Alpha Media Holdings

Nedbank participates in mines indaba

FIDELITY MHLANGA

NEDBANK Zimbabwe recently participated at the Chamber of Mines annual conference where the financial institution’s MD Dr Sibongile Moyo (pictured below) discussed various ways of financing mining operations.

Officiating at the Chamber of Mines conference in Victoria Falls recently, Moyo told delegates that the bank could raise funds, but guarantees would be required.

“I will just say in terms of funding for established senior miners we have relied extensively on offshore financing,” Moyo stated.

She said in the past Nedbank was able to arrange an offshore facility against offshore patent guarantees to be able to support mining entities in the country.

“Having said that, we do have a big gap in the local market in terms of capacity,” she said.

Moyo explained that if a mining entity had a requirement for US$200 million this could not be financed by a single bank on their balance sheet thus creating opportunities for banks to syndicate in order to avail the required finance to the mining sector.

She said junior miners who are in early stage of green field have tended to rely on private equity markets, venture capital and pension funds for funding. Moyo further said the third element to mining finance, which is very critical to the mining industry, is access to plant and equipment funding which can be done through leasing.

“Huge leasing opportunities — decades ago in this country we had a very active plant and equipment lease market. Our challenge now is to have reputable suppliers of plant and equipment, who are willing to bring their wares into the country. Why, because this requires a good and solid insurance back bone or infrastructure,” Moyo said.

We are speaking of credit insurance, commercial risk insurance and political risk insurance, which cover leased equipment that come into the country until it is paid off or until a certain point it is required to go back to its country of origin.

“We do have membership as Zimbabwe to the African Trade Insurance (ATI) where such opportunities are there to provide political risk cover, commercial risk cover, trade cover for plant and equipment imported into the country funded by foreign investors, so these opportunities should be taken advantage of.”

e Nedbank MD gave a recent example from South Africa where Export Credit Insurance Corporation of South Africa recently provided political risk and commercial cover for the Beitbridge Border Post project where Nedbank South Africa is one of the participants.

Moyo further said funding to the small scale and medium scale mining sector is very critical because of its impact on the number of enterprises or entrepreneurs and livelihoods.

“We have had challenges in funding our gold miners largely because of a small gap in marketing arrangements. Previously banks like ourselves had direct participation in exports of gold starting with airfreight logistics as well as ringfencing sales,” she said.

Moyo reiterated that for real expansion of projects and capital expenditure for smaller miners where there is higher risk, there is need for “patient capital” which is typically contributed from funds put together by government using mining royalties and funds contributed by pension funds and banks.

“Collectively, we need to come up with a solution that enables the creation of a fund. We currently have the Export Credit Guarantee Corporation of Zimbabwe (ECGC) that was created in Zimbabwe a few years ago and a lot of our small business including mining services companies are benefiting from ECGC guarantees that are given to banks to allow us to fund their assets, finance smaller equipment and projects as well as working capital,” she said.

CHAMBER OF MINES

en-zw

2021-06-18T07:00:00.0000000Z

2021-06-18T07:00:00.0000000Z

https://digital.alphamedia.co.zw/article/281990380477677

Alpha Media Group