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Ranking of Countries for Mining Investment - Behre Dolbear via International Mining

Below is International Mining's summary of Behre Dolbear Group's ranking of countries for mining investment. The IM summary is available at http://bit.ly/eRiq5P and the full report is attached here.

 

Worldwide, Canada, Australia, Brazil, and Chile will likely remain the best jurisdictions in which to invest in and develop mining projects. Each of these nations will likely continue to see economic growth and mining investment.” This comment comes from a report, 2011 Ranking of Countries for Mining Investment Where ‘Not to Invest’. Most of us will agree with the company’s statement “the mining industry is vital to the creation of wealth and prosperity in any country. Countries that stifle it with detrimental political, economic, financial, and regulatory policies should be challenged to make changes that are more accommodative to its success.”


Behre Dolbear Group has compiled this political risk assessment of countries “we deem of importance to the mining industry,” since 1999. Other conclusions from the report are provided below.

North America

  • The US will remain a difficult country in which to develop new projects and could deteriorate further, depending on new regulations and taxes
  • Canada will continue to be a favorite destination for mineral investment and will likely remain a mining-friendly jurisdiction, although policies related to First Nations, environmental, and other regulations could change this
  • Mexico will continue to see significant exploration and mining investment. The level and rate of investment will be impacted by its success against organised drug cartels and related crime and corruption.

Central and South America

  • Chile, Brazil, Peru, and Colombia will likely outperform others in the region in attracting and using mineral investment to develop new mines and creating wealth
  • Argentina’s economy and mineral investment while recently strong are likely to pause as the country’s leadership shifts from the Kirchners
  • Bolivia and Venezuela are not expected to see much more than marginal improvement. Behre Dolbear continues to advise against investing in either jurisdiction

Africa

  • There will continue to be a growing interest and volume of investment capital into many African projects and assets
  • In sub-Saharan and West Africa, mineral deposits continue to attract interest from a variety of large and smaller listed public mining companies and private investors, such as private equity funds, as well as foreign SOEs and sovereign wealth funds. Sub-Saharan Africa will continue to be relatively stable. This is predicated on their respective governments avoiding the traditional trap of evolving into despotic or totalitarian regimes. Behre Dolbear predicts that investments will continue to pour into this region, and incremental regional improvement will continue. Zimbabwe and South Africa will continue to challenge investors as their mineral wealth is well defined but their politics are subject to change.

Asia

  • China will remain an aggressive acquirer of minerals assets. Behre Dolbear predicts that the Chinese government will not reduce its infrastructure spending or economic stimulus, as it fears social unrest more than asset bubbles or inflation. This in turn will continue to place a greater demand on mineral resources and their prices
  • China’s sphere of influence on its neighbors and their resources, while initially welcomed, is likely to be seen as neo-colonialism, resulting in some backlash against Chinese investment
  • India will act as a relative counterweight to China. The US and India will continue to draw together as their democratic traditions provide a common ground to expand their economic relationship

Middle East

  • The Middle East region will see more mining, minerals, and metals investments in the coming years. The region’s nations will continue to seek to diversify and expand their economies. Low-cost energy will continue to encourage development of energy intensive industries, such as fertiliser, aluminum smelters, and steel mills, all of which will consume construction materials, aggregates, ferro, and specialty alloys

Russia will continue to chart its own course. It remains a high-risk investment environment, it is plagued with corruption, and its bureaucracy is an enigma to most; the exception being those within its inner circle, i.e., Putin’s orbit. It is expected to continue to use and leverage its natural resource wealth to exert pressure on its neighbors, Western Europe, and elsewhere.

Australia’s government has introduced a lot of uncertainty this past year given its proposed change in tax policy and political leadership. The rebuilding of its coal mining infrastructure, following the extensive flooding, will take at least six months. The effect of the new taxes on investment remains to be seen.

NGOs will likely continue their anti-mining actions, using proxies and almost any method to stop mining and other development. These actions include influencing regulatory and law-making processes in developed democratic countries and co-opting labor and religious leaders in developing countries.

The reports final section notes: ”Summarily, in 2011, prices and resurging demand, with producers cautiously expanding capacity, are set within a backdrop of a global economy stimulated by the injections of trillions of dollars and other currencies, all of which is potentially sowing the seeds of large-scale inflation. In such an environment, gold and other precious metal prices are likely to remain high or go higher with sporadic interruptions due to speculative trading activities. Industrial metals and minerals will also be in greater demand and will result in companies taking greater risks by investing in projects and countries that under other circumstances would be deemed too risky for investment.

“Asian countries will continue their global grab for resource projects, many of questionable merit. Sovereign investment funds and private equity groups, unfamiliar with the resource industry, will climb aboard the mineral ownership train.

“The old dog of a project called Fido re-emerges under a new company with a new name - Phydeaux - still a dog, but a higher class dog, due to higher commodity prices. When prices return to long-term levels, these projects will fail, with billions of dollars wasted.”

CountryRankings.pdf

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