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Technical Meeting on the Development of Mineral Resources

Presentation by Stéphanie Guihard-Brand

and Eberhard Gschwindt

“Development financing instruments of the EIB in the ACPs, with a particular focus on the mining sector ”

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2.

3.

Background information on the EIB

The EIB in the ACP countries

1.

Structure of the presentation

Guiding principles

4. Illustrating our action through concrete projects

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EIB: background InformationEIB: background Information

“Promoting European Objectives”

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EIB: Background Information

• Birth: Treaty of Rome, 1958

• Purpose: “Provide long term lending to promote European objectives”

• Shareholders: 27 EU Member States

• Governance: • Board of Governors - EU Finance Ministers

• Board of directors - Member States & European Commission

• Management Committee - EIB’s executive body

• Audit Committee - Independent, non-resident

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EIB lending outside the EU in 2009: EUR 8.6 bn

– Pre-accession countriesPre-accession countries Candidate countries - Croatia, Turkey and the FYRM* Potential candidate countries in the Western Balkans

– European European neighbourhoodneighbourhood Mediterranean Neighborhood (FEMIP) Russia and Eastern Neighbours

– Co-operation policyCo-operation policy Africa, Pacific and Caribbean States (ACP) Overseas Countries and Territories (OCT) South Africa Asia and Latin America (ALA)

* Former Yugoslav Republic of Macedonia

SUPPORTING EU DEVELOPMENT AND COOPERATION POLICIES

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The EIB & the African, Caribbean and Pacific States

“Committed to economic growth and sustainable development”

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ACPs: the oldest mandate entrusted to the EIB (1963)

Since 2003: “Cotonou Partnership Agreement”

Builds on the acquis of over 45 years of experience

Sources of funding:

- European Development Fund (EDF)

- EIB Own Resources

EIB’s role focuses on the Financial Cooperation:

managing the Investment Facility & lending from its own resources

EIB lending in the ACPs

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Infrastructure36%

Financial intermediaries

41%

Industry (incl.mining)

23%

Since 2003: breakdown by sector of project signed

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Infrastructure* Financial sector

Projects that foster:

• regional integration

• environnemental sustainability: renewable energy/climate change

• growth/ development: job creation and poverty alleviation (ESIAF)

• cooperation with bilateral and multilateral donors

* Supported by: EU-Africa Infrastructure Trust Fund and the Water/Energy Facilities

STRATEGIC FOCUSSTRATEGIC FOCUS

Energy Water Transports SMEs Microfinance- mainly through intermediaries - - public & private sector -

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OTHER SECTORS:OTHER SECTORS:- industry, commodities, services- industry, commodities, services - -

“Provision of long term finance not availableProvision of long term finance not available locallylocally””

• Mining: EITI initiative, ESIAF: high financial & economic outputs

• Industry & agro-business: - SME focus (through credit lines) - export oriented undertakings

• Sugar sector: close cooperation with the EC• Tourism sector - economic context/political stability/governance issues

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Guiding principles

“ Taking more risks, in a controlled manner for more value-added ”

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EIB lending in ACPs & OCTs*

* Overseas Countries and Territories

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Economic growth

Poverty reduction&

Millennium Development Goals

Private sector development, throughForeign Direct Investors,Local private sectorFinancial sector Commercialy viable public entities

The objectives The means

Use of a wide range of risk-bearing instruments under IF Value added of the IF

The constraints:

• Ensure the long term sustainability of the IF through risk pricing

• Mitigate the risk of MS as guarantors

vs. developmental objective

EIB and the Cotonou Agreement Investment Facility

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EIB terms and conditions

Subsidies are available:- for project related technical assistance- to ensure concessionality whenever required

EIB operates on market related terms: risk pricing, cost recovery

Long maturities and grace periods

EIB = catalyst encourages co-financing max. 50% of funding provided by EIB

Direct or indirect intervention (major /smaller scale investments)

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Technically sound

Financially viable

Bear a positive impact on the economy: - economic and social impact assessment framework -

Comply with environmental protection and procurement regulations:

- “EIB environmental and social guidelines”-

Project requirements

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Illustrating our action through concrete projects

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Year Country Company ProjectEIB finance

(EURM)Own Ressources / Investment Facility

1 2003 ZambiaKansanshi Mining plc Brownfield open pit copper mine development 34.00 IF

2 2004 KenyaThe Magadi Soda Company, Ltd. Production increase and quality improvements for soda ash 21.95 OR + IF

3 2004 MozambiqueKenmare Moma Mining Ltd. Development of an ilmenite mine and preparation plant 57.75 IF

4 2004 All AfricaAfrican Lion 2 Mining Fund Early development of smaller mining projects 6.75 IF

5 2005 MauritaniaSphere Minerals Ltd. Feasibility study for an iron ore mine plus pelletizing plant 5.00 IF

6 2005 ZambiaMopani Copper Mines plc Rebuild of a copper smelter 48.00 IF

7 2006 Republic of CongoMAGIndustries Corp. Feasibility study for a potash mine and magnesium plant 13.00 IF

8 2006 ZambiaLumwana Mining Company Ltd. Development of a copper mine 85.00 OR + IF

9 2007 ZambiaAlbidon Zambia Ltd. Development of a nickel mine 29.50 OR + IF

10 2007 MadagascarAmbatovy Minerals SA Development of a nickel mine + processing plants 260.00 OR

11 2007 BotswanaDiamonEx Botswana Ltd. Development of a diamond mine 5.00 IF

12 2008 All AfricaAfrican Lion III Mining Fund Early development of smaller mining projects 11.00 IF

13 2009 Mauritania

Société Nationale Industrielle et Minière Production increase of an iron ore mine plus processing plant 75.00 IF

Total signed to date (EURM) 651.95

Projects signed by EIB under the Cotonou Mandate

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Lumwana

2001

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Moma

2002

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Ambatovy

2006

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Thank you !