Pitfalls and Pipelines - Philippine Indigenous Peoples Links

42 Pitfalls and Pipelines: Indigenous Peoples and Extractive Industries
brink of being dashed. The economic growth rates of China
and India have simply failed to meet predictions. The world
is awash with surplus coal, iron, copper, or nickel. Although
demand for new mined sources of metals and fuels is likely
to continue over the longer-term, shifting these stocks profitably
into the markets over the short-term is, to say the least, a
challenge. And so long as that challenge remains, it would be
a foolish investor indeed who put money into mining on the
scale which many of them did just a few years ago.
2008-2012: Statistics, Damning Statistics…
Even while many gold and silver prospectors (in both
senses of the term) have ridden the recent storm, this has not
been true for producers of base and ferrous metals, diamonds,
and other minerals—not to mention their workforces.
There are three main methods by which funding is raised
to sustain minerals output:
1. Bank loans and other debt financing for projects and
general purposes;
2. The issuing of corporate bonds (those made by companies
themselves, through a bank or broker), and
convertible bonds—ones that can be exchanged for
company shares at a later stage;
3. The direct purchase of equity—shares or stock—in a
mining or minerals company.
If we now examine recent fluctuations in the use of these
financial instruments, we gain a fair idea of the mining industry’s
financial health, and can make some educated guesses as
to what its future holds.
Between 2000 and 2006, direct loans to, and debt financing
of, mining involved at least 53 banks (both private and
state-owned), insurers and other financial institutions—each
providing between US$5 million to $5.7 million in any one
year. This resulted in around $178 billion being disbursed to
mining companies during that period.