Johannesburg, South Africa — MININGREVIEW.COM — 10 December 2008 – The Industrial Development Corporation (IDC) – which has a total exposure of close to R17 billion rand in investment in mining operations across the African continent – is seeing an increase in funding applications for mining projects, as other funders, who had initially committed, are now either cutting down or pulling the plug altogether.
“This past month we have already received applications from banks to co-fund with them three projects they had already committed to funding,” Ufikile Khumalo – head of the IDC’s resources business unit – told Fin24.com. “That requires over R2bn of the IDC’s commitment.”
He would not reveal the particulars of any of the projects, except to say the applications had come from some of South Africa’s big four banks.
Khumalo said banks and other commercial funders were scaling down on funding new mining projects because of the slump in commodity prices. “We anticipate more such applications in the near future.” He added that the IDC would be having discussions with another institution this week.
Many financial backers have opted out of projects because they have ceased to be economical at current market prices. But the IDC has committed R60billion to mining and resource projects for the next five years, and Khumalo said that would not be reduced because of gloomy commodity markets.
He said the IDC would step in to fund projects that might be delayed or scrapped because banks had pulled out. “We will probably overspend the R60 billion budget, but not necessarily on the same projects we had budgeted for,” added Khumalo.
“Once the global recession has been dealt with, it will be smooth sailing for resources,” Khumalo continued. “It has happened in the past, and it will happen again.” He went on to say that the consensus on commodity prices was that they would start rising in 18 months’ time. “If you take a long-term view, you’re okay,” he concluded.