Financing Trends in the Post-Pandemic WorldBy Alejandro Ehrenberg | Thu, 04/23/2020 - 13:15
The COVID-19 sanitary emergency and the economic downturn it has generated are changing the mining industry’s financial landscape. One trend that is gathering pace is the transition to green mining: capital is more likely to be allocated to projects with a strong ESG profile. Also, innovative solutions, like online investment platforms, are filling up gaps in the finance market.
As reported by Hellenic Shipping News (HSN), the transition to mining activities with ESG principles at the top of their priority list will be more intense in the post-pandemic world. Investors are under heavy pressure at the moment but when the situation starts normalizing, they will be more selective in their capital allocation. Julian Treger, CEO of Anglo Pacific Group, a royalties company, said to HSN that “miners may, for instance, focus increasingly on developing specific mineral grades for specific applications. This could include the production of high-grade iron ore to help reduce steelmaking emissions and copper with lower arsenic content, as companies’ carbon footprints also become a financial factor.”
Treger’s statement adds to the opinion of Enrique Rodríguez del Bosque, a prominent lawyer in Mexico’s mining sector. During his participation in this year’s Mexico Mining Forum, Rodríguez del Bosque pointed out that “miners have to do an exhaustive analysis of what they have, not only in terms of assets but also in terms of relationships with the community, with the government and with unions.” During the same forum, David Chelich, head of global energy business development at the TMX, said ESG is extremely important for the Toronto Stock Exchange and for retail investors. “ESG is not just about being a good corporate citizen. Companies that focus on ESG achieve better cost savings and profitability in the long term, which enhances the company’s capability to access capital,” Chelich said.
As for innovative funding solutions, an exciting example is NR Private Market, which has been described as the aspiring Uber of mining finance by Proactive Investors. NR Private Market describes itself as “an online mining investment and communications platform that connects approved mining investors with access to private placements within the mining and exploration sector. Using state-of-the-art, secure technology, investors can follow or engage with companies and management teams raising capital on NR Private Market.” The company is aiming to fill the niche in the financing market of junior miners trying to raise between US$1 and US$5 million. The platform, Proactive Investors says, “invites sophisticated and high net worth investors to register and thereby gain access to ongoing fundraising deals, accompanied by a suite of due-diligence material.” That makes the matching of investors and projects potentially more dynamic and flexible. In a post-pandemic world where debt and public equity may be significantly restricted, a solution like NR Private Market can help juniors to source the money they need to keep the project pipeline flowing.