Among the objectives of the IDC, through its Basic Metals and Mining Strategic Business Unit (SBU), is to ensure a globally and domestically competitive downstream manufacturing in the metals value chains. The aim is to ultimately contribute towards the creation of a globally competitive and diversified local basic metal and mineral resource industry that produces a significant amount of the metals products and minerals for the local market and the rest of Africa.
This should ultimately lead to increased exports of value-added minerals. Accordingly, the Basic Metals and Mining SBU, offers financial assistance, to a range of entities in the basic metals and mining space.
What do we fund in the Basic Metals and Mining industry?
We fund development of Basic metals manufacturing capacity, mining of minerals that supports the inputs to metals value chain and strategic minerals such as energy and food security minerals. We are also keen on projects, that beneficiate and add value to locally mined minerals in support of downstream manufacturing. The aim is to boost export of local minerals
Funding is also considered for businesses that are involved in the development of projects that increase production of the following:
- Non-ferrous metals
- Ferrous metals
- Ferro-alloys
- Large mines
Who should apply?
New or existing companies or entrepreneurs within the Basic Metals and Mining industry may apply for finance. Financing of expansionary BBBEE acquisitions in the sector, where the majority of the acquisition funds remain within the target company for expansionary purposes (usually through an issue of shares), may also apply.
How do we fund businesses in the Basic Metals and Mining industry?
- Compliance with international environmental standards.
- Shareholders/owners are expected to make a financial contribution:
- The contribution of historically disadvantaged people under special circumstances may be lowered, in which case the IDC will be prepared to extend finance in excess of the owner’s contribution.
- The project/business must exhibit economic merit in terms of profitability and sustainability.
- The IDC does not re-finance fixed assets since our aim is to expand the industrial base.
- Security, the form and nature of which will relate to your specific circumstances.
Mining deals have unique requirements:
- Mineral rights
- Details of all the mineral rights held, including the way they are held, such as a prospecting permit or mineral rights ownership and the remaining duration of such leases/rights.
- The options associated with the various rights, such as renewal conversion of prospecting rights into mining rights and so on.
- Obligations associated with the various rights.
- Reserve and mineral resources
- Classification of the mineral reserve/resource inventory of the mines as per the SAMREC or JORC code.
- The classification should include a discussion on tonnage, seem/reef, thickness dip, grade, depth below the surface, etc. for both the reserve and resource calculations.
- The IDC may require verification by independent consultants acceptable to the IDC, of the ore reserve calculations, and future mining and processing costs.
- Adequate drilling and exploration data to prove that sufficient reserves are available to keep the mine producing for at least twice as long as the proposed funding.
- Sampling information to substantiate or illustrate the average grade and variations within the ore-body.
- Relevant geological reports and maps for the deposit.
- Historical production/mining
- Production records in the case of currently producing mines.
- A mine design and a mining plan, indicating mining blocks, grade and the proposed mining schedule.
- Proof that extraction process has been adequately researched to determine that the yield will be acceptable pilot plants, tests are essential if ore beneficiation is to be undertaken.
- Flow diagram of the recovery process, capital items required; capacities and expected recovery rates.
- An environmental impact assessment and the associated environmental management programme report and mining authorisation.
- A comprehensive feasibility study incorporating all the above information.
- Details of commodity cycles, off-take agreements, and the like.
- Working capital costing with cognisance given to stock accumulation requirements.
- Detailed costing schedule illustrating current and or future working costs, a capital expenditure for development and operating the mine.
The IDC funds start-ups and existing businesses with a minimum funding requirement of R1 million and a maximum of R1 billion.
Funding can be structured utilising a wide range of instruments including:
- Debt
- Equity
- Quasi-Equity
- Guarantees
- Trade finance
- Venture Capital
How do we structure funding?
For investments within South Africa:
- Debt funding minimum R1 million
- Equity funding minimum R5 million
- Funding limits:
- Start-up businesses: IDC maximum funding equates to 60% of the total funding requirement.
- Expansion projects: IDC can fund a full expansion if the equity structure (equity/assets) at peak is a minimum of 35%.
- Funding of historically disadvantaged persons under special circumstances: the IDC will be prepared to extend finance in excess of the limits above.
- Preferred equity structure for start-up projects of at least 50% at peak.
For investments in the rest of Africa:
The project must be of direct benefit to South Africa in any of the following ways:
- Must promote South African capital goods.
- Must develop and integrate regional value chains (source inputs/raw materials from elsewhere for processing in South Africa).
- Must promote South African ownership (25% or more) on the rest of the African continent.
(In some cases, the above conditions could be relaxed for South Africa’s neighbouring countries).
- The minimum size of the total project funding requirement must be:
- R5 million SACU-based investments.
- USD 3 million for SADC-based investments.
- USD10 million for investments in countries outside SADC.
- The IDC will not fund more than 50% of the total funding requirement (for expansions not more than the existing asset base) – the funding amount will be a factor of the South African content/involvement.
- Rand, US Dollar and Euro-based funding are available.
How to apply for finance?
Application for funding should be in writing and should include an executive summary and a business plan. Please refer to this website for a comprehensive business plan guideline and further information. Click here to apply online.
