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.
Mauritius’ biggest lender by market share will increase exposure to gas and move into into funding the mining of metals needed for clean-energy technologies.
Mauritius Commercial Bank — a unit of Port Louis-based MCB Group Ltd. — is making 10 billion rupees ($211 million) available to help clients transition to a lower-carbon economy, Head of Corporate and Institutional Banking Philippe Touati said. The lender also raised $400 million in December through a syndicated loan, and it plans to do finance sustainable projects with the money, he said.
“Recognizing gas as a comparatively cleaner fossil fuel, the bank intends to expand its financing of upstream and midstream gas projects, and to gradually increase the share of our exposures to gas in our balance sheet,” he said by email. “The bank plans to gradually expand its involvement in metals and mining, with a clear focus on those metals which are required — not to say critical — in the wider green-energy transition value chain.”
Demand for the minerals used in electric vehicles and renewable-energy equipment is expected to soar, and many African countries hold significant deposits. Democratic Republic of Congo already produces more than 75% of the world’s cobalt and is the second-largest source of copper. Countries including Zimbabwe, Ghana and Mali plan to become significant producers of lithium. Sub-Saharan Africa could produce almost $2 trillion of metals required for the energy transition by 2050, according to the International Monetary Fund.
Mauritius Commercial Bank plans to closing the first set of metals and mining transactions in its fiscal year that starts July 1. The capital it plans to deploy will be “relatively modest” in the first few years, providing time to build expertise, experience and a track record, Touati said.
“The strategy will primarily target African countries that are abundant in the earmarked commodities on the extraction side with a wider coverage on the commodity side of the activity,” he said.
At the end of December, about two-thirds of the Mauritius Commercial Bank’s gross loans were denominated in foreign currency, while short-term financing accounted for 60%, Touati said. The lender’s short-term commodity trade-finance exposures amounted to $3.5 billion, with 54% being off-balance sheet, he said, while gas represented 9% of the bank’s oil and gas trade financing.
(By Kamlesh Bhuckory)
Comments