Green bonds are a rising source of funding as project developers widen their search for financing beyond stock markets, according to a panel at a New York mining conference.
There are more green bond products – debt designed to fund environmentally friendly projects – in more countries than there used to be, according to Erin Boeke-Burke, director and lead analyst for Americas sustainable finance at S&P Global Ratings. She put the amount at about 14% of the total bond market, or US$6 trillion by the end of this year.
“It’s still not old enough to drive yet,” Boeke-Burke told a May 21 session at the event run by the Society for Mining, Metallurgy & Exploration. “But that said, it has grown up a lot over the last decade.”
A combination of fewer banks and funds supporting mining as inflation raises capital costs is requiring developers to tap multiple types of financing besides traditional equity markets. These include royalty companies, streamers, export credit agencies, traders and private equity and credit funds besides banks. Green bonds and sustainability-linked loans are a more recent development that help developers try to finance projects while improving mining’s environmental credibility.
Canadian mining specialist funds from a group of lenders including RBC, Mackenzie Investments and 1832 Asset Management fell to $2.8 billion in 2022 from $16 billion in 2010, according to Bloomberg figures presented at the annual conference on mine financing trends.
