This year’s Fraser Institute Annual Survey of Mining Companies 2008/2009 is better than ever, even though the message is gloomier than ever.
As they do each year, the Fraser Institute once again compiled answers to questionnaires it sent out to miners. The miners are asked to rank countries and the states and provinces of major mining countries. Here are a few observations about how some jurisdictions rank.
Policy Potential Index.
This is a measure of the “effects on exploration of governmental policies including uncertainties concerning the administration, interpretation, and enforcement of existing regulations; environmental regulations; regulatory duplication and inconsistencies; taxation; uncertainty concerning native land claims and protected areas; infrastructure; socioeconomic agreements; political stability; labor issues; geological databases; and security.”
That is a lot in one index. But it is clear enough if you think of it as being a score on how good a place it is to try and find an ore body and turn that ore body into a mine.
As it has been since 2001, Quebec scores highest with 96.6 out of 100. Venezuela is last with a miserable score of 3.7.
The top ten include Wyoming, Nevada, Alberta, Newfoundland & Labrador, New Brunswick, Manitoba, Chile, Saskatchewan, and Ontario. All this is good news for Canada, except it seems to have no impact on the exchange rate.
The bottom ten worst places to try to find an ore body, start a mine, and by extension operate a mine, include those usual miscreant: Venezuela, Ecuador, Guatemala, Honduras, India, Bolivia, Zimbabwe, Kyrgyzstan, Democratic Republic of the Congo, and Indonesia. Why does anybody bother going there to explore?
Current Mineral Potential Index
This is a measure of a jurisdiction’s mineral potential under the current policy environment and whether the policy environment encourages or discourages exploration. There is overlap with the Policy Potential Index, but the list is different.
The top five include: Chile, Quebec, Finland, Nevada, and Saskatchewan. At the bottom are Zimbabwe, Kyrgyzstan, Ecuador, Venezuela, and Honduras. No surprises there.
Room For Improvement
This is a pretty obvious factor. The interesting part is who comes first and who comes last. Included in those places with the most room for improvement, we find Montana, Colorado, California, and Papua New Guinea. If only those US states would come down from their clouds and really try to balance their budgets with work and productivity instead of running to Washington for hand-outs.
I liked the idea that the places with least room (need?) for improvement include Nova Scotia, Wisconsin, Spain, and Washington State.
Environmental Regulations
The worst include Washington, California, Montana, and Wisconsin. The US, it seems, is a bad place to try to find, start, or operate a mine if you consider the environmental regulations.
Conversely the best places to mine as far as environmental regulations and their impedance impact are Chile, Mexico, Quebec, and Columbia. Know anybody who speaks French or Spanish? Is this the Latin character at work?
Taxation Regime
Places where the tax regime is a deterrent to mining investment include the worst: Zimbabwe, Venezuela and the rest of the miscreants. Taxes constitute the least deterrent to mining investment in Wyoming, Quebec, Nevada, Botswana, and Chile. Somewhere in the middle of this list are South Africa and British Columbia.
Uncertainty Concerning Native/Aboriginal Land Claims
As a deterrent to investment, Wyoming and Spain are tops. Along with them are Kazakhstan, Mali, Ireland, Utah, and China. Near the bottom right next to each other are British Columbia and Zimbabwe. Welcome to BC.
Political Stability
Alberta is judged the most stable politically in spite of the National Geographic and its pictures. Quebec is just below Alberata, followed by South Australia, Finland, the Northern Territory, and Tasmania. Why bother to ask who is at the bottom. You already know. Of course it’s Zimbabwe.
There are other fascinating indices and scores for socioeconomic agreements, community development conditions, labor regulations, geological databases, supply of labor, and security. The same good place to invest in mining and the same bad places dominate the top and bottom of the lists.
Interspersed in the many tables and graphs of rankings are quotes from people responding to the survey. Some of my favorites:
Here is a definition of sustainability: the company survives over one or more full commodity cycles.
Some companies are zombies with no funds, no hope of raising funds, and whatever bank balance is left over, is there for the survival of the directors.
Companies can buy assets or mines cheaper than finding and building them—with no risk.
Commodity prices have been ludicrously high in recent years and are now returning to something resembling sanity.
In our experience, all governmental authorities in Utah have been extremely helpful. They are accessible and pleasant to deal with.
Nevada has good infrastructure, a sound legal system, and there is stilll room for major discoveries.
Botswana is the shining star of governance and lack of corruption in Africa.
There are many more. It is almost worth downloading the entire report just to read the comments.
That is something you may choose to do this weekend.
