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The Reference and Promise on the Mining Sustainment

24 November, 2012 at 3:03 am in Computer

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ATI acting CEO Stewart Kinloch says that the financial crisis has impacted on a large number of investment projects on the continent.?“A number of mining projects have been mothballed or slowed down, owing to low commodity prices impacting all of our member states to a greater or lesser degree.”

Africa is a continent with significant and ? impressive mining reserves and ? resources, but is, unfortunately, also associated with a great degree of investor risk.

Africa’s only multilateral trade and political risk insurer, the African Trade Insurance Agency (ATI), tells Mining Weekly how it ?recently assisted mining projects and contractors to mitigate some of these risks.

“Foreign direct investment in Africa is down by 18% in 2009, and restoring confidence in the continent will be critical to reversing that trend,” he says.

In addition, banks tend to be more risk aware during challenging economic times. “Banks are increasingly considering other sources of risk mitigation, even for strong projects,” says Kinloch.

Other concerns include the Democratic Republic of Congo’s (DRC’s) mining review, which has caused some concern in the financial community. ?Financiers that stood behind some of the mining projects in the DRC have now looked to ATI for support.

Kinloch says that a South African company wishing to invest in a major mining project in the DRC approached ATI to provide it with political risk insurance. ?The political risk insurance covered the company against three types of perils.

The first is war and insurrection. In the event that the mine was completely destroyed by war, ATI would pay out 100% compensation for the investment.

ATI further covers the company against ?expropriation, which is in the event of ?government seizing the mine, and not paying for it or paying for the mine in a currency that is not freely convertible. ?Kinloch notes that the agency would pay out 100% compensation for such a loss.

The third peril that ATI covers is inconvertibility. ?“In the event that the loan was to be repaid ?and the local currency could not be con-?verted to dollars, we would pay the company out 100% in dollars, and take the local ?currency.” Choosing one better mining machine such as the impact crusher and hammer crusher and help you save a lot in a short time, and we can promise that we won't let you down on our products.

The agency supplied the company with cover using its own balance sheet, as well as reinsurance sourced from Lloyds of London, for this particular transaction. He reports that this transaction was successfully handled and the project is now in its construction phase.

A smaller project covered by ATI in the DRC was related to artisanal miners. ?Earlier this year, the DRC government ?announced that it was no longer going to allow the export of unprocessed ore, says Kinloch.

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