Category Archives: potash

Canadian Mining Report for 2016 Released

A return to optimism in mining puts Canada at a crossroads

February 16, 2017

The Canadian Mining Association

http://mining.ca/news-events/press-releases/return-optimism-mining-puts-canada-crossroads

To download a copy of Facts & Figures 2016, go HERE

 

Action needed for Canada to capitalize on potential rebound 

 

Cautious optimism is returning to the global mining industry, which could spur mining companies to make new and significant investments. However, a new report from the Mining Association of Canada (MAC) shows evidence of declining Canadian competitiveness and the prospect for major exploration and mining investments to flow offshore.

“Very simply, Canada is not as attractive as it used to be for mineral investment, and competition for those dollars is growing globally. The recent elimination of federal mining tax incentives, regulatory delays and uncertainty, combined with major infrastructure deficits in northern Canada are all contributing factors that can explain Canada’s declining attractiveness. The time is now to put the right policy pieces in place to better compete for those investments and regain our leadership in mining,” stated Pierre Gratton, President and CEO, MAC.

MAC’s Facts & Figures 2016 report notes several indicators that reveal that Canada is not as competitive as it once was. Foreign direct investment into Canada’s mining sector dropped by more than 50 percent year-over-year in 2015. This is disproportionate to Canadian mining direct investment abroad, which only experienced a 6 percent decline. This imbalance indicates that companies are investing in project development, but may be less interested in doing so in Canada. Canada also no longer attracts the single-largest share of total global mineral exploration spending, having conceded first place to Australia in 2015. Further, no new mining projects entered the federal environmental assessment stage in 2016. If these trends continue, there will be fewer discoveries made and fewer projects that become operational mines in Canada.

“The policy landscape in Canada is full of uncertainty as we await the outcomes of major government decisions. The federal government is reviewing federal environmental legislation, is implementing a pan-Canadian climate change policy, and is working to address long-standing transportation and infrastructure issues. These are all necessary and positive steps, but they must result in boosting Canada’s attractiveness as a place to do business. At risk is a key sector of our economy, and one that leads the world in sustainable mining practices,” stated Gratton.

MAC’s report also revealed the mining industry remained a strong contributor to the Canadian economy despite the downturn in 2015. The industry directly employed more than 370,000 people across Canada and remained the largest private sector employer of Aboriginal people on a proportional basis. An additional 190,000 worked indirectly in mining, with more than 3,700 companies supplying goods and services to the Canadian mining industry. In 2015, the mining industry accounted for $56 billion of Canada’s GDP and minerals and metals accounted for 19% of Canadian goods exports.

Policies that improve Canada’s mining competitiveness:

1)   Improve the federal project review process –  the process should be effective and timely, from pre-environmental assessment (EA) to post-EA permitting, with meaningful consultation with Aboriginal communities.

2)   Invest in critical infrastructure in remote and northern regions – introduce strategic tax measures and ensure the new Canada Infrastructure Bank has a strong economic development focus for northern Canada.

3)   Improve access to trade – ensure trade policies provide access to new and important markets, including China, and improve Canada’s transportation network to more efficiently move mineral and metal products to market.

4)   Address climate change while protecting Canadian businesses – adopt policies that lead to meaningful greenhouse gas emissions while protecting emissions intensive and trade-exposed industries (EITI), like the mining industry. Failing to protect EITI sectors will result in “carbon leakage”—the shifting of production and the associated economic benefits from countries that are taking action on climate to those that are not.

5)   Help expedite industry innovation – The Canada Mining Innovation Council is seeking a $50 million investment for the Towards Zero Waste Mining innovation strategy from the Government of Canada to accelerate the adoption of disruptive technologies that will support the transition to a lower carbon future.

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To download a copy of Facts & Figures 2016, go HERE

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About MAC

The Mining Association of Canada is the national organization for the Canadian mining industry.  Its members account for most of Canada’s production of base and precious metals, uranium, diamonds, metallurgical coal, mined oil sands and industrial minerals and are actively engaged in mineral exploration, mining, smelting, refining and semi-fabrication. Please visit www.mining.ca.

 

Canada losing ground as mining investment destination

Canada losing ground as mining investment destination

Cecilia Jamasmie

Feb 16, 2017

Mining.com

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Source: MAC’s Facts & Figures 2016.

While optimism is slowly but steadily returning to the global mining industry, Canada doesn’t seem to be in a good position to benefit from the increasing number of companies ready to make new and significant investments.

At least that is the conclusion from a report released Thursday by the Mining Association of Canada (MAC), which also warns of the possibility of seeing major exploration and mining investments flow offshore.

“Very simply, Canada is not as attractive as it used to be for mineral investment, and competition for those dollars is growing globally,” MAC President and CEO Pierre Gratton said.

Elimination of federal mining tax incentives, regulatory delays, uncertainty and major infrastructure deficits in northern Canada are all contributing to the country’s declining appeal.

The recent elimination of federal mining tax incentives, regulatory delays and uncertainty, combined with major infrastructure deficits in northern Canada are all contributing factors that can explain Canada’s declining attractiveness, Gratton noted.

The report also highlights the policy areas that Canada needs to pay attention to in order to seize future growth opportunities and re-gain its leadership in mining.

Some of the figures included in the report are quite telling. In 2015, foreign direct investment into Canada’s mining industry dropped by more than 50% from the previous year. In contrast, the country’s resources sector direct investment abroad only experienced a 6% decline.

According the industry body, such imbalance proves that Canada no longer attracts the single-largest share of total global mineral exploration spending, a top place it lost to Australia in 2015. Further, MAC says, no new mining projects entered the federal environmental assessment stage in 2016.

If these trends continue, the association warns, there will be fewer discoveries made and fewer projects to become operational mines in Canada.

Despite the challenges, the sector remains a key contributor to the Canadian economy, employing more than 370,000 people across the country and being the largest private sector employer of Aboriginal people on a proportional basis.

In 2015, the mining industry accounted for $56 billion of Canada’s GDP and minerals and metals accounted for 19% of Canadian goods exports.

 

 

 

India may cut potash subsidy in potential blow to demand

Thu Feb 16, 2017 | 8:50am EST

Exclusive: India may cut potash subsidy in potential blow to demand

By Rajendra Jadhav | MUMBAI

REUTERS

An Indian ministry has proposed slashing potash subsidies by 17 percent in the next financial year to reduce the fiscal deficit, officials said, a move that would hit demand in one of the world’s largest importers of the fertilizer.

Although global prices have been falling, a reduction in government support in India – which alongside China is the world’s biggest bulk potash importer – will make potash relatively expensive for the companies that import it.

Some officials at those companies said that were the proposal to be adopted, they would seek lower prices when negotiating annual contracts with global suppliers and also raise retail prices charged to farmers, dampening demand.

Global producers including Uralkali, Potash Corp of Saskatchewan, Agrium Inc, Mosaic, K+S, Arab Potash and Israel Chemicals have been hoping for robust demand to help counter weak prices.

Asian import prices have fallen around 10 percent in the last 12 months.

India’s fertilizer ministry has proposed fixing the potash subsidy at 7,669 rupees ($114.61) a tonne for the 2017/18 fiscal year beginning in April, down from 9,280 rupees per tonne this year, said a senior government official.

He did not wish to be identified, because he was not authorized to talk to the media.

Prime Minister Narendra Modi’s cabinet has to decide on the proposal, said the official, who is directly involved in the decision making process.

If India were to import 4 million tonnes of potash in 2017/18, the savings from the proposed subsidy cut would equate to almost $100 million.

Two other industry officials confirmed the plan.

The Ministry of Chemicals and Fertilisers spokesman declined to comment on the proposed changes.

NOT SO ROSY OUTLOOK

India relies on imports to meet its annual potash demand of about 4 million tonnes, but higher prices are expected to limit how much its 263 million thrifty farmers use.

India buys potash from global miners in annual contracts that the south Asian country usually signs before the start of the fiscal year.

Contracts signed by India and China are considered benchmarks globally, and are closely watched by other potash buyers such as Malaysia and Indonesia.

“The subsidy reduction will weigh on the new contract negotiations. We cannot offer higher prices in new contracts due to the proposed subsidy reduction,” said an official who takes part in the negotiation process with overseas miners.

Leading producer Potash Corp last month expressed hopes for a pick-up in demand from India in 2017, while Agrium earlier this month forecast a 5 percent rise in global potash shipments this year.

Some industry officials in India say the demand outlook is not so rosy, and doubted imports of the crop nutrient would exceed 4 million tonnes if the subsidy cut went through.

Last year suppliers had to sell potash to India at $227 per tonne, down from $332 previously and the lowest in a decade, after India delayed purchases due to sluggish demand.

That allowed importing companies to reduce retail prices, but that could be reversed in 2017/18.

“If the subsidy goes down, then we have no choice but to raise retail prices,” said an official with a state-run fertilizer company. The official declined to be named.

In his budget for the 2017/18 fiscal year, Finance Minister Arun Jaitley in fact kept the overall fertilizer subsidy unchanged at 700 billion rupees.

But fertilizer importers said that almost half of the amount would be spent on settling arrears accumulated from 2016/17, necessitating savings.

(Editing by Mike Collett-White and Mayank Bhardwaj)

 

 

 

Jansen Lake Potash Mine Still Seeking Board Sanctions

Jansen Lake Potash Mine Still Seeking Board Sanctions

Published: 07 February 2017

Written by Adam Brilz

http://www.sasknow.ca/local-news/79523-jansen-lake-potash-mine-still-seeking-board-sanctions

 

It’s been more than 6 years since crews began work near Jansen Lake for BHP Billiton’s proposed potash mine, and they are still waiting for the company’s board to sanction the mine.

In 2011, the Jansen project was being touted as the world’s largest potash mine, and the project was scheduled to be completed by 2015. However, despite $3.8 billion of investment by the company, the project has still not received full approval by the board.

Head of Corporate Affairs for BHP Billiton in Canada Chris Ryder says a few factors have been delaying the approval, including cash availability and a struggling potash market that is seeing historically low prices. Ryder doesn’t expect the sanction to be given in the next year.

Around 200 people are on site constructing the two mine shafts at the site about 150 kilometres east of Saskatoon. Those shafts are now 600 metres deep, with the company’s plan to lower them 1 kilometre deep, where most of the potash can be found. Ryder says a 2,500 person work camp has been built and all utilities have been set up, so they are almost ready for the large process plant if it is sanctioned.

Ryder estimates as many as a thousand people would be working on the sites if the site is completed.

 

 

 

Mosaic sees ‘gradual’ market improvement

Mosaic cuts dividend; sees only ‘gradual’ market improvement

Reuters

Published Tuesday, Feb. 07, 2017 7:21AM EST

Last updated Tuesday, Feb. 07, 2017 7:54AM EST

 

Mosaic Co reported a better-than-expected quarterly profit as it kept a tight leash on costs, and the company slashed its annual dividend as it expected only a “gradual” improvement from a prolonged slump in the fertilizer market.

The company’s shares were down 6.6 per cent at $29.90 in light premarket trading on Tuesday.

The world’s largest producer of finished phosphate products said it would cut its annual dividend by 45.4 per cent to 60 cents per share, effective with the next declaration.

A capacity glut and soft crop prices have pushed potash and phosphate prices to multi-year lows.

“While we are confident the market bottom is behind us, the pace of improvement is expected to be gradual,” Chief Executive Officer Joc O’Rourke said in a statement.

Potash MOP (muriate of potash) cash production costs dropped 28 per cent in the fourth quarter from a year earlier, while phosphate conversion costs fell 15 per cent.

Net earnings attributable to Mosaic fell to $12-million, or 3 cents per share, in the three months ended Dec. 31, from $155-million, or 44 cents per share, a year earlier.

On a per share basis, the company recorded a charge of 23 cents, compared with 16 cents a year earlier.

Excluding items, the company earned 26 cents per share, according to Thomson Reuters I/B/E/S, handily beating estimates of 13 cents.

Plymouth, Minnesota-based Mosaic’s net sales fell to $1.86-billion, but was slightly above analysts’ average estimate of $1.80-billion.

Mosaic recently bought Vale SA’s fertilizer business for $2.5-billion, the latest in the global fertilizer market as companies seek ways to beat the slump in prices.

The deal, which makes the Brazilian iron ore miner the biggest shareholder in the U.S. company, is expected to close in late-2017.

 

What PotashCorp’s donations mean to Saskatoon

  • 28 Jan 2017
  • Saskatoon StarPhoenix
  • ALEX MACPHERSON

Sponsorship Inc.

What PotashCorp’s donations mean to Saskatoon

In the summer of 2011, Potash Corp. of Saskatchewan paid an undisclosed sum to become the title sponsor of what is now called the PotashCorp Fringe Theatre Festival. It’s one of dozens of local causes that bear the fertilizer giant’s name and rely on its money.

Since its formation as a Crown corporation in 1975 and initial public offering in 1989, PotashCorp has given hundreds of millions of dollars to the community. Longtime Fringe director Robert Wyma said the Saskatoon-based company’s contributions are of enormous value.

pcs-sponsorship

“I think it’s one of the best fits that we’ve discovered as a community,” Wyma said in an interview. “It doesn’t feel like a sponsorship. At the end of the day, for us, it feels like a community investment that trickles down to an impact that we’re both proud of.”

Wyma wouldn’t disclose how much PotashCorp has given to the Fringe over his 13-year tenure as its director, but said its “significant and continuing” investment in it and other local organizations, especially over the last five years, has made a big difference in the city.

“We get to build a city through those activities. … We build a vibrant, dynamic background for the citizens of Saskatoon to enjoy Saskatoon,” he said. “(The Fringe) is a part of that, obviously, but not the only part.”

PotashCorp is likely the largest corporate donor in Saskatoon, if not the entire province. Since 2010, the company — which operates half of the province’s potash mines — has spent US$134 million on what it calls “community investments,” according to its financial documents.

In 2015, the last year for which complete data is available, PotashCorp spent US$28 million on sponsorships and donations to local organizations and causes. That works out to 2.2 per cent of the US$1.27 billion it reported earning over the same period.

By comparison, Cameco Corp. — the only other public company in Saskatoon on the same scale as PotashCorp — says it aims to give one per cent of its after-tax earnings to community groups. Last year, Cameco made $65 million on $2.75 billion in revenue.

PotashCorp has given money to local causes since its formation, but its profile — reflected by the number of signs bearing its name — has grown dramatically since 2010, when the Anglo-Australian mining giant BHP Billiton launched a $40-billion hostile takeover bid.

Community investment was one of seven pillars outlined in the company’s “Potash Pledge,” issued amid BHP Billiton’s ultimately doomed takeover bid. The pledge said that PotashCorp is “committed to … being the No. 1 corporate citizen in Saskatchewan in terms of philanthropic giving.

“In the case of PotashCorp, this would include commitments to major projects which would promote excellence in education, enhance access to the best in medical care and provide Saskatchewan residents with improved recreational facilities,” it said.

The main motivation of every publicly-traded company is profit, which equates to value for shareholders, but there are many good reasons why companies give money to their communities, said Jason Aebig, a partner in the Saskatoonbased public relations company Creative Fire.

While there are many community relations strategies, high-profile donations and sponsorships are a tried and tested method of building a “social licence to operate,” a “trust account” of goodwill that can be added to when business is good and drawn down in times of need, Aebig said.

“Hopefully, people with whom you’ve now developed a relationship will give you the benefit of the doubt,” he said. “They believe your intentions are good. They know that you are a serious and trustworthy company. … The risk (of not investing) is that you don’t build any trust with your stakeholders.”

PotashCorp has attempted to build that trust by giving around US$30 million each year to local arts organizations like the Fringe and charities like the Friendship Inn, donating cutting-edge equipment to the city’s hospitals, and contributing to public projects like the revitalization of Kinsmen Park.

That project, which began in 2010, ended up costing PotashCorp $7.5 million, plus $1.5 million from Canpotex Ltd. Former mayor Don Atchison said last year that PotashCorp Playland at Kinsmen Park, as it’s now known, wouldn’t have been built without corporate investment.

The future of PotashCorp’s local investments became less certain this summer when the company announced it planned to merge with Calgary-based Agrium in response to what its CEO, Jochen Tilk, called “fierce” market conditions.

Potash prices have fallen sharply since 2008, causing companies in the fertilizer business to respond by cutting costs. Over the last year, PotashCorp has shuttered one mine, reduced production at others, and laid off miners at its Cory operation west of Saskatoon.

The US$26-billion merger, which is expected to close next year, will result in the still-unnamed new company having two offices: a head office in Saskatoon and an office in Calgary. Aebig said while a head office’s location shapes community investment, nothing is certain.

“There’s no funding that flows to a charity that is guaranteed, whether it’s a government grant or a philanthropic donation or a sponsorship,” he said. “There’s always a risk that an organization puts way too much stock in one revenue stream, has expectations that it will flow uninterrupted into the future.”

At the same time, resourceextraction companies are particularly sensitive to the communities in which they operate because of a perception that natural resources belong to the people who live on them, he said. Any company that fails to pay attention, does so at its peril, he added.

Although many details of the merger have yet to be made public, PotashCorp has already started reassuring local organizations that the company remains committed to Saskatoon.

“That won’t change,” PotashCorp spokesman Randy Burton said in an email. “We put great emphasis on our communities and being an active and supportive corporate citizen. … Each company’s best practices in corporate social responsibility will be carried into the new company. It will maintain commitments to community involvement and investments.”

Wyma said that, while questions about what the merger will mean are likely “top of mind” for dozens of local organizations, he doesn’t have any reason to expect a dramatic change in the company’s commitment to Saskatoon.

“PotashCorp has continued to commit to support the Fringe Festival, so from that perspective, a check mark was pretty easy to garner,” he said.

“(But) I think that, as they move ahead, and they spoke quite frankly to me … there were questions obviously to be answered in the future that couldn’t be answered today.”

 

 

PotashCorp expects potash sales volumes to rise – 8.6 mt in 2016 to 8.7 – 9.4 mt in 2017

Thu Jan 26, 2017 | 8:54am EST

Potash Corp outlook disappoints, fertilizer slump deepens

REUTERS

By Rod Nickel and John Benny

Jan 26 Canada’s Potash Corp of Saskatchewan Inc forecast a less profitable year on Thursday than analysts expect, and reported a surprisingly big drop in quarterly profit as a deep slump continued in the oversupplied fertilizer sector.

U.S.-listed shares of the world’s biggest fertilizer producer, which reported a 22 percent slide in fourth-quarter sales, dropped 4 percent in premarket trading.

Potash prices are hovering around their lowest in nearly a decade, amid bloated capacity and weakening farm incomes, spurring consolidation. Adding to miners’ problems, several new low-cost mines are scheduled to start production in the coming years, starting in 2017.

Potash Corp said it expected earnings of 35 cents to 55 cents per share in 2017, including costs related to its pending merger with Agrium Inc of 5 cents per share.

The forecast was well short of analysts’ average expectation of 62 cents a share, according to Thomson Reuters I/B/E/S.

The midpoint of Potash’s 2017 forecast, 45 cents, would be the second-lowest annual profit in 13 years.

“We remain concerned these so-called ‘trough’ earnings levels could linger for years,” said BMO analyst Joel Jackson, in a note.

With prices weak, demand for potash is strong in key markets, China and India. The company expects potash sales volumes to rise in 2017 to between 8.7 million and 9.4 million tonnes, from 8.6 million in 2016.

Potash Corp and rival Agrium announced in September a plan to merge, combining Potash Corp’s fertilizer capacity and Agrium’s farm retail network, the world’s biggest.

Agrium said on Wednesday the merger had received regulatory approval from Russia and Brazil but was awaiting approval from the United States, Canada, China and India.

Potash Corp Chief Executive Jochen Tilk said the deal was still expected to close in mid-2017.

The company said the value of certain assets was being assessed for potential impairment. The assessment, to be completed by late February, will focus on phosphate assets, Potash Corp said.

The company’s fourth quarter net earnings plunged to $59 million, or 7 cents per share, from $201 million, or 24 cents per share, a year earlier.

Analysts on average had expected earnings of 9 cents per share.

The company’s sales fell to $1.06 billion from $1.35 billion.

 

 

 

Vancouver junior inks $1 billion a year potash deal

Vancouver junior inks $1 billion a year potash deal

Frank Els

January 18, 2016

Mining.com

[ORIGINAL NEW RELEASE IS HERE  http://www.encantopotash.com/english/news/default.aspx?item=136 ]

 

Encanto Potash Corp. (CVE:EPO) on Wednesday announced the finalization of a blockbuster agreement with India’s national farmers co-operative to supply a minimum of 5 million tonnes of potash per year for the next twenty years.

Vancouver-based Encanto’s is advancing a $2.9 billion potash project in the Saskatchewan province of Canada in a joint venture with the Muskowekwan First Nation. Encanto President Stavros Daskos said the deal is “clearly a defining moment for our company and the industry.  India imports 100% of its potash and is susceptible to cartel-like practices from producers that can hurt its national food security.”

potash-prices

NACOF was established under the Indian ministry of agriculture and represents farmers in 25 out of 29 states across the subcontinent. India is home to some 55 million small scale farmers and NACOF boasts an annual budget of $7.7 billion according to a statement.

The country imports roughly 6 million tonnes of muriate of potash a year, a substantial portion of a global industry for the crop nutrient of roughly 50 million to 60 million tonnes. The potash price has been under severe pressure since 2011, more halving in value to trade at $215 a tonne at the end of 2016. MOP prices peaked in 2009 just shy of $900 a tonne.

Encanto would be the first junior mining company to bring a potash mine into production in an industry dominated by a handful of global giants based in in North America and Russia. Encanto’s proposed mine about 100 km northeast of Regina will be the first potash mine in Saskatchewan on First Nations land.

According to a 2013 pre-feasibility study, the project boasts proven and probable reserves of 162 million tonnes, with plans for a 2.8 million tonne per year mine with a 50 year plus life. The proposed mine would employ 1,000 people during construction and 500 permanent jobs when complete.

Encanto also has an agreement with Metal Mineral Trading Co. of India, a state-owed trading agency to supply 2 million metric tonnes of MOP annually. Encanto plans to source potash from existing producers pending the commercialization of its Muskowekwan project.

Last year a $700 million financing deal between a private Indian fertilizer company in the state of Gujarat and another Saskatchewan junior, Karnalyte Resources, fell apart. BHP Billiton’s giant Jansen potash project which at a potential 8 million tonnes per year would the largest mine of its kind anywhere in the world, has yet to receive board approval even after the world’s top mining company spent $3.8 billion on the project.

 

 

 

Israeli official opposes extension to ICL’s Dead Sea mining permit

Tue Jan 17, 2017 | 8:58am EST

Israeli official opposes extension to ICL’s Dead Sea mining permit

By Steven Scheer | JERUSALEM

REUTERS

Israel Chemicals’ (ICL) permit to mine in the Dead Sea should not be extended when it expires in 2030 but instead the rights should be put up for sale by tender, a senior Finance Ministry official recommended on Tuesday.

“Holding a tender is the correct way to maximize the public’s share of the Dead Sea’s natural resources,” Accountant-General Michal Abadi-Boiangiu wrote in a letter to the ministry’s chief economist, who heads a committee that will decide on the fate of the Dead Sea rights.

ICL, one of Israel’s largest companies and a key supplier of potash to China, India and Europe, has exclusive permits in Israel to extract minerals from the Dead Sea.

It had revenue of $4 billion over the first nine months of 2016, although its profits have suffered due to a sharp decline in potash prices.

Abadi-Boiangiu’s letter comes as a surprise since there have been talks between the two sides on extending the concession. She said, however, that ICL would still receive priority in the tender.

Shares in ICL were down 2.3 percent in afternoon trading in Tel Aviv, compared with modest declines in the broader market. The company declined to comment.

Abadi-Boiangiu ends her term at the end of the month and will be succeeded by Rony Hizkiyahu.

ICL has battled the state over plans to heavily tax mining companies and has frozen about $2 billion of investments in Israel while expanding operations abroad.

ICL competes with Russia’s Uralkali and North American trading group Canpotex Ltd, owned by Potash Corp of Saskatchewan, Mosaic Co and Agrium Inc.

Potash Corp owns a 13.8 percent stake in ICL. It sought to expand its holdings but was rebuffed by Israel’s government, which holds a golden share in the company.

(Editing by Greg Mahlich)

 

 

 

2016 was a comeback year for natural resources

Private capital rotating into mining and metals

Frik Els

Mining.com

Jan 11, 2016

 

After four-plus years of declines, 2016 was a comeback year for natural resources and the oil and mining industries – with only a couple of exceptions, energy, metal and mineral prices rallied last year.

According to a new report by private capital tracker Preqin, the improving conditions of last year did not filter through to all sectors.

Overall fundraising for natural resources investment actually declined declined by a fifth in 2016 to the lowest since 2012.

Coming off a record 2015, 70 funds raised a total of $58bn for investment in natural resources in 2016 (a figure that could go higher as more information becomes available says Preqin).

In 2015 mining and metals made up a paltry 0.6% of funds raised

But mining and metals enjoyed a much better year. In 2015 mining and metals made up a paltry 0.6% of funds raised with just two funds closing on $400 million in 2015. Last year five funds managed to raise $2.1 billion.

That’s still small beer compared to the money going into oil and gas however. Of the top 10 largest natural resources funds that reached a final close in 2016, all 10 are focused on energy-related assets, and all but one focus on projects in the US.

Together, these 10 funds alone raised $38bn, two-thirds of all natural resources capital raised through the year according to the report. So called dry powder – money ready to be invested – for natural resources now total $173 billion. Dry powder destined for mining stood at around $7 billion last year.

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In 2017, across natural resources 250 funds are look to raise just under $120 billion. Of those only 13 are primarily focused on metals and mining and are hoping to raise $10bn (although some of $2.9bn for diversified funds could go into mining). The biggest mining-focused fund is China’s Power Capital which is seeking $3bn to invest in Asia. Diversified US-based Energy and Minerals Group is looking for $4 billion.

Tom Carr, Preqin’s head of real assets products, says there is more diversity present among those funds that are currently in market: “In particular, large vehicles focused on
mining and agriculture may see these sectors account for a greater proportion of activity than in 2016.”

Private capital encompasses a range of investment vehicles and strategies including traditional private equity such as buyout, venture capital and turnaround funds, private debt including distressed debt and direct lending, and private real estate, infrastructure and natural resources funds.

A total of $602bn were raised by 1,228 funds across all strategies and sectors in 2016 according to Preqin data.

 

 

 

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