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We have negotiated joint venture agreements for mining properties on all continents. We have also acted on behalf of clients who have acquired mineral properties on all continents. While mining companies have made significant progress in strengthening their operations, streamlining processes, integrating digital technologies, and creating value beyond compliance, the industry is still often put in a negative light. The conclusion? Market capitalization in this sector is declining (Figure 1) and companies – especially juniors – often still struggle to raise capital. This type of collaboration with shared values allows businesses, governments, communities and other key stakeholders to work together to strengthen local economic clusters, achieve greater social impact and increase the return on social investment. However, achieving this end goal is clearly a journey, which is why mining companies should start small before adopting a model that pools all means and integrates governance structures. It is important to allow the large mining company to terminate the joint venture agreement in the event of a breach and, ideally, to retain ownership of all available or produced mining information (e.g.B. geological and other survey data and results). And it`s not just juniors who will potentially benefit from these JVs. Given the size of mining investment projects, their location in remote areas, and the increasing complexity associated with access to many ore deposits, companies of all sizes can benefit from partners to fund projects, develop essential skills, build local relationships and share risk. Similarly, joint ventures can provide investors with shorter returns on investment given the volatility of commodity prices as well as the security of supply of critical resources.
The industry is likely to see more joint ventures in the future, making it an important area of expertise that companies will likely need to build. Andrew is the global and Canadian leader in the Mining and Metals practice and the world leader in consulting for the sector. In his global roles, Andrew leads a team around the world and is responsible for setting the strategic direction and go-to-market strategy for the global practice. With 20 years of industry and consulting experience, Andrew has a passion for customer service and has worked in many key mining and metallurgical regions, including Canada, Chile, Russia, Ukraine, Kazakhstan, Brazil, Germany, India, South Africa, the United Kingdom and the United States. Andrew`s areas of expertise include strategic business and competitive engagements, digital and innovation systems, and major organizational transformation programs. The basis of the agreement is the conditional granting of a stake in the project of the main mining company, provided that the farm party meets certain expenditure obligations over an agreed period of time (in fact, a way for the main mining company to transfer the obligation to maintain the apartment buildings in good condition to the participating operation, B. while maintaining interest in the project and exhibition. compared to exploration successes). Although the EU merger regime is capable of developing a joint venture solely on the basis of the turnover of the parent companies, it has a significant division for joint ventures that will not play an autonomous market-oriented role (the technical term is a joint venture without full function). This requirement has potentially important implications for mining joint ventures: investors in mining joint ventures are often engaged in the trade of a mine`s production, either under take-off agreements and/or in their capacity as marketing or sales agents. As a result of this type of activity, it is possible to disseminate and use potentially anti-competitive ISCs in relation to competing mines, which, in extreme cases, could facilitate and/or lead to a cartel-type infringement in the relevant market(s). James leads Deloitte`s Global Mining and Metals Tax Group.
He works with a management team of more than 40 mining and metal professionals in all regions. He is also a partner in international taxation and leads the Equity Capital Markets Tax group, which provides tax advice, structuring and custody audits for IPOs. James also leads the CIS Services group at Deloitte UK. He has over 23 years of experience in global markets, including the UK, South Africa and Russia. James specializes in energy, resources and industry, as well as technology, media and telecommunications. He holds a Master of Science degree from the University of Oxford. Beyond joint ventures, some mining companies are considering other ways to spread the risks associated with large investment projects. An emerging model is to distribute project assets and liabilities among a comprehensive ecosystem of partners – mining companies, original equipment manufacturers (OEMs), and service providers to local communities and governments.
As mining companies grapple with digital disruptions, economic sanctions, and capital constraints, better decisions become essential to move business forward. Our mining leaders show what the new frontier of change looks like for the mining sector and how your company can manage those changes. But what if the party`s farm does not meet its spending obligations as promised, loses interest in the project, or focuses on other projects, and the main mining company “holds” the baby with apartment buildings that are now threatened with abandonment due to non-compliance with spending obligations? Overall, however, the main reasons for joint ventures in the mining sector are the need to share the risks of the project with someone else and share the costs. Since investors are likely to have a board of directors or equivalent representation in the management structures of the mining joint venture due to their equity investments, they generally have access to the ICS of competing mines, including costs, prices and other commercially sensitive information. Marshall Lawyers WA has experience negotiating and designing joint venture farms under agreements (whether they work for the main mining company or the farm in part). The parties to the joint venture must agree on a financing program for all mining operations, starting with exploratory studies, initial drilling and resource definitions, pre-feasibility studies, banking feasibility studies, and then a full construction program and related budget. Once the mine is in production, it is normal to set up an annual program and a related budget that still needs to be funded, at least in the early stages. What are the key issues for mining joint venture agreements (JVA) From the point of view of the operation in the game – agreements that are too rigid can lead to problems, and there must be adequate flexibility. For example, any additional expenses in previous years of the induction period could be taken into account in years when the acquiring party spent too little. Various contractual safeguards are in place for large mining companies that outsource assets that can be incorporated into joint ventures and farm agreements. On the other side of the fence, the agreement must be carefully crafted to allow sufficient flexibility for the farm party, which may be grappling with financing risks and uncertainties related to the financing. The board of directors often sets up committees to oversee certain aspects of mining operations, in particular a technical committee and an environmental and social committee.
Committees will have their own mandate and composition that normally reflects the overall representation of the Board of Directors, particularly if they have delegated authority. There are a number of reasons why mining companies can enter into joint venture agreements. This can lead from a circumstance where the original owner does not want to completely give up his “property rights” and wants to retain a stake in the property to cases where it is desirable to have a local partner with good knowledge and relationships, or a partner who has mining expertise or familiarity with certain technologies that will be useful in the development of the mining project. As with any joint venture agreement, careful consideration of all possible outcomes (the “what if?”) is required during the negotiation phase, whether on the side of the farm part or the purchaser or the main mining company (p. ex. B the owner of the project or asset to which the farm party wants “the farmer”). When negotiating/entering into a contractual agreement with a part farm, the world`s major mining companies may be promised, but the reality can be very different – especially in a cyclical industry like mining, where raising capital can come with many challenges. If that fails, there is a philosophical debate about how best to resolve the deadlocks. Some commentators believe that there should be no “circuit breaker” in the documents and that the parties should negotiate it – otherwise the joint venture will fail (and this should be enough incentive to find a solution). Since most mining operations are not divisible between the parties, the ultimate danger of dissolution is one that should concentrate minds. If a large mining company has been abandoned by a farm party and is unable to easily terminate the agreement under the contract, the mining company would run the risk of the dwelling house falling into disrepair and being denied the opportunity to solicit bids from other potential partners in the joint venture.
Are you considering strategies to accelerate project development and diversify risks in your mining project? A joint venture that pools capital and capabilities, shares financial and operational risks, and executes successful long-term strategic relationships could be the answer you`re looking for. .
