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Orion Resource Partners raising fund for financing of potash mines

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World Fertilizer,

Reuters is reporting that Orion Resource Partners, a US-based mining-focused private equity group, is raising up to US$500 million in a fund financing potash, tungsten and iron ore mines, sources close to the matter said, meeting miners’ need for funding and investors’ appetite for long-term assets.

Miners are turning to alternative sources of finance as the industry has struggled to woo back traditional financiers, despite the recovery of commodity prices from the crash of 2015/2016.

Orion will provide royalties and streams and close the fund within the next few months, the sources said.

Streaming and royalties are types of alternative finance for the mining sector, and typically involve an upfront payment being made to a miner, which then repays it through the supply of metal at a later date.

The company’s investors – mainly pension funds, sovereign wealth funds and other long-term funders – had expressed interest in having exposure to mining for long-term projects that would pay steady dividends over time.

Potash prices have started to recover as mine closures have limited supply of the crop nutrient. Potash mines tend to be long life assets.

Thomson Reuters data showed earlier this year that investors are still shunning the mining sector and withholding fresh funds despite a price rally.

Orion said in February that it raised US$2.1 billion for a fund that would finance the construction of later-stage mining projects through a combination of debt, equity and production-linked investments.

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