sharing in governance of extractive industries
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.
Central and South America
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.”
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