A joint venture based on limited partnerships is a hybrid approach that is exclusively a creature of a statute, which depends on the jurisdictional partnership provisions in which the partnership is established. While it is probably the most complex and expensive entity (which requires a single limited partnership agreement in its own right and often a separate shareholder pact for the cooperation partner), it may, if properly structured, offer similar flexibility and tax benefits to a joint venture without its own legal personality, while alleviating some of the disadvantages contained in the form taken. , while providing limited liability protection. “Most pension funds now have a few mining companies in their portfolios, as well as a growing number of private equity firms,” says Rajeev Chopra, Global Energy, Resources – Industrials Leader, Deloitte Touche Tohmatsu Limited. “You understand that the sector could be volatile in the short term, but it could offer strong long-term returns.” “Even companies that engage in many joint ventures have a hard time transferring to newly created companies the knowledge that has been obtained from existing ones,” said Lyon. “For these relationships to be fully profitable, their governance models should provide operational flexibility and facilitate rapid decision-making, while developing the maturity of their governance model over time.” Because the capital of young miners is limited and the market capitalization does not reflect the full value of the company, some players in the sector are consolidating to grow in size. Joint ventures (JVs) can be a natural solution. But even if they are structured rights, high-risk companies often fail because of a lack of clarity in decision-making processes, inefficient governance, and poor transparency and direction. Here are some ways to overcome these common challenges. The registered business form requires the creation of a separate company, which will be the main vehicle of the joint venture, which probably owns all the project resources and which can operate the project on a daily basis (with the help of a management team made up of MPs from one or more participants in the joint venture). Each partner of the joint venture is a shareholder in the joint venture company and the joint enterprise agreement must respect the provisions of the company`s statutes in the jurisdiction in which the joint venture company is registered. 2 Mining.com, “A new topic has appeared in the gold-DM market – report,” Mining.com, June 6, 2019, Appeal October 17, 2019.3 GlobalData, “Citi leads globalDatas Top 10 Global M-A Financial Advisor Table in the metallurgical and mining sector for H12019,” GlobalData, August 7, 2019, called October 17, 2019.
Check out the article and it`s not just the juniors who benefit from these JVs. Given the scale of Capex mining projects, their location in remote areas, and the increasing complexity of access to many minerals, companies of all sizes can benefit from partners to finance projects, acquire critical skills, build local relationships and share risks. Similarly, at-risk devices can provide shorter shock absorbers due to volatile commodity prices and security of critical resource supply. The sector is likely to see more CVs in the future, making it an important area of expertise that companies will likely need to develop. Although it requires work, companies that achieve the right level of operation can benefit from operational continuity, effective decision-making, optimized conflict resolution and enhanced teams: critical results in which miners invest based more on joint venture agreements. This type of shared value cooperation enables businesses, governments, communities and other important players to work together to strengthen local business clusters, have a greater social impact and increase investment returns.