Credit woes hit new mine projects, others survive

By Eric Onstad

LONDON (Reuters) - The mining sector -- with strong earnings, low debt and buoyant underlying metals prices -- has been less hurt by the global credit crisis than others, but the funding tap has virtually closed for unknown firms with new projects, executives said this week.

"The big boys can always do what they like, but I know a lot of good projects that cannot get debt financing in place," Pekka Pera, chief executive of Finland's Talvivaara (TALV.L: Quote, Profile, Research, Stock Buzz), told the Reuters Global Mining Summit.

Talvivaara, building the biggest nickel mine in Europe, raised $320 million in project finance last year just before the sub-prime U.S. mortgage crisis hit debt markets.

"We couldn't do it now. Nobody's getting any finance at the moment, there's no deals now, just no deals," he added, referring to start-up companies with new mine projects.

Firms with good projects and no funds to build them could become targets of bigger firms, said Paul Knight joint global head of metals and mining at UBS's (UBSN.VX: Quote, Profile, Research, Stock Buzz).

"There is an interesting species of companies that had pretty ambitious projects and made, what in retrospect looked to be optimistic assumptions about equity and debt financing."

"Those are potential acquisition opportunities or co-financing opportunities for the major companies."

Chief Executive Richard Adkerson of Freeport-McMoRan Copper & Gold Inc (FCX.N: Quote, Profile, Research, Stock Buzz) told the summit that his firm was scouting out possibilities thrown up by the credit squeeze.  Continued...