The Role Of Canadian Banks In Mineral Resource Development

The major role of financial institutions in the free world in the development of mineral resources is to provide the necessary capital in the form of loans to underwrite the development of these resources by the industry on a stable and continuous basis. This capital provided by the depositors to the bank must be invested in sound projects where the degree of risk is relatively small, the return on the investment is reasonable and the time to retire the loan is of short duration. Money is, therefore, one of the important ingredients along with technology, manpower and an exploitable resource that will provide a sound economic base in this region of development. Canadian banks are similar to banks of other western nations, although each country has some differences in their banking systems. The basic difference between the American and Canadian systems is that the former employs unit banking while the Canadian utilizes the more mobile branch system, which is prohibited or restricted in the United States and some other countries. Canadian banks are the subject of this paper, so, subsequent material will relate to Canadian banks unless indicated otherwise. It will be realized by everyone that the mineral industry is only one area of the economy in which the banks are interested and to cover the subject matter in the time allowed, the topic is restricted to mineral resource development. In Canada this is a vital sector of our economy and before we outline some of the details of financing and services involved in various aspects of mineral development, a review of the Canadian mineral industry is a necessary part of the sequence of presentation. The writer presents this material as a resource engineer advising a major bank in mineral matters, so the presentation may relate more to the financial problems of the developer