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By Edwin A. Rides

HISTORICAL ORIGIN OF THE EXPORT CREDIT AGENCIES Almost since the inception of international commerce sellers, having manufactured and/or sold and shipped goods to an overseas buyer, have been obliged to accept the risk that they will not be paid for one reason or another. There are many reasons why payment may not be forthcoming, for example, the goods may be lost at sea, or rejected by the buyer or the buyer nay simply not be creditworthy. These risks were brought into sharp relief as international trading became more sophisticated and the practice of giving credit to buyers gathered momentum. Inevitably enterprises sprang up which offered same mitigation of this exposure, accepting houses and later confirming houses and banks were prepared to assure acceptable credit risks an behalf of the seller, usually by discounting trade paper, and for many years the market ticked over reasonably satisfactorily. However, after the 1914-18 War international trade was at an extremely low ebb and its inherent risks were accentuated to a point where they were often commercially unacceptable. Yet a healthy and vigorous international market was indispensable to recovery of the world economy and a number of governments, led by the United Kingdom, perceived a need to offer their exporters a comprehensive form of insurance, particularly to facilitate the extension of credit to foreign buyers. In the United Kingdom the Export Credits Guarantee Department (ECGD) was set up to encourage trade through the provision of export credit insurance. Over the ensuing years others followed suit and now most of the developed trading nations and many developing nations have similar agencies. PRESENT DAY IDLE OF THE EXPORT CREDIT AGENCIES (ECAS ) Traditionally then the BA's role was to encourage trade through the provision to exporters of insurance against the risks of non-payment by overseas buyers of their goods and services. However, during the 1970's the manufacturing industries of most of the developed nations found themselves facing severe competition for business, particularly in the developing world. As a result the more aggressive ECA's began to introduce ancillary forms of cover designed to reduce exporters' risks outside of the credit field. For instance, most of the European agencies now have a form of cover against foreign exchange risks here contracts are denominated in currencies other than that of the exporter's country. Most of the agencies also provide cover to exporters against the risk of unfair calling of bid, advance payment, performance bonds etc and in certain countries, where high inflation rates were endemic, a form of cover against cost escalation. In certain circumstances it is also possible for an exporter to obtain cover against losses arising as a result of the involvency of a partner in a consortium or joint venture. These are all forms of insurance but, also during the 1970's, many of the national export credit programmes took a major step away from their original raison d'etre by facilitating the provision of preferential financing terns for the acquisition of capital equipment by an overseas buyer. This new line of business quickly became an important ingredient of major export financing packages and, as we shall see later, turned out to be extremely costly for the countries providing it.

Jan 1, 1985

1. COAL PRODUCTION: Under Section 402 of Public Law 95-87 (SMCRA), coal operators are required to pay a fee when coal is sold, used, or transferred. These fees are deposited in the U.S. treasury as the Abandoned Mine Land Fund. Information about the type of coal (bituminous, lignite, or underground) and tonnage are tabulated on Form OSM-1 and submitted with the fee, which is paid quarterly to the Office of Surface Mining. The coal production data presented in this report was compiled from information stored in the Office of Surface Mining Fee Collection System computer data base. Collection of the fee began with the last quarter of 1977; therefore, 1978 data includes the last quarter of 1977 and the first three quarters of 1978. Information for each successive year follows the same tabulation pattern. Surface production includes both bituminous and lignite coal; underground includes tonnage reported as underground mined. In New Mexico and Montana, coal production on Indian land is listed under the Crow, Hopi, and Navajo Tribes. 2. HISTORIC COAL PRODUCTION: Federal Government agencies have published coal production data since 1807, the date of the earliest record. The source of coal production data used to compile this graph was: 1891-1895, U.S. Geological Survey, Division of Mineral Resources; 1896-1977, U.S. Bureau of Mines annual Minerals Yearbook; 1978- 1991, Office of Surface Mining data described in footnote 1 above. 3. NUMBER OF MINES: The number of mines was compiled from Office of Surface Mining Fee Collection System data described in footnote 1 above. Annual totals were calculated by adding together the number of operations with the same Mine Safety and Health Administration numbers reported each quarter and dividing by four to give an annual number in each state. 4. ENFORCEMENT ACTIONS: Enforcement action data was compiled from annual reports developed by Office of Surface Mining field offices and historical field office records. The data presented are all actions taken by both the state regulatory authority and the Office of Surface Mining. Citations issued are the sum of Notice of Violations (NOVs) and Cessation Orders (COs). Because the Hopi and Navajo jurisdictions overlap in Arizona and New Mexico, enforcement actions data for the tribes have been combined in annual reports prepared by the Albuquerque Field Office; therefore, they are combined for this report and listed under Navajo Tribe. 5. ACREAGE PERMITTED: Acreage permitted data was compiled from annual reports developed by Office of Surface Mining field offices and historical field office records. The acreage listed was permitted during the year shown and is not the total acreage under permit during that year. 6. BONDS RELEASED: Acreage of reclamation bonds released was compiled from annual reports developed by Office of Surface Mining field offices and historical field office records. The sum of final Interim Regulatory Program bonds and Phase 111 (or final release) bonds shows only the land area where reclamation is complete and has been released by the regulatory authority.

Jan 1, 1992

INTRODUCTION Besides the European export credit agencies covered in Ted Rides' paper in this Chapter, other agencies are also active (see Appendix) but the most notable for mining projects are The Export-Import Bank of the United States ("US Exim") and the Export Development Corporation ("EDC") of Canada. Mexico's Fomex is basically a short-term trade-finance fund administered by the Central Bank. US Exim This independent agency can provide loans, guarantees, and insurance. Like all export-credit agencies, its mandate is to support the export of goods and services from the US as a means of competing against other countries' products. If a piece of mining equipment can only he made in the US, the US Exim may very well not provide any financial assistance. (It is important not to place the order for any item for which export credit is sought because, once ordered, the situation is no longer competitive in US Exim's eyes.) Direct Credits and financial guarantees ("buyer credits") are commonly in amounts greater than 85 million and for terms longer than six years. An example here is the $48.5 million provided to PT International Nickel Indonesia (see Robert de Gavre's paper in Chapter 12). US Exim usually requires a 15% downpayment and, therefore, finances up to 857 of the goods; less if the US content is lower. The dollar funding can he US prime, London Interbank Offered Rate (LIBOR), or other sources. Exim can fund in either or both of the following ways: 1. Under a US bank Letter of Credit ("L/C") 2. Reimbursement to the buyer/borrower via a US bank account. US Exim will, without charge, issue a preliminary commitment. It will, however, need to approve the various credit agreements and prefers to tie other parallel financings into one loan agreement. US Exim's total commitments are large, up to $5R billion in aggregate under various programs. US Exim has been the world's leader in medium-to long-term minerals project financings/ co-financings but suffers from (i) aggressive foreign export-credit competition whereby other nations mix in soft-loans or aid programs ("mixed credits") to increase the percentage financed and lower the interest margin and (ii) an imbalance in its own cost of funds. A common US Exim package would be as follows: 15% Banks under US Exim guarantee, floating rate over prime or LIBOR. 35% US Exim funding, fixed rate 35% Pefco funding, fixed rate 857 Drawn down pro-rata under US bank L/C 15% Cash down payment (may have been financed within a project/corporate credit) 100% Repayment usually begins six months after planned start-up in equal semi-annual instalments, with the banks usually paid out first, Pefco next, and US Exim last. Medium-term credits ("supplier credits") are issued for US equipment exports for terms up to five years, again for 85% of the equipment costs although the exporter is expected to bear at least 10% out of that 857 for its own risk. The buyer is required to be a first-class credit such as some governments or highly credit-worthy companies. Otherwise a bank L/C would be required. (This may be wrapped into an overall project-finance package for a minerals development. The project-finance banks provide an L/C to US Exim instead of funding that portion themselves.) US Exim guarantees 100% of the political risk and either 85% or 95% of the commercial risk for

Jan 1, 1985

By Charles White Merrill

Money is one of the most .pervasive elements in human life. The compensation for a workman's daily efforts is expressed as a wage and is measured in money. What an individual may consume depends largely on his income which also is expressed in terms of money. If he would start an enterprise its size would be determined in large part by the amount of money available for capitalization and its success would be measured in net income expressed in money. In short, the most widely used common denominator for comparing merchandise, real property, jobs, enterprises, gross national product, or personal success is money. Despite this use of money by almost everyone past infancy to express his appraisal of the in- numerable values he sees around himself, the complexity of the device called money makes its nature and workings a mystery to most users. Some of the difficulty in understanding money results from the fact that it has three distinct but interrelated functions: (1) a medium of exchange, (2) a unit of account, and (3) a store of value. In many statements about money the discussion moves from one function of money to another without the speaker or the listener recognizing the changes. For example, the housewife says "We took the money we had saved up to make the down payment and after twelve monthly payments the television will be ours." When this housewife spoke of "saving up the down payment" she referred to money in its function as a store of value; when she spoke of "the down payment" she was using money as a medium of exchange; and when she referred to the "monthly payments" she spoke of money as a unit of account. Another cause of confusion in understanding money is its paradoxical nature in that it represents both the power to produce and the power to consume. For example, when the rich uncle dies one nephew may regard his inheritance as an opportunity to buy a farm and leave the ranks of the wage earners to become an independent producer, whereas the other nephew may regard his portion as the means of living in complete leisure as a pure consumer.

Jan 1, 1959

By Donald W. Gentry

The recently established SME-AIME Education Board has completed its first full year of operation, and its six constituent committees-Accreditation, Career Guidance, Continuing Education, Educational Statistics, and Scholarship-have been extremely active in identifying and initiating programs to serve the educational needs of the Society of Mining Engineers and its members. The Continuing Education Committee-primarily concerned with the needs and problems associated with providing a continuing education program for SME members-is responsible for: (1) determining the need for short course offerings; (2) developing needed courses, along with new means and opportunities of presentation; and (3) scheduling and evaluating course presentation. In response to this charge, the committee has sponsored two short courses at the SME-AIME Fall Meeting in St. Louis and three short courses at the AIME Annual Meeting in Denver. Its major effort, however, has been directed toward the 1978 SME-AIME Fall Meeting to be held in Orlando, Fla., where 18 days of short-course instruction have been scheduled. A portion of these courses will be presented prior to the meeting, with the remainder to be presented in Nassau, Bahamas, immediately following the meeting.

Jan 7, 1978

Post--Crunch Financial Management -An Overview A. The Industry and the Capital Markets B. .The SME -De-risking the Current and New Assets Followed by: C. The Lender?s Perspective on Re-financing?Jeff Stufsky, BNPParibas, NYCD D. .The Agency/Export Credit Lender Perspective?Doug Macaulay, EDC, Ottawa E. The Foreign Political Insurance Perspective?Pierre Vieillescazes, Carrick-Bend, Washington, DC ?Four Fundamental Metal Models No Longer Prevail. ?Mining is in new ?waters?: so be prepared (next page). ?Capital markets are uncertain-so be your own financier first ?If tight capital may remain, prepare to triage based on cash-flow production (not oz, lbs, tonnes, etc) ?Know your banker/financier(and it should know mining) ?In the past, it was ?know your borrower? ?The climbing team can fall if one climber carries too much ?Constantly re-assess the risk matrix (and j/v?s), and ?De-risk/diversify both the asset and the capital base

May 1, 2010

By Frank Haas

THE public generally has-become aware that there is something wrong with the coal industry and a clamor has arisen for an explanation if not a remedy for this disorder. It is only reasonable that this Institute be looked to for a diagnosis to show the way for some other .agency to prepare the patient for prescription or operation. The subject is extensive, widely diversified, and beyond the efforts of an individual to cover completely; one of the objects of this paper is the initiating of a symposium on the non- technical factors essential to an understanding of the bituminous coal industry. The present condition of the coal industry cannot be described in a few words but, in effect, it resolves itself into a simple statement: The average coal operator is losing money notwithstanding a firm conviction on the part of the consumer that he pays too much for his coal. Without enumerating the many and varied. factors which contribute to this condition, this paper will be devoted to the interrelation of taxation and ownership of coal and its effect on finance

Jan 1, 1930

By Charles White Merrill

Money is one of the most pervasive elements in human life. The compensation for a workman's daily efforts is expressed as a wage and is measured in money. What an individual may consume depends largely on his income which also is expressed in terms of money. If he would start an enterprise its size would be determined in large part by the amount of money available for capitalization and its success would be measured in net income expressed in money. In short, the most widely used common de- nominator for comparing merchandise, real property, jobs, enterprises, gross national product, or personal success is money. Despite this use of money by almost everyone past infancy to express his appraisal of the innumerable values he sees around himself, the complexity of the device called money makes its nature and workings a mystery to most users. Some of the difficulty in understanding money results from the fact that it has three distinct but interrelated functions: (1) a medium of exchange, (2) a unit of account, and (3) a store of value. In many statements about money the discussion moves from one function of money to another without the speaker or the listener recognizing the changes. For example, the housewife says "We took the money we had saved up to make the down payment and after twelve monthly payments the television will be ours." When this housewife spoke of "saving up the down payment" she referred to money in its function as a store of value; when she spoke of "the down payment" she was using money as a medium of exchange; and when she referred to the "monthly payments" she spoke of money as a unit of account. Another cause of confusion in understanding money is its paradoxical nature in that it represents both the power to produce and the power to consume. For example, when the rich uncle dies one nephew may regard his inheritance as an opportunity to buy a farm and leave the ranks of the wage earners to become an independent producer, whereas the other nephew may regard his portion as the means of living in complete leisure as a pure consumer.

Jan 1, 1964

By P. Klaus

"KfW IPEX-Bank is the commercial arm of KfW Bankengruppe, responsible for international project and export finance.KfW was one of the first banks in Germany to promulgate environmental guidelines for its commercial business activities. These guidelines were first made public in 2000 and updated for the second time in 2004. They now include specific reference not only to environmental but also to social concerns. The guidelines specify the procedures to be followed in assessing credit risks related to environmental or social hazards.The bank considers sustainability as an interdependent framework of economic, ecological and social factors. In its efforts to contribute to sustainable development worldwide the bank uses its influence as far as possible to improve a project’s performance if such improvement is deemed necessary."

Jan 1, 2005

By L. J. Gerber, O. D. Eniowo, L. D. Meyer, S. R. Kilambo

Artisanal and small-scale mining (ASM) operations continue to grow across sub-Saharan Africa and serve as a source of livelihood to many rural communities. Owing to safety, health, environmental, and social concerns, the occupation has been regarded as a menace in several sub-Sahara African countries. Recent studies in the field of ASM prescribe formalization as a way to tame its excesses while enhancing its potential. This paper explores the concept of formalization as it relates to ASM and how it is being affected by the funding situation. The paper seeks to address the question as to whether formalization of artisanal mining operations can achieve the desired results in view of the lingering credit constraints in this mining subsector. It is recommended that, as a way of extending the scope of formalization, focus should be placed not only on access to credit in ASM but also towards optimizing the creditworthiness of ASM firms, with the goal of improving the viability of the operations.

Mar 2, 2022

By Michael Bradbury

INTRODUCTION A major change in financing exports in recent years has been the decreased importance of subsidized export credits, following the commitment of the OECD countries to eliminate the subsidy element. Subsidized export credit rates are now often more expensive than market rates as the financing for exporters has decreased in volume and importance. The forfait market, in recognition of this decreasing importance, provides a rapidly expanding source of nonrecource finance for exporters. The following is a step by step guide to what it is, how it works, its benefits and problems. WHAT IS FORFAITING? Forfaiting is not new. It has been used in Europe for about 25 years to provide export finance for both capital goods and commodities without recourse to the exporter. Although long the preserve of exporters in Germany, and more lately Italy, forfaiting is now used increasingly by exporters in Great Britain, the United States, Canada and Scandinavia. It is a fairly simple operation with easy straight-forward documentation. The transaction involves the purchase by the forfaiting bank of a bill of exchange or a series of bills without recourse to the exporter. These bills will have been drawn by the exporter, accepted by the importer, and will usually bear the unconditional guarantee of the importer's bank. They are normally drawn payable at intervals during the credit period agreed between importer and exporter and are purchased at a discount by the forfaiter. The exporter thus obtains his cash payment and the importer receives his credit period. The forfaiter collects the amount of the bills as they mature directly from the importer. Credit periods vary, depending upon the type of goods and the country and commercial risk of the importer. The period is generally between one and five years with six monthly maturities. The usual forfait currencies are US dollars. Deutschmarks and Swiss francs and others, such as sterling, French francs, and the Scandinavian currencies are being used more frequently. CHOOSING FORFAITING Most types of financing require the continued involvement of the exporter in the financial side of the transaction during the credit period. Forfaiting has certain comparative advantages. In particular, it is possible to forfait 100 percent of the risk without recourse to the exporter, unlike government sponsored export finance schemes, where some retention of the risk by the exporter is required. In addition, exports from country sources do not present problems and forfaiting can also cover trade within the EEC. Other benefits for the exporter are: (a) The exporter's balance sheet is improved; debts are turned into cash thus improving the liquidity of the company and enhancing its cash flow. And there are no contingent liabilities for bills of exchange. (b) If the sales contract is in a foreign currency forfaiting removes the risk to the exporter of adverse movements in foreign exchange during the credit period. (c) Fluctuations in interest rates during the credit period can be ignored since in forfaiting the transaction is usually done on fixed interest rate terms on a discount basis. (d) The political and transfer risks are taken by the forfaiter. (e) The commercial risk is taken by the forfaiter. (f) The costs of administration and collection etc. during the credit period are removed.

Jan 1, 1985

By Robert Gillham, Victoria Yablonsky, Grover R. Castle

INTRODUCTION The commercial paper market, unique to the United States, is a direct exchange of funds between high-grade borrowers and large lenders; because it eliminates both the bank's role as middleman and also some significant transaction costs, commercial paper is the lowest cost short term instrument in the world. For this reason, virtually all borrowers would like to enter the market, but only issuers with the highest rating from Moody's and Standard & Poor can attract purchasers at the best rates. COMMERCIAL PAPER The commercial paper market, in existence for over 100 years, has traditionally been used for short-term financings, with most paper maturing within 30-45 days. Under the U. S. Securities Act of 1933, (section 3(a)3) industrial paper can avoid registration only if it matures within 270 days and is used for current transactions. It was first used to finance the short-term seasonal working capital needs of manufacturing companies. Since World War II, commercial paper use has grown steadily, serving in the 1950's as the market in which finance companies financed the explosion in consumer credit purchases of heavy consumer durables. LETTER OF CREDIT BACKING As far as is known, the use of letters of credit to support energy-related commercial paper began about 13 years ago with an arrangement to finance the nuclear fuel for Con Edison's Indian Point 3 Plant. Goldman, Sachs was the architect of this financing and Chemical Bank provided the letter of credit support. After an early burst of interest, this type of financing wobbled severely in the difficult credit markets of the mid-seventies before regaining serious momentum in 1976 and 1977. A mining project would not normally qualify as a borrower in the commercial paper market because of its credit standing and because its large capital needs require long term financing. However, lately, commercial paper has begun to take the place of a bank term loan in limited recourse project financings. L/C backed commercial paper took this new and startling turn in 1982 when it was used as part of the $700 million financing for the development of the Newlands-Collinsville coal mines of Mount Isa Mines Ltd. in Australia. This was the first use of L/C backed commercial paper in a long-term limited recourse project financing. First Boston acted as financial advisor and, again, Chemical Bank provided sole letter of credit support of $155 million. The $785 million BHP financing for the acquisition of the Queensland (Australia) coal assets of Utah International from General Electric Company followed the next year; there we acted with two other Front Banks to provide $270 million of L/C support. These two important transactions indicate that not only has commercial paper become an integral part of a long-term financing package, but also that it is no longer the exclusive domain of the best known U. S. companies. Lesser-rated companies and a multitude of foreign borrowers have gained access to this "exclusive club." How has this become possible? OPERATION OF AN L/C An instrument of the commercial banks, the "direct pay" letter of credit, has enabled lesser-rated companies to issue commercial paper in their own names. The letter of credit allows the issuer to substitute the credit rating of the supporting bank for its own. The L/C in effect allows a lesser-rated company to rent the bank's credit rating. This upgrading is possible because the bank is unconditionally obliged to pay the note-holders at maturity and then turn to the Issuer for reimbursement. The Issuer commonly "rolls over" a new short-term issue and reimburses the supporting bank from the sale of the new issue until cash flows from the project allow the borrower to reduce the level of paper outstanding. The commitment for an L/C facility, up to 12 years in the case of the Broken Hill transaction, governs the life of the commercial paper tranche of the financing. The term of the L/C commitment thus has the power to extend the ordinary 30-45

Jan 1, 1985

By Alan M., Bateman

MR. JORALEMON'S dispassionate discussion of this subject in TECHNICAL PUBLICATION 340 of the Institute shows clearly some of the failures and successes of geology in the discovery of ore deposits. He forces us to recognize, with humility, that chance has played a greater part than geology in the recent discovery of several great copper deposits. I think, however, he wrongly ascribes to unexpected or chance discovery some deposits that were found as a direct result of geological investigation. I refer to the Rhodesian copper deposits,, particularly Roan Antelope and Mufulira, both mentioned by him as having been found by chance. Also,. I think Mr. Joralemon's paper, inadvertently, does not- give the proper credit for the early recognition of the possibilities of these deposits. I feel sure that Mr. Joralemon and the gentlemen given credit by him will welcome any further information on this subject that will throw light on what will some day- be of. historical interest and importance. Consequently, I should like to set forth some additional data that throw light on who should receive the most credit, and' to indicate that, in my opinion, sound. geological reasoning and not chance is to be, credited for the development of the. Roan Antelope and Muf ulira mines.

Jan 1, 1931

By C. E. Berner

Since 1933, the Coal Mine Rating Schedule in Pennsylvania has provided credits in the Workmen's Compensation insurance premium rates for the use of safety hats, goggles and shoes. In that year, the worth of such protective clothing had just been well established and satisfactory articles were being made by a number of manufacturers. Standards for these three items of safety clothing' were written in the Rating Schedule and have been little changed through the years. The credit in the premium rate for a bituminous mine is $0.14 for hats, $o.08 for goggles, $o.08 for shoes. In order to earn such credit, it is necessary that all the employees in the particular mine be equipped with safety hats, goggles or shoes, as the case may be. In fact, it is not unusual for mines to qualify in all three categories, thus earning a rate reduction of $o.30 per $100 of payroll. These credits have been a decided stimulus to the use of safety clothing, and at present insured bituminous mines are credited as follows: Hats........ 63 per cent, or 22,600 employees Goggles..... 28 per cent, or 10,000 employees Shoes....... 44 per cent, or 15,800 employees Of course, many other employees wear these protective articles but they are in mines that are not fully equipped and so are not given the rate credit. The growth in use of this equipment has not been spectacular but it has been steady, as shown in Table I. An interesting thing about this is that it covers virtually all of the small and medium-sized bitumi- nous mine operations in Pennsylvania. A number of large operations are included, but many large mines are self-insured. It is difficult to keep alive interest in safety work in the smaller mines: first, because employment of safety engineers is out of the question and the one or several mine officials employed are often concerned only with production; second, because the life of many small mines is brief, so that safe conditions although established do not last long. Conditions as to safety in mines of this class rest chiefly with inspectors of state mine departments and of casualty insurance companies. Many millions of tons of production come from these mines, so that

Jan 1, 1944

By C. E. Berner

Since 1933, the Coal Mine Rating Schedule in Pennsylvania has provided credits in the Workmen's Compensation insurance premium rates for the use of safety hats, goggles and shoes. In that year, the worth of such protective clothing had just been well established and satisfactory articles were being made by a number of manufacturers. Standards for these three items of safety clothing' were written in the Rating Schedule and have been little changed through the years. The credit in the premium rate for a bituminous mine is $0.14 for hats, $o.08 for goggles, $o.08 for shoes. In order to earn such credit, it is necessary that all the employees in the particular mine be equipped with safety hats, goggles or shoes, as the case may be. In fact, it is not unusual for mines to qualify in all three categories, thus earning a rate reduction of $o.30 per $100 of payroll. These credits have been a decided stimulus to the use of safety clothing, and at present insured bituminous mines are credited as follows: Hats........ 63 per cent, or 22,600 employees Goggles..... 28 per cent, or 10,000 employees Shoes....... 44 per cent, or 15,800 employees Of course, many other employees wear these protective articles but they are in mines that are not fully equipped and so are not given the rate credit. The growth in use of this equipment has not been spectacular but it has been steady, as shown in Table I. An interesting thing about this is that it covers virtually all of the small and medium-sized bitumi- nous mine operations in Pennsylvania. A number of large operations are included, but many large mines are self-insured. It is difficult to keep alive interest in safety work in the smaller mines: first, because employment of safety engineers is out of the question and the one or several mine officials employed are often concerned only with production; second, because the life of many small mines is brief, so that safe conditions although established do not last long. Conditions as to safety in mines of this class rest chiefly with inspectors of state mine departments and of casualty insurance companies. Many millions of tons of production come from these mines, so that

Jan 1, 1944

By A. C. Milner

In a gold standard world which possesses insufficient metal to meet the every-day needs of all, confidence becomes the vital factor, the very foundation upon which the machinery for the expansion of gold into currency, and credit, rests. The gold supply, affected by many influences, moves constantly from one point to another, but not always to that point where it is most needed. In the period 1928-1930, the combined gold holdings of the United States and France increased $1,370,936,-000, and this with new gold adding only $600,000,000 to the monetary gold stock.Theref ore, the gold stocks of other countries must have been depleted during the period by $770,936,000. This uncontrolled shifting throws the delicately adjusted instrumentalities of both credit and commerce out of equilibrium. If a given nation's gold stock shifts so as to bring it substantially below the legal reserve ratio set up against it for currency issues, the effect can easily extend to the currency issues and banking credit volume of one or more nations which may have based their gold exchange standards upon the gold stock of such nation. Thus the substitution of paper based on gold in place of the actual gold is an inflation of the currency, which carries through into an uncontrolled pyramiding upon the entire machinery of credit based on gold. In 1929 Europe, South America, Africa and Asia had overissued currency based on gold. America, Oceanica and Japan, which have not overissued their gold currencies, would in normal times require their entire present gold stocks and, as Continental Asia is largely upon a silver credit basis, from a domestic standpoint, it would appear that the gold problem is not so much one of maldistribution, as it is one of inadequate supply. It would appear that some method of increasing greatly the velocity of gold, within the safe reserve point, should be devised, or that silver, of which estimates indicate that 7,000,000,000 oz. are available for

Jan 1, 1931

Offshore petroleum development involves massive capital expenditure and financing demands, with the main participants being large international oil companies and State owned enterprises. Types of project oriented financing include take-or-pay contracts, throughput agreements, and production payment financing. The main project finance credit aspects are revenues, investment budgets and cost over- runs, reservoir, political and other risks and special problems such as weather and corrosion in the North Sea. A variety of documents is required and a mix of equity, export credit and Euro-market financing will typically be included in the financing.

Jan 1, 1983

By J. H. Field

Capital and operating costs have been estimated for removing sulfur dioxide from flue gases of a powerplant of 12,000-kw. capacity by liquid-purification processes, using limestone, ammonia, or sodium sulfite as the reactant. The annnonia and sodium sulfite processes yield end products that may be marketable. Coals containing about 1.5 and 5.0 percent sulfure have been considered. The sulfur dioxide content of the gases to be treated is 0.083 and 0.30 percent, respectively. Estimates have been made for 90-percent removal of the sulfur dioxide from both gases. A third instance has been considered in which 70 percent of the sulfur dioxide is removed from the flue gas of 0.30-percent concentration. The scrubbed gas would contain 0.09 percent sulfur dioxide, which might be within the permissible limit for discharge to the atmosphere in most areas. Although it is unlikely that flue gases with sulfur dioxide concentrations of less than 0.10 percent would require purification, a cost estimate for such a gas is included because an estimate is available for a British plant employing the limestone process at these conditions. Capital investment and operating costs, with no credit for products, are lowest for the limestone process for gases of both concentrations. Crediting the ammonium sulfate and sulfur produced in the ammonia process at their market prices at the end of 1956 of $32 and $28 per ton, respectively, the operating costs of the ammonia process become the lowest for purification of the gas containing 0.30 percent sulfur dioxide. The operating costs of the sodium sulfite process for purifying gas of high sulfur dioxide content approach those of the limestone process when the byproduct sulfur dioxide is credited at $14 per ton. Even if credit for products is allowed for the ammonia and sodium sulfite processes, the operating costs are higher than those of the limestone process for the gas of low sulfur dioxide content. Because of the large quantity of materials that would be produced by removing sulfur dioxide from a relatively small number of plants, credit for products should be allowed with extreme caution.

Jan 1, 1959

By Franklin J. Stermole

INTRODUCTION Economic evaluation of an open pit mine is similar to the economic analysis of any major investment project in any industry. It requires (1) taking into account all of the costs and revenues that are estimated to be incurred over the economic life of the project; (2) crediting the project with all the tax savings and tax credits that will be realized over the project life from tax deductions and credits related to various project costs; (3) charging the project with all taxes to be paid on taxable income over the project life; and (4) properly accounting for the time value of money for all project costs, revenues, taxes, tax savings, and tax credits when making the overall project economic evaluation. These considerations must be taken into account for any valid method of economic analysis such as discounted cash flow rate of return (DCFROR) or net present value (NPV) analyses. All economic analyses fall into one of two categories. ( 1 ) comparison of income-producing alternatives, or (2) comparison of service-producing alternatives. The analysis of alternatives in either of these categories can be made by using correctly any of five basic economic evaluation approaches which are. ( 1 ) present value, annual value, (3) future value, (4) rate of return (ROR) , and (5 ) break-even analysis. Of these evaluation techniques, DCFROR and NPV analyses are used most widely for evaluating income-producing alternatives while present worth cost and equivalent annual cost analyses are used most often for the evaluation of service-producing alternatives. In this chapter income- producing alternative analysis is emphasized, so DCF- ROR and NPV are utilized for evaluating the case studies presented.

Jan 1, 1979

INTRODUCTION Trade financing is a particularly important component of short-term financing for a minerals company since errors, extra costs, or payment delays/defaults can easily wipe out the profit margin on a particular shipment or can cause problems when arranging purchases of e.g. reagents. It is required to make any minerals operation function and does not have to be cross-border to require proper management. Sources of working capital are as follows: 1. Extended credit terms from suppliers 2. Inventory loans from banks, finance companies 3. Accounts receivable financing or factoring 4. Credit lines or overdraft facilities from banks. TRADE CREDITS These are provided under the familiar terms "net 10 days" or payment due by the "10th day of the following month." Thirty days for payment is usual but longer periods can be negotiated with regular suppliers. Shipment may be made on open account with specified periods for settlement. In the mining industry, a custom smelter gains trade credit by paying for concentrates three months after the month of shipment. INVENTORY LOANS Various forms of inventory finance are provided via "floor-plan" or warehouse financing. A set percentage, usually 60%-80%, of a good-quality, readily saleable inventory item (e.g. bullion, concentrates, ingots) will be provided by a bank or finance company which will usually have security over these products and has a right to inspect the goods from time to time. Legal security will he achieved by warehouse receipts, floating liens, chattel mortgages, trust receipts, or through collateral management service companies. The latter certify control over stock or distribution outlets and often carry insurance against fraud. Costs range around 1.5% - 2.0% p.a. or more plus some fees to cover out-of-pockets or other costs. ACCOUNTS RECEIVABLES Accounts receivable financing is based on the company's generation of satisfactory receivables which are continuously assigned to a bank or finance company ("factoring"). Because of the risks in being able to collect receivables, such as payments to a smelter for its blister copper shipments to a refinery, this form of financing costs as much as 3% - 5% of the debt amount purchased plus an additional charge for processing paperwork. Receivables can be purchased with or without recourse and on a notification or non-notification basis to the client's customer to, respectively, pay the invoice directly to the bank or not. LETTERS OF CREDIT Letters of Credit ("L/C's") are a common feature of international trade finance whereby a bank, at the request of the buyer, issues a written undertaking to an exporter to pay a specified sum of money within a set time on presentation of previously specified documents. This undertaking means that the exporter is no longer relying on the credit standing and integrity of the foreign importer. A dispute about shipment does not otherwise affect the obligation to pay upon presentation of a "clean" set of documents. These documents include the hill of lading and other documentation, often on standard "form" bases. There are a number of conventions and techniques in L/C's such as irrevocable/revocable L/C's, time L/C's, confirmation/advising L/C's and transferable L/C's. These are tools to adjust for the varying risks that the importer will not pay. Other routes where one is comfortable with an importer include documentary sight hills (D/P hill), documentary term bills (D/A bill), and, of course, open account.

Jan 1, 1985