The Fraser Institute: Media Release; Mining Executives Rate the Investment Climate of Jurisdictions Around the World
TORONTO--(BUSINESS WIRE)--March 22, 2006--Attractive geology does not guarantee mining investment if a region's policies are bad, say mining executives surveyed in the ninth annual Survey of Mining Companies, released today by Canada's Fraser Institute.
In this year's survey, companies responsible for a combined total of US$1.83 billion in international exploration (in 2005) - a third of the global total - rate the policy attractiveness and mineral potential of mining jurisdictions in North America and internationally.
Companies are asked to provide their opinions about the investment attractiveness of 64 jurisdictions around the world, on every continent except Antarctica, including the Canadian provinces and territories, the Australian states, selected US states, and jurisdictions across Europe, Asia, and Africa.
Policy Potential Index
While geologic and economic evaluations are always requirements for exploration, in today's globally competitive economy where mining companies may be examining properties located on different continents, a region's policy climate has taken on increased importance in attracting and winning investment.
"The Policy Potential Index serves as a report card to governments on how attractive their policies are from the point of view of an exploration manager," said Fred McMahon, co-ordinator of the survey and the Institute's director of trade and globalization studies.
Nevada obtained the highest score on this index, while Zimbabwe received the lowest.
This is the sixth straight year Nevada is rated as having the best mineral policies. The other top 10 policy jurisdictions are Alberta, Manitoba, Chile, Quebec, Mexico, Saskatchewan, Arizona, Ontario, and Utah. For the most part, last year's top 10 jurisdictions were either in this year's top 10 or nearly so.
Zimbabwe continues to set new records for its poor performance. Its last place score of 7.6 last year was the lowest score recorded in the previous four years. This year Zimbabwe's score fell to 2.4, the lowest in the survey's history. Also at the bottom were Papua New Guinea, DRC Congo, Venezuela, the Philippines, Indonesia, Russia, Zambia, Bolivia, and California.
Current Mineral Potential Index
Current Mineral Potential is based on respondents' answer to the question on whether a jurisdiction's mineral potential under the current policy environment encourages or discourages exploration. Chile, Nevada, Mongolia, Quebec, Mali, South Australia, Ghana, Mexico, Ontario, and Western Australia hold the top 10 slots. All scored strongly last year and most were in last year's top 10.
Not surprisingly, the jurisdictions at the bottom of the list are also consistent with last year's poor performers-and in most cases with poor performers in the Policy Potential Index. Colorado comes in last and is joined by California, Zimbabwe, Ireland, Wisconsin, Washington, Minnesota, Ecuador, DRC Congo, and Venezuela. These jurisdictions all scored near the bottom last year, with the partial exception of Ireland (39 out of 64 last year), which has generally fallen in this survey from last year's.
Best Practices Mineral Potential Index
From a purely mineral perspective, the most appealing jurisdictions are Nevada, Nunavut, Canada's Northwest Territories, Indonesia, Papua New Guinea, DRC Congo, Ghana, Mali, Peru, and Russia. All scored highly last year, except for Ghana and Mali, which were in the middle of the pack.
The least appealing jurisdictions are Nova Scotia, Alberta, Finland, Ireland, Wisconsin, New Brunswick, New Zealand, Sweden, Tasmania, and Spain. Not surprisingly, there is a large correspondence between these rankings and rankings in previous years.
Room for improvement
The survey also calculates which jurisdictions have room to improve their regulatory environments. Many of the jurisdictions with the greatest room to improve are developing countries, where additional investment, and job, wealth, and capital creation are most needed.
These include the Zimbabwe, the DRC Congo, Papua New Guinea, Zambia, China, Venezuela, and Peru. Except for China, miners indicated significant security problems with all of these nations, particularly the DRC Congo and Zimbabwe. Nearly three-quarters of the respondents indicated they would not consider investment in these two nations due to security concerns.
However, some of worst performers are from the developed world and include Colorado, California, and Montana.
"Mining executives are becoming increasingly willing to invest their exploration dollars around the globe. Attractive geology is necessary, but not enough. Governments who want to maintain viable mining industries in their jurisdictions must enact favourable policies to encourage investment," said McMahon.
Established in 1974, The Fraser Institute is an independent public policy organization with offices in Vancouver, Calgary, and Toronto. The media release and survey (in PDF) are available at www.fraserinstitute.ca.
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