spRING 2011 GlobAl MARKETs INTERNATIoNAl - Willis

PolitiCal violeNCe
Political Violence protects against losses
resulting from damage or destruction of
project assets due to events such as War,
Civil War, Riots, Strikes, Civil Commotion,
Sabotage, Terrorism, Insurrection, Rebellion,
Revolution, Coup d’etat or Malicious Damage.
It is also possible to cover the resultant
Business Interruption following a physical
damage event.
CuRReNCy iNCoNveRtiBility/
eXChaNge tRaNsFeR
Cover can be provided against the inability of
the project company to convert local currency
into freely convertible currency such as
U.S. dollars or the inability to transfer hard
currency funds out of the host country for the
purposes of remitting revenues or profits back
to the project’s sponsors and/or to service its
debt service obligations. Situations where the
project company is unable to make a deposit
due to a government action can also be covered
where currency cannot be remitted following
the cancellation of a permit allowing the
project company to hold off-shore accounts.
BReaCh oF CoNtRaCt
This covers the breach of specific contracts
by host governments such as a joint venture
or production sharing agreements, or
off-take contracts where government or
state-owned entities are off-takers of the
resources being produced. This may take the
form of Arbitration Award Default which can
sometimes be extended to include Arbitration
Frustration or Denial of Justice type covers.
Where sovereign guarantees are issued to
cover the performance obligations of the
off-taker, non-honouring of the guarantee
can also be provided.
" faIlure to address
soCIal and
enVIronmental
ConCerns ProPerly
Can exaCerBate
tensIons wItH loCal
CommunItIes, damage
tHe rePutatIon of
ProjeCt sPonsors and
lenders and result In
Huge losses"
Willis | Mining Market Review 2011 | 61