Mining projects are increasingly drawing on export-credit agencies, development banks and commercial lenders as companies seek financing for equipment, processing plants and mineral exploration. A clear example emerged in Finland in August, when Finnvera, the country’s official export-credit agency, issued a non-binding letter of interest for up to approximately $132 million in potential financing support linked to Metso equipment for the Troilus gold-copper project in Québec.
The potential support could cover up to 85% of an approximately $155 million Metso equipment and services package. The arrangement connects financing for the Canadian mining project with equipment supplied by the Finnish company.
Finnvera support linked to Troilus equipment
The proposed financing would support equipment procurement for the Troilus project, while providing a financing mechanism connected directly to a domestic Finnish supplier. Export-credit support can allow mining companies to secure financing for supplier-related costs while enabling equipment manufacturers to support major international orders. Such structures can also involve longer-duration financing than conventional commercial lending.
For large mining developments, equipment financing can form part of a broader funding package alongside project debt and equity. A similar financing structure is being used in Kazakhstan, where the European Bank for Reconstruction and Development (EBRD) is providing up to $300 million to Solidcore Resources for its Ertis hydrometallurgical project.
EBRD backs Kazakhstan processing project
The Ertis plant has estimated total project costs of approximately $978 million and is designed to process up to around 278,500 tonnes per year of refractory gold concentrate. ING, Société Générale and Abu Dhabi Commercial Bank are participating in the financing as co-lenders alongside the EBRD. The structure places a development bank at the centre of the financing package while allowing commercial banks to participate in the project. The approach is relevant to processing developments where financing requirements combine mining exposure with industrial and technological investment.
European finance extends to mineral exploration
Public financing is also being directed toward the earlier stages of the mining value chain. An European Investment Bank-commissioned study estimated that annual mineral-exploration spending in the European Union would need to increase from approximately €200 million to around €2 billion over five years to support a project pipeline consistent with the bloc’s strategic raw-material objectives. The financing landscape therefore spans exploration and project development through to equipment procurement, processing infrastructure and construction funding.
Public institutions can provide exploration support, project equity, export guarantees and anchor debt, while commercial banks and strategic offtake arrangements can form additional components of project financing. For mining companies developing large-scale projects, capital structures can consequently combine state capital, export credit, equipment finance, commercial bank lending and strategic offtake.
