Opportunities for Australian SMEs
Efic is contributing to the financing of the expansion of the Oyu Tolgoi gold and copper mine, which will create a number of opportunities in the Project’s supply chain, many of which are expected to be awarded to Australian SMEs. Consistent with its mandate, Efic’s participation in the financing is partly predicated on this expectation.
The Project represents a significant business opportunity for Australian SME exporters across a wide range of industries who provide services to the mining sector. Around 200 Australian SMEs have already been involved in the initial development phase (with contracts worth more than US$83 million). This includes companies such as Gears Mining, a Queensland company which provides maintenance and repair work for the mine’s relining equipment and Marcus Punch, a New South Wales company managing risk and safety protocols.
Large scale project financings in emerging markets like Mongolia can find it difficult to attract the required finance from the commercial market, without the support of multilateral development financing agencies and export credit agencies.
In this case, Efic joined the International Finance Corporation, export credit agencies from the United States and Canada, and the European Bank for Reconstruction and Development in contributing to the financing for this Project. The World Bank’s Multilateral Investment Guarantee Agency (MIGA) is also providing political risk insurance cover for the commercial banks to encourage their participation.
About the Project
Oyu Tolgoi is an underground copper and gold mine in the South Gobi region of Mongolia, which counts the Government of Mongolia and Turquoise Hill Resources as its ultimate shareholders.
Believed to have the largest known undeveloped copper deposit of its kind, the mine represents the largest single investment in Mongolia’s history and is expected to boost the country’s Gross Domestic Product by over 30% when fully operational.
The mine has been producing and exporting copper and gold concentrate since late 2013, and is now commencing the second phase of its expansion.