NORTH MACEDONIA Law and Practice Contributed by: Ana Tosic Chubrinovski, Ivica Jevtic, Ljupka Naumoska Gjorgjievska and Marija Boceska, JPM Partners North Macedonia
5.4 Sources of Finance for Exploration, Development and Mining Financing for exploration, development and mining projects in the Republic of North Macedonia is drawn from a mix of equity, debt and off-take arrangements, with foreign capital remaining the primary driver. Early-stage exploration is typically supported through equity investments from strategic investors, private equity funds and joint ventures between domestic companies and international mining groups. Debt financing is available but remains limited in the domestic market. Local banks are increasingly hesi - tant to provide project or operational financing for min - ing companies due to internal ESG-driven policies, the push towards the green transition and broader insti - tutional reluctance to finance industries perceived as environmentally sensitive. Nevertheless, both domes - tic financial institutions and international development banks (such as the European Bank for Reconstruction and Development (EBRD), International Finance Cor - poration (IFC) and various EU funding instruments) are willing to support the mining sector when projects are aligned with environmental improvement, green tran - sition or sustainability objectives – such as renewable energy integration, reduction of harmful emissions or environmentally improved tailings management. Large-scale development continues to rely predomi - nantly on foreign commercial banks and industry- focused lenders. Off-take and prepayment structures remain widely used for securing funding tied to future production, while equipment suppliers often offer vendor or leasing arrangements for heavy machinery. Access to domestic capital markets is limited. Exist - ing operational mines commonly rely on internal cash flow and refinancing from domestic banks for capacity expansion. 5.5 Role of Domestic and International Securities Markets in the Financing of Exploration, Development and Mining In the Republic of North Macedonia, domestic securi - ties markets play a very limited role in the financing of exploration and mining projects. The North Macedoni - an Stock Exchange is relatively small and illiquid, and mining companies rarely access equity or debt capital
through public offerings or listed instruments. Min - ing companies, especially ones previously involved in underground exploitation, are rarely listed locally due to limited access to capital, and at the moment every company granted a concession for underground exploitation of minerals is a limited company. As a result, exploration and development activities are predominantly funded through private equity invest - ments, shareholder loans, strategic joint ventures and direct foreign investment. For larger mining pro - jects, financing is typically sourced from international financial institutions, commercial banks or multilateral development banks, or through the capital markets of foreign jurisdictions. In practice, international capi - tal markets play a significantly more substantial role than the domestic market in securing funding for min - ing exploration, development and production in the Republic of North Macedonia. 5.6 Security Over Mining Tenements and Related Assets Under North Macedonian law, mineral resources are state-owned and may be used by private entities only on the basis of a concession granted under the Law on Mineral Resources. Concessions are administrative rights, not proprietary rights, and therefore they can - not be freely mortgaged or pledged in the same way as tangible assets. A concession may be transferred or encumbered only with prior consent of the government/Ministry of Ener - gy, Mining and Mineral resources, and only if statu - tory conditions are met. Any attempt to create security without obtaining such consent is legally ineffective. Security in mining finance is typically structured as follows: • pledge over movable assets (equipment, machin - ery, vehicles) registered in the Pledge Registry; • mortgage over land and buildings related to the mining site if they are owned by the company; • pledge over shares of the concessionaire company (this is the usual workaround to “indirectly” control the concession); • assignment of receivables and bank accounts; and
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