This posting has proven popular with readers. It deals with the 2009/2010 Survey of Mining Companies as prepared by the Fraser Institute. The new 2010/2011 survey is now available at this link. If you seek the most recent report, maybe go to the new posting. If you are still interested in last year’ssurvey, continue and enjoy.
The Fraser Institute’s Survey of Mining Companies 2009/2010 is available at this link. Its fifty-five plus pages should be mandatory reading for investors, mining companies, and regulators, and policy makers alike. It is sobering to see the truth about mining and politics put in perspective.
Most Canadian jurisdictions continue near the top of places to explore and to mine–with Quebec being the out-right winner and BC being an outright looser. Along with Nevada and Chile. No surprises there.
The same miscreants cluster at the bottom of the list. The worst places to explore and mine continue to be the African jurisdictions, too many South and Central American countries, California, and of course Venezuela. No surprises there either. I was surprised to see Mongolia near the bottom–particularly with all the hype from Rio Tinto. But if you think of Mongolia as a buffer state between Russia and China, can you blame them for knowing how to negotiate, dodge, and scamper among the giants?
I can understand California–with beaches, mountains, earthquakes, the Central Valley farms, Hollywood, fundamentalist Christians in San Diego, and dysfunctional politics. Why would the muddle of mixed population seek to mine? I bet they make more off tourists visiting Angels Camp (home of the jumping frog) to see the old mine workings (and the frogs) than they ever would off new mines. Plus consultants to and investors in mines are happy to live in California for the life style and happy to travel to mines in other states that are not nearly as nice a place to live.
Surprise to see South Africa only marginally better than California as a place to explore and mine. That is saying something. It is easy to understand why California is not a place to explore or mine–but for South Africa to score as low is a sad reflection of events. Of course it is all those young Blacks seeking to grab (nationalize) the mines for themselves that makes South Africa a scary mining place. Plus South Africa scores pretty low in the category of “uncertainty concerning the administration, interpretation, and enforcement of existing regulations.” With a dancing polygamist in charge, we hardly need the Fraser Institute to warn us.
I am not surprise to see Guatemala near the bottom. Sad though, considering I have seen the mine which is the subject of vast and many times undiscriminating attack. Maybe it is also down there because it has beaches and mountains?
The point is that you can play this game of looking up the scores for any country of interest to you–as a place to explore, invest, work, or simply snide about–by downloading for free the latest Fraser Institute Survey. I have heard some complain that the Institute is a right-wing, conservative hive and not to be believed. Even if that were true, the Survey is primarily a collation of the opinions of the mining community, and whatever you may think of them, this is where their hard-headed, honest opinions are collated.
My advice: If you are contemplating investing in mining—go study the Survey carefully before calling your stockbroker.
PS: Here from MineWeb is their take on the Survey.
For the third straight year mining industry executives rate Quebec as the most attractive jurisdiction for mineral exploration and development, while perennial favorite Nevada is slowly losing some of its luster as a mining haven.
The Fraser Institute made public its annual survey of mining companies Thursday, representing the opinions of 670 mining executives and managers internationally on the policy and mineral riches of 72 jurisdictions on all continents except Antarctica.
Companies participating in the survey reported exploration spending of US$2.9 billion in 2009 and $3.6 billion in 2008.
Survey coordinator Fred McMahon, Fraser Institute vice president of international policy research, noted, “As economic recovery takes hold, we’re seeing greater optimism from the mining industry in terms of new explorations and long-term projects.”
“Last year’s survey showed significant pessimism towards new mining investment, but this year’s survey reveals a strong rebound in optimism,” the Fraser Institute noted. Almost twice as many mining companies (333) said they will increase explore budgets.
“Miners also expect mineral prices will increase over the next two years: 64 percent expect mineral prices will rise moderately, while nearly 20% expect substantial increases,” the survey said. Twenty percent or more expect peak prices for copper and gold, while 10% expect new peaks for silver, nickel, platinum, zinc and coal.
WE’LL TAKE QUEBEC, BUT NOT THE DRC
“Mining executives say Quebec remains an international standout for investment because its stable government policies offer them the certainty that reduces risk for long-term projects,” McMahon said.
While mining executives love to do business in Quebec, they have a far less rosy view of Ontario and British Columbia, two provinces with a lengthy history of mining, which fell significantly in this year’s survey. Ontario dropped from its 10th place finish last year to 22nd, while British Columbia’s rating plunged 14 places from 24th in 2008 to 38th in 2009.
New Brunswick is ranked second overall, moving up four places, while Alberta remained in fourth place. Saskatchewan rose three spots to six, while Newfoundland and Labrador dropped from fifth last year to eighth this year.
Finland ranked third overall with Nevada at number five; Chile, the only Latin American nation ranked among the top 10, at number seven; and South Australia, the highest-ranked Australian jurisdiction at number 10.
Botswana is the highest ranked African nation in the survey at 21st, followed by Mail and Ghana in the 27th and 34th spots, respectively. The worst African nations in which to conduct mining are Zimbabwe and the Democratic Republic of the Congo, both bottoming out among the 10 worst jurisdictions.
Among Australian states, South Australia is followed by the Northern Territory in 14th, Western Australia in 19th and New South Wales in 20th.
While Nevada leads the favorable U.S. mining states, Wyoming ranked 13th, Utah 15th, and Alaska 18th. Interestingly, the Golden State isn’t very golden any more when it comes to mining. California dwells in the cellar as a least favorable jurisdiction along with Venezuela, Ecuador, the Philippines, Mongolia, Bolivia, Honduras and Guatemala.
“Respondents say California’s staunchly environmentalist polices create a strong deterrent to investment by interfering with mining practices that are proven to be clean and responsible,” McMahon observed. “Unfortunately, the rest of the worst-ranked jurisdictions are developing nations that urgently need the new jobs and economic prosperity mining can create.”
DAMN THOSE CALIFORNIA ECO-HIPPIES!
In the comments submitted with the survey, trade associations, mining executives, explorationists and others expressed why they would or would never do business in certain nations again.
–“In Nevada, it is all here!! No terrorists, no disease, no bribery, lots of undiscovered deposits, infrastructure is all here, the laws are stable-what else is there?” -Exploration company consultant
–“In Quebec, government departments talk to each other. The provincial government wants development and simply makes it happen.” -Exploration company, Manager
–“Botswana lacks red and green tape.”-Exploration company, President
–-“California is full of eco-hippies who do not understand that their lifestyle is dependent upon mining-Exploration Company, Managing Director
–-“In the Democratic Republic of the Congo, everything is wrong. Government consists of corrupted crooks.”-A producer company with more than US$50M revenue, Manager
–-“Mongolia suffers from endless tinkering with mining laws and regulations, resource-nationalism, creeping expropriation, non-transparency.”-Trade association, President
–-“In Venezuela, if you actually succeed in making progress with a project, Hugo Chavez will simply nationalize it. -Consulting company, Consultant
–-“Make sure the Ontario Minister of Mines gets a copy of your survey as it will likely be very damning for Ontario and maybe they will think twice about changing the Mining Act.”-Consulting company, Consultant
–-“Manitoba aggressively pursues exploration companies to invest in the province and backs it up with good taxation incentives and environmental /land use policies.”-A producer company with more than US$50M revenue, Manager
–-“Victoria has an extremely poor mines department.”-A producer company with more than US$50M revenue, President
–-“The best increase in potential is in Columbia.”-Mineral exploration research institute, Manager
–-“Mexico is politically stable and has reasonable laws and regulations, a strong history of mining, an experienced work force, and an acceptable tax load.” A producer company with more than US$50M revenue, Vice President
–-“Populist politicians in Tanzania like to blame foreign miners for all the country’s ills when the real problem lies elsewhere.”-A producer company with more than US$50M revenue, Manager
–-“The black empowerment regime in South Africa is very confusing and restrictive.””-Exploration company, Manager
–-“China has unclear regulations: Too subjective-Mining finance company, President
–-“USA seems to want to protect its borders to a degree that it is discouraging investment in their country especially from Canada. “-Exploration company, President
To read the survey, go to www.fraserinstitute.org.
Here is a comment by Andy Clay from South Africa:
The Fraser Institute survey of 72 mining countries pushed South Africa down to the 61st position, from its 49th position previously. This is shocking to say the least but begs the question “why and what has caused the slippage?” Fraser has a very simple principle which is as follows: –
“In order to attract mining investment, jurisdictions must uphold the rule of law and respect negotiated contracts and property rights. Jurisdictions that fail to do so can not compete successfully on a global scale.”
Over the years, Venmyn has been striving for top quality independent compliance with all stakeholders to generate top quality compliant documentation as well as to change the rules and regulations to ensure meaningful investor friendly and graphic information on mineral assets. In that regard, we think the quality of private and public mineral reporting has improved substantially. We now have the CRIRSCO codes and SAMCodes in South Africa as well as revised JSE Listing Requirements for companies to adhere to.
So if industry is playing its part with top quality compliance surely it is the political component that is causing the problem? Mineral Resources Minister Susan Shabangu has created the South African mining industry’s special task team and asked it to pull the country back from the global mining brink where it now ranks with the likes of Zimbabwe, the Democratic Republic of Congo and Venezuela. Well unless government follows the same rules as the private and public companies we won’t solve the problem.
To my mind, if statal and parastatals own and operate mines in direct competition to its electorate then this creates a massive conflict of interest and THAT is the problem. Unfortunately, if the Minister can’t see that then the rating will continue to go down.