Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
LONDON, June 26 (Reuters) – Orion Resource Partners is raising up to $500 million in a fund financing potash, tungsten and iron ore mines, sources close to the matter said, meeting miners’ need for funding and investors’ appetite for long-term assets.
Miners are turning to alternative sources of finance as the industry has struggled to woo back traditional financiers, even though commodity prices are rebounding from the crash of 2015/2016.
Orion will provide royalties and streams and close the fund in the next few months, the sources said.
Streaming and royalties are types of alternative finance for the mining sector and generally involve an upfront payment to a miner, which then repays it by supplying metal at a later date.
The company’s investors, mainly pension funds, sovereign wealth funds and other long-term funders, had expressed interest in having exposure to mining for long-term projects that would pay steady dividends over time.
An Orion spokesman declined to comment.
Orion is a U.S.-based mining-focused private equity group with a presence in London and Sydney with about $4.5 billion under management.
Potash prices have started to recover as mine closures have limited supply of the crop nutrient while iron ore prices have also rebounded from lows seen at the end of 2015.
Tungsten prices are hovering near their highest since 2015.
Potash and iron ore mines tend to be long life assets while tungsten mines are generally smaller but more lucrative.
Thomson Reuters data showed earlier this year that investors are still shunning the mining sector and withholding fresh funds despite a price rally.
Orion said in February that it raised $2.1 billion for a fund that would finance the construction of later-stage mining projects through a combination of debt, equity and production-linked investments.
(Reporting by Zandi Shabalala; Editing by Alexandra Hudson)
