The mining industry has always had a high level of tolerance for emerging market risks. Political risks, such as licence cancellation and expropriation, are on the whole are mitigated effectively, but for junior miners, when these risks occur, the financial impact can be severe.
Whilst traditional Political Risk Insurance can be utilised to protect equity, the product can be prohibitively expensive, particularly for miners in pre-production phase, or for those operating in the highest risk territories. This tends to mean companies are forced to hold contingency funds in readiness for potential litigation disputes with the host government. At a time when financing is hard to secure and balance sheet costs are being scrutinised, tying up funds in this way is uncommercial.
JLT Mining has developed a new solution specifically to address this challenge. Many junior miners have recourse to international arbitration through bi-lateral investment treaties (BIT). Our BIT Arbitration Scheme provides a pre-litigation funding facility of up to USD1m in order to pay for the legal/expert fees required to establish a valid BIT claim. Once the claim has been established, the solution can then unlock third party funding on a non-recourse basis for working up the case and pursuing international arbitration.
This cost-effective solution can also act as an essential safeguard for financiers and other stakeholders.
For further information about the product, please download the brochure or alternatively contact Harry Floyd, Partner, Mining on +44 (0)20 7466 1305 or email firstname.lastname@example.org or Clive Petty from the Corporate Recoveries team on Clive_Petty@jltgroup.com