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Investing in the African renaissance
 

Investing in the African renaissance

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Objective Capital's Global Resources Investment Conference 2011

Objective Capital's Global Resources Investment Conference 2011
Stationers' Hall, City of London
27-28 September 2011
Day 1- Session 8: Africa focus
Speaker: Christopher Goss, IFC

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    Investing in the African renaissance Investing in the African renaissance Presentation Transcript

    • Closing Keynote: Investing in the African renaissance
      Christopher Goss – IFC
    • @Objectivelive
      GLOBAL RESOURCESINVESTMENT CONFERENCE 2011
      Lead sponsor:
      Media partners:
      Other sponsors & participating organisations:
    • Mining, Africa and IFC; Opportunities, Risks, and Partnership
      Christopher Goss
      IFC Consultant
    • 4
      Over the last 18 months, junior mining companies have raised over $6.3 billion for their African projects
      US$ million
      35% spent on gold; 24% on iron-ore
      Data Source: Intierra
    • Debt Finance - About $22 billion raised in Africa Mining over the last 10 years
      Between 2000-2011, African Mining raised $22billion in debt financing
      78% was for projects in Southern Africa (South Africa, Botswana, Namibia, Zimbabwe, Zambia, Mozambique)
      South-Africa alone accounted for 55%.
      High concentration on Gold projects, which raised $9.5 billion, or 43% of the total.
      Breakdown by African Region $m (2000-2011)
      Breakdown by Commodity $m (2000-2011)
      Where is the money going ? (IDA vs Non-IDA)
      40%
      60%
      Data Source - Dealogic
      5
    • Summary IFC Investment in Africa
      $578m. in 30 transactions since 1999, or an average of just over two per year.
      But half of these transactions in the last three years:
      4 in FY2011 (up to June 2011)
      7 in FY2010
      4 in FY 2009
      Half investment volume in debt, half in equity
      But debt in only 6 transactions
      6
    • Mining and Africa
      Major global investment flows into Africa mining as investors and companies take on the country risks in their hunger for resources
      But mining carries with it wide ranging investment risks, some of which are acute in many African countries.
      7
    • Risks in the Metals and Mining Sector
      Ernst and Young released its annual report, “Business risks facing mining and metals” for 2011–2012
      Through discussions with mining and metals leaders and from its global analysis of companies and projects, E&Y provides a snapshot of the most significant challenges currently facing the sector
      8
      Source: Ernst and Young, “Business risks facing mining and metals 2011 – 2012.” www.ey.com/miningmetals.
    • Challenges in Africa Mining
      Risks 1-4 and 10. in the previous slide, ie:
      Resource Nationalism
      Skills
      Infrastructure
      Social Licence
      Fraud and Corruption
      apply particularly in many African countries.
      Governance, Infrastructure and other challenges vary greatly across the continent. For example, by contrast:
      Governance and infrastructure standards in Botswana are high.
      The infrastructure challenges and investment needs for iron ore in West Africa are huge.
      9
    • Challenges in Africa Mining (cont.)
      Where these risks are high, IFC can help; especially regarding the company’s social licence.
      Recent events in Guinea and DRC, which have involved IFC, have demonstrated our willingness to maintain our partnership and support in challenging circumstances.
      Infrastructure requirements, when large (risk 3.), are likely to need some form of project financing.
      This financing will be very challenging to raise, given the sums needed, country risks and current global financial stresses. It will probably need extensive involvement of IFIs such as IFC to succeed.
      10
    • Examples of Large Infrastructure Requirements for Africa Mining Projects
      11
    • The World Bank Group
      12
    • Over $85 Billion Invested Since 1956
      Largest multilateral source of loan/equity financing for the emerging markets private sector
      Founded in 1956 with 182 member countries
      AAA-rated by S&P and Moody’s
      Equity, quasi-equity, loans, risk management and local currency products
      Takes market risk with no sovereign guarantees
      Promoter of environmental, social, and corporate governance standards
      Resources and know-how of a global development bank with the flexibility of a merchant bank
      Holds equity in over 800 companies worldwide
      13
    • IFC’s Global and Africa Reach
      14
      22 Country offices in Africa, including 4 regional hubs
      Moscow
      Almaty
      Washington
      Istanbul
      New Delhi
      Cairo
      Mexico City
      Hong Kong
      Dakar
      Port-of-Spain
      Bogota
      Nairobi
      Johannesburg
      São Paulo
      Buenos Aires
      IFC HQ/Hub Offices
      IFC Operational Centers
      IFC Country Offices
    • IFC’s Mining Portfolio
      $507 million current portfolio comprising 36 projects in 24 countries
      Major commitment to Africa: Half of our total current portfolio in Sub-Saharan Africa
      Track record of long-life partnerships with companies
      Equity represents 54% of portfolio
      15
      By Product
      By Region
      Gold
      43%
      Aluminum &
      Bauxite
      9%
      Copper
      18%
      Note: Data as of March 2011
    • IFC Value-Add in Mining
      16
    • Financing & Sustainability Expertise Under One Roof
      IFC’s package deal brings together world-class talent, a global outlook and a social/environmental mandate to deliver sustainable business solutions; IFC’s team includes financial professionals, mining engineers, environmental specialists, development experts, and communications specialists
      17
      IFC Mining
      Integrated Solutions Combining Capital and Expertise
    • IFC: The Complete Package; African Examples
      18
      IFC Investment & Advisory Services
    • One Example Closer Up: Allana Potash, Ethiopia
      Allana Potash is a mineral exploration company focused on Ethiopia
      Key assets are three licenses in the Danakil Depression near the Eritrean border
      19
    • When Does IFC Invest?
      IFC funds projects in all stages of development
      20
      IFC in the Project Life Cycle
      Project
      Discovery
      Project
      Finance
      Mature Production
      Value
      Early
      Exploration
      Senior Debts and
      Equivalents
      Equity/
      Mezzanine
      Equity
      Time
    • A Broad Range of Financial Products
      21
      Equity
      Mezzanine / Quasi-Equity
      Senior Debts & Equivalents
    • IFC as a Strategic Partner: Equity Investments
      22
      General IFC Offerings and Criteria
    • IFC as a Strategic Partner: Debt Investments
      23
      General IFC Offerings and Criteria
    • Past IFC Investments
      24
      Ahafo
      $75,000,000
      Senior Term Loan
      Mandated Lead Arranger
      Tanzania
      Chile
      South Africa
      Ethiopia
      Peru
      Ghana
      Guinea
      Peru
      Newmont / Yanacocha
      Escondida Copper
      Lonmin
      $32,300,000
      Senior Term Loan
      Williamson
      Simandou/RioTinto
      Dallol
      MineraQuellaveco
      $94,600,000
      Senior Term Loan
      $40,000,000
      Senior Term Loan
      $100,000,000
      Senior Term Loan
      $35,000,000
      Equity
      $10,000,000
      Equity
      $94,000,000
      Syndicated Loan
      $42,000,000
      Equity
      $15,000,000
      Equity
      $50,000,000
      Syndicated Loan
      $50,000,000
      Equity
      $10,000,000
      Equity
      $330,000
      Equity
      Equity Investor
      Equity Investor & Lender
      Equity Investor
      Equity Investor & Lender
      Equity Investor
      Equity Investor & Lender
      Equity Investor & Lender
      2011
      2006
      2006
      1993 and 1999
      1993-2011
      2010
      1989 and 1999
      2006
      Peru
      Morocco
      Anteres Minerals
      Achmmach Tin
      $12,800,000
      Equity
      $5,700,000
      Equity
      Equity Investor
      Equity Investor
      2009
      2010
    • Advisory Services
      IFC relies on 50+ years of experience of working in developing countries to develop practical, sustainable business solutions for its clients
      25
    • IFC Africa and Global Mining Team
      26
      Tom Butler
      Global Head, Mining
      Washington DC
      +1.202.473.5989
      tbutler@ifc.org
      Tom Bruington
      Chief Engineer
      Washington DC
      +1.202.473.0651
      tbruington@ifc.org
      Africa
      Latin America
      Asia
      MENA / CEU
      Louis Vos
      Washington DC
      +1.202.458.5934
      lvos@ifc.org
      Stephan Vermaak
      Johannesburg
      +27.11.731.3148
      svermaak@ifc.org
      Brian McNamara
      Washington DC
      +1.202.473.0461
      bmcnamara@ifc.org
      Robin Weisman
      Washington DC
      +1.202.473.0174
      rweisman@ifc.org
      Christian Mulamula
      Washington DC
      +1.458.1218
      cmulamula@ifc.org
      KarstenFuelster
      Jakarta
      +62.21.2994.8036
      kfuelster@ifc.org
      GustafLilliehook
      Istanbul
      +46.708.559.338
      glilliehook@ifc.org
      Juan Jose Rossel
      Lima
      +51.1.611.2520
      jrossel@ifc.org
    • 27
      Annex: IFC Deals In Africa
    • Deals Done in Africa: FY1999-2011
      28
    • Deals Done in Africa: FY1999-2011 (Contd.)
      29