IFC to up funds for Africa mines

International Finance Corporation (IFC), the World Bank's private investment arm, said it planned to double the number of sub-Saharan mining projects it invests in amid rising metal prices and improvement in corporate governance.

The IFC, which in the past invested in no more than two projects a year, will aim to participate in as many as four, annually, and diversify away from its focus on gold towards base metals as opportunities arise, said Rashad Kaldany, director of its oil, gas, mining and chemicals unit.

"We're targeting sub-Saharan Africa as a major focus of engagement in the mining sector,'' Kaldany said in an interview in Johannesburg on Wednesday. "Traditionally we looked at gold. Now there are opportunities in copper, aluminium, iron ore. We're pleased it's becoming more diversified.''

Companies, including Anglo American and Phelps Dodge Corp, drawn by a rally that drove copper and uranium to records in the past year, committed to spending $34.7 billion on projects last year, almost two-thirds more than in 2005. Their attraction in sub-Saharan Africa is enhanced by the world's largest reserves of platinum, bauxite, gold and manganese.

The IFC favours investing in countries that comply with the Extractive Industries Transparency Initiative, a pact which aims to limit corruption, Kaldany said. Guinea, Nigeria, Mali, Democratic Republic of Congo and Botswana have all agreed to abide by the treaty, he said.

The bank will either buy stakes in projects before feasibility studies have been conducted, to help finance their early-stage development, or provide ordinary project finance.

It will focus on those that require large infrastructure expenditure, including that on ports, roads and power, which will also benefit local communities. Kaldany declined to comment on projects the company is considering.

It will only finance those mines that will produce metal among the cheapest half of the world's mining companies to avoid default when commodity prices fall, Kaldany said.

"Our view is that prices will fall to their long-term trends,'' he said. "That's all the more reason to look very hard at the cost structure of these projects.''