Pitfalls and Pipelines - Philippine Indigenous Peoples Links

Chapter 1.2: Financial Innovations and the Extractive Industries
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During the same period, the amounts of money arranged,
syndicated, or raised in corporate bond issues for specific
mining projects, mergers and acquisitions, and general corporate
purposes, was significantly higher: falling not far short
of $250 billion between the start of the new millennium and
2007. In 2008 alone—until the bankers’ credit and credibility
crash—919 mining mergers and acquisitions took place, with
a combined value of $127 billion.
Corporate bond issues numbered a hundred and fifty in
2009, raising $61 billion—a marked 60 percent increase on
2008, with China responsible for almost a third (32%) of this
type of financing.
In 2009, however, despite the number of mergers and
acquisition deals slightly increasing (to 1,047), their overall
worth had plummeted by over 50 percent, to just $60 billion.
Moreover, only two percent of bank loans were used that year
to fund new corporate acquisitions, of which China accounted
for $16.1 billion (27%).
In contrast, 97 convertible bond issues were made in
2009, raising $14.4 billion—around $2.2 billion more than
in 2008 and in the previous year. There were 150 corporate
bond issues which raised $61 billion—a marked 60 percent
increase on 2008. Once again, China accounted for almost a
third (32%) of this type of financing.
Between 2000 and 2006, just over $9 billion was disbursed
to mining projects. Strikingly, more than a third of this was
spent in 2006 alone. The year 2008 was a record year for project
funding, with $7.7 billion deployed on 16 projects.
During 209, however, only 10 project deals achieved “financial
closure,” at a cost of $5.4 billion; the biggest chunk of
which landed in Latin America. Just one project (Antofagasta
Copper’s Minera Esperanza in Chile) came in at more than a
billion dollars.
London-based global accountancy firm Ernst & Young
estimated that during the first half of 2010, the volume of
completed deals in the mining and metals sector had risen by
20 percent (to 544 transactions) on the same period in 2009;
and their overall value increased by 46 percent (to just over
$40 billion). 5