Maybe not $1 billion Ddzx but a good chance for several hundred million imo. check out this article:
Junior miners urged to look to African Development Bank
African Development Bank’s Sheila Khama is hoping for more Australian business. Picture: Bryan Charlton
Source: Supplied
AUSTRALIA’S junior miners and explorers struggling to attract capital to pursue projects in Africa should follow in Rio Tinto’s footsteps and approach the African Development Bank, a director of Africa’s international money backer has suggested.
Sheila Khama, director of the African Natural Resources Centre at the African Development Bank, said few Australian companies had tapped the bank for its services but she added that it was keen to talk to companies looking to develop the region’s resources.
While the junior companies are yet to widely engage with the bank, one of the world’s largest miners, Rio Tinto, has.
Ms Khama said that in May the bank was approached by Rio Tinto and its partners to contribute funds to the infrastructure component of the massive $US20 billion ($21.3bn) Simandou iron ore project in Guinea in West Africa.
She said the bank had made a principal agreement to finance that project and had submitted a letter of interest to Rio to contribute finance to the infrastructure project.
“Now we are going through the formalities but the principal agreements and principal acceptance has been made,” she said at the Africa Down Under conference in Perth. We have also been requested by the development partners to be the lead development finance institution. So we will partner with Rio and the Guinea government to motivate finance in the region from other development financiers.”
Ms Khama explained that given the bank’s position in Africa, its presence as lead development finance institution in the infrastructure project was likely to generate confidence from other potential financiers. “We think as a regional development bank the most important thing that we can do is to boost confidence in the region and give assurances to other prospective financiers, who might be in a position to then provide much more finance than ourselves, but might otherwise not be inclined to do so if we hadn’t already expressed confidence in the project and country,” she said.
Simandou, which will include a multi-user 650km railway and deepwater port infrastructure, will be the largest combined iron ore and infrastructure project ever developed in Africa and when fully operational, it has the potential to double the country’s GDP.
The funding of Rio Tinto’s share of mine development capital is yet to be approved by its board and at its first-half results last month, Rio’s chief financial officer Chris Lynch didn’t mention Simandou as being a candidate for near-term capital spend.
“That ore is good quality ore and eventually it will get to the market, but whether that time is now or not is another matter.
“The issue is, really, can you get it to a consumer economically. We need to determine that before we invest further,” Mr Lynch said.
Ms Khama said that companies like Rio Tinto were capable of managing risk but the bank could give the company a regional perspective of risk using its knowledge of the region and the macro-economic environment.
“There is no country and no project in the world which does not have some element of risk. The important thing is to understand the nature of the risk and be able to mitigate the risk,” she said.
Given that most junior companies tend to tap the stockmarket for funds to finance African projects, Ms Khama said there had not been many approaches to the bank from Australian companies.
Despite that, she said the bank remained committed to being prospective partners with Australian companies and encouraged them to talk to the bank about the various financial instruments it had.
“It’s important for Australian companies to not only look for institutional partners but to look for prospective private sector partners to help them navigate what is essentially a new and different investment, social and economic environment.”
