Mining Journal > Finance > IFC expects to double mining investments

Finance

International Finance Corp, the World Bank Group’s private-sector lending arm, expects to double mining investments to about US$100 million in its current fiscal year as commercial lenders curb loans.

“We have taken an opportunity with this market crash to make more investments,” said Bill Bulmer, global head of mining at Washington-based IFC. The target applies to the fiscal year ending this month and IFC is considering 15 mining projects for the next year, he said.

The global recession, the first since World War II, has forced producers including Rio Tinto to seek financing after commodities plunged. While IFC typically would cooperate with more than 20 banks to fund mining companies two years ago, that number has now dwindled to “five or six,” Bulmer said.

“In fact, most of our attention over the past six months has been on how we can work with other development institutions to mobilize money, given the lack of appetite in the commercial banking sector,” he said. IFC’s mining portfolio is worth about US$840 million, Bulmer said.

This year’s investments included US$25 million in BHP Billiton’s Escondida, the world’s biggest copper mine, according to IFC data.

The 82-company Bloomberg World Mining Index plunged 61% last year, led by copper producer Kazakhmys plc. Stock in Rio Tinto, which aims to sell shares worth US$15.2 billion after a planned investment by Aluminum Corp of China ended, tumbled 72% in London trading.

Africa accounts 65% of IFC’s mining investments. About 40% of the current fiscal year’s deals were in Latin America, according to Bulmer. “We expect the debt market over the next 12 months or so to be very tightly constrained,” he said.

June 26 (Bloomberg)