Mining Joint Ventures - Major vs Minor

When a joint venture is established between a major and a minor, the co-venturers often have a number of divergent interests; the major may have put up significantly more capital into the project and will want to protect its investement; the major may have more financial resources and be more readily to commit capital to the project; the major may have more technical resources and expertise to provide to the project; the major may have other competing demands for its capital; the minor may be relying on rapid development of the project as its sole source of cash flow. Successful joint ventures arise when the co-venturers understand each others' interests and attempt to satisfy these interests. This could be achived by having a clear process and timetable for development of the project coupled with clear rules for distribution of income, the commitment of capital to the project and the provision of inter-company services. If divergent interests are either regulated clearly or eliminated, both co-venturers are more likely to seek common objectives in the joint venture with less scope for conflict. This paper, written from the perspective of a major, examines means of establishing successful joint ventures between majors and minors.