The Deeper the Crisis, the Better the OpportunityMon, 10/22/2018 - 12:18
Q: What is your view of the current state of the mining sector?
A: The last 10 years have been a roller coaster of high and lows. During this time, we have seen the industry bleed and many companies have gone out of business, particularly small to medium-sized companies as there are just a few financing options available to them. But there is an opportunity in every crisis and the deeper the crisis, the better the opportunity can be. It is simply a matter of identifying it and profiting from it.
As we now stand in the middle of what appears to be another bull run for some commodities, the next 10 years will see the continuation of rapid change in the industry against a backdrop of declining ore grades, decreasing availability of Tier 1 assets and continued focus on shareholder returns. To thrive amid this volatility, companies must rethink the traditional way of financing their mining operations. That is why the role of financial institutions that serve the mining industry is more relevant than ever.
Q: What are the main financial areas of opportunities you have identified in the mining industry?
A: Accendo Banco offers a wide range of financing products for the mining sector, including term loans, revolving credit facilities, bridge and mezzanine loans, nonconforming project finance facilities, subordinated cost-overrun facilities in select situations, trade finance consisting of equipment leases, leasebacks and factoring facilities. This 10-year global mining industry crisis has translated into very limited financing for mining companies, particularly for small to medium-sized companies. Mexico, which is among the world’s most natural resource-rich countries, does not have a bank that supports the sector. This crisis has presented us a unique opportunity to provide financing throughout the whole mining spectrum.
Q: Why do you consider yourself to be the bank for the mining sector?
A: We are the only Mexican bank that actively serves the industry. We serve the mining companies, as well as the whole supply chain, such as service provides like drillers, contractors and reagent producers. Mining is one of the most important industries that Accendo Banco targets with its bespoke products.
Q: What services or programs have you created for the mining industry?
A: We offer trade finance, equipment leasing, financing for expansion plans and restructuring of existing loans. We have the infrastructure to adjust financing terms to meet the requirements of our clients. We believe that each client is different and therefore each one deserves a special product. In contrast to other Mexican institutions, we understand the sector’s needs and are willing to take the risk to provide the sector and the companies within it with the financial services they need.
Q: What is the main added value you can offer the mining industry in comparison to other financial institutions?
A: We understand what the mining sector needs. The main shareholders in Accendo Banco have been conducting these types of investments and financing for at least 20 years. This gives us a broader picture of how the sector works and what its needs are. Moreover, we have diversified our financial services to serve the mining industry. We offer bespoke products tailored to clients’ requests; we will consider smaller ticket sizes that other lenders might not consider and our team is comprised of both technical and financing professionals who come from the mining industry and understand the full spectrum of risks and reward inherent to the industry. The team and ticket size allow us to leverage our expertise to an otherwise underserved segment of the Mexican mining sector while at the same time steering clear of competition with the giants.