Overcoming Uncertainty in the Mining Industry
Captive power plants usually need to be financed off-balance sheet through limited recourse project finance. Due to lenders’ due diligence processes, this option may take many months or years before the financing is ready to draw down. Often this process is further delayed because of the viability of the project in a volatile commodity price cycle.
Where there is uncertainty over the life duration of the mine, raising this type of financing can become even more complex, making buying or leasing generator sets the only other option to managing or eliminating this capital and project risk. The leasing option is obviously the better risk option for the mining operator.
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