Abstract: In 2009, the Fraser Institute in Canada released the twelfth annual survey of mining companies on the investment environment for mining in major countries and regions around the world. The survey provides an overview of the policy potential and mineral resource potential of key global countries and regions in attracting mining investments. This article offers a concise introduction to these findings.
Keywords: Global Mining, Policy Potential, Mineral Potential
In 2009, the Fraser Institute of Canada released the results of its twelfth annual survey on the mining investment environment in major countries and regions around the world, conducted by mining companies. The 2008/2009 survey covered 658 mining companies globally. In 2008, these companies’ total exploration expenditures amounted to US$3.4 billion, accounting for approximately 24% of the global total (global non-ferrous mineral exploration expenditures in 2008 totaled US$14.4 billion). The survey presented assessments of both the policy potential and mineral resource potential for attracting mining investments in major countries and regions worldwide. This year’s survey included 71 countries and regions globally—three more than in the previous year—and marked the first time since the survey’s inception that the number of countries and regions surveyed has exceeded 70. Among them, the United States, Canada, and Australia were evaluated at the state, provincial, or regional level, totaling 33 units. Latin America accounted for 12 countries, Africa and the Asia-Pacific region each had 10 countries, and Europe had 6 countries.
I. Policy Potential
The “Policy Potential Index” is a comprehensive index developed by the Fraser Institute to measure the impact of government policies on mineral exploration investment. It takes into account factors such as political uncertainty, policy interpretation, regulatory enforcement, environmental controls, taxation, land tenure, and labor issues. The higher the index score, the more favorable the country’s policies are for attracting mineral exploration investments. Based on the mineral exploration investment policies of various countries (or regions), they have been ranked accordingly. Among them, Quebec, Canada, scored the highest on this index at 6.0 points—marking the province’s second consecutive year in first place. Venezuela, by contrast, scored the lowest at 3.7 points, representing a significant decline from its previous year’s score of 20.3 points.
In the context of a severe global economic downturn, Canada remains the country with the most favorable policy environment. Excluding Quebec, Alberta, New Brunswick, Manitoba, Saskatchewan, Newfoundland and Labrador, and Quebec—all of which rank within the top 10—occupy seven of the top 10 spots, more than doubling their share compared to the previous year and reaching their highest level in recent years. The United States ranks second, holding two spots in the top 10: Nevada, which is No. 2 and has consistently ranked among the top three in recent years, and Wyoming, which comes in at No. 3. Utah, which was seventh last year, has dropped to 11th place. Chile ranks seventh, making it the only non-North American country in the top 10. Last year’s top 10—including Finland, Ireland, and Sweden—three European countries—all have now fallen out of the top 10.
Among the bottom 10 countries, five are Latin American nations—Guatemala, Ecuador, Honduras, and Bolivia, in addition to Venezuela. Among these, Guatemala and Honduras are new entrants in the past two years. The bottom 10 also include three Asian countries: India at 67th, Kazakhstan at 64th, and Indonesia at 62nd. The other two countries are Zimbabwe and the Democratic Republic of the Congo, both from Africa.
The U.S., Canada, and Australia—regions that participate in the survey at the state, provincial, or regional level—show considerable variation among themselves, yet overall their performance is relatively good. Canada performs best: of the 12 provinces and regions that took part in the survey, seven ranked within the top 10. At the bottom end, Canada’s Nunavut territory ranks 43rd—compared to 54th last year. Among U.S. states, there’s significant variation: four of them rank within the top 20, while five fall into the bottom half of the 50-state ranking. Australia shows more uniformity and generally performs well; aside from South Australia, which ranks highest, the other six states and territories all place between 21st and 31st, with little change from the previous year.
The mining policy environment in Latin America continues to deteriorate. Among the top 30 countries, only Mexico (ranked 28th), Peru (ranked 30th), and Brazil (ranked 39th) made the list—aside from Chile. The remaining eight countries all ranked below 40th place, with Venezuela, Ecuador, Guatemala, and Honduras occupying the bottom four positions. Compared to the previous year, most Latin American countries saw their rankings decline; only Colombia and Panama showed notable improvements, moving up from 56th and 65th respectively in the previous year to 46th and 47th this year. Latin America was once one of the regions with a relatively favorable mining policy environment. In the 2005/2006 survey, Latin American countries averaged a score of 51.2. However, in recent years, many countries in the region have undergone significant policy changes, which have had a substantial negative impact on mining investments. As a result, mining investors have markedly lowered their assessment of the region’s mining policies. This year, the average score is just 37.3 (based only on countries that have consistently participated in the survey). If all currently participating countries were included in the calculation, the average score would drop even further to only 33.4.
The African region saw a slight decline: Among the 10 countries surveyed, all but Botswana—ranked 18th—fell below the 30th position. Ghana and the Democratic Republic of the Congo experienced particularly significant setbacks, dropping from 23rd and 51st respectively in the previous year to 35th and 63rd this year. Only Mali showed some improvement, rising from 58th in the previous year to 33rd this year.
Compared with the previous year, most countries in the Asia-Pacific region experienced a slight decline in their rankings. Only China stood out, posting a significant improvement—moving from 53rd to 41st place and ranking first in the Asia-Pacific region. Following China in the rankings are, in order: New Zealand, Russia, Mongolia, Kazakhstan, the Philippines, Papua New Guinea, Indonesia, Kyrgyzstan, and India. The Asia-Pacific region still lags behind Latin America and Africa; among the 10 countries surveyed, aside from China and New Zealand, which rank 41st and 45th respectively, the other eight countries all fall below 50th place.
II. Mineral Potential Under Current Regulations and Land Use Restrictions
The mineral potential index, based on current regulations and land-use restrictions, provides a relatively comprehensive reflection of a country’s mining investment environment. The top 10 countries or regions in this index are Chile, Quebec Province, Finland, Nevada, Saskatchewan Province, Sweden, Western Australia, Utah, Mexico, and South Australia. Compared to the previous year, Australia’s ranking has generally improved, with the number of top-10 countries rising from one to two. Victoria, which had been the worst-performing region, climbed from 44th place in the previous year to 33rd. Moreover, with the exception of Tasmania, which ranked 25th, all other regions ranked within the top 20. Canada experienced a decline, with its representation among the top 10 dropping from three to two. The African region saw a significant drop; Burkina Faso, Ghana, and Mali—countries that had ranked among the top 10 in the previous year—no longer appear in this year’s list.
The 10 countries or regions ranked lowest this year are largely the same ones that performed poorly in the previous year. Among them, Zimbabwe ranks lowest on the mining potential index under the current policy environment, followed by Kyrgyzstan, Ecuador, Venezuela, Honduras, Washington State, California, Bolivia, Montana, and New Zealand. Latin America leads with four spots, followed by the United States with three. Kyrgyzstan and New Zealand are new entrants to the list.
Among the seven regions surveyed in the U.S., Canada, and Australia, Australia performed best, with all seven regions ranking in the top half (before 36th place); Canada came in second, with six of its seven provinces and territories placing in the top half, accounting for 58.3% of the total surveyed regions; the U.S. performed worst, with only four states ranking in the top half, representing just 28.6% of the total surveyed regions. Aside from the U.S., Canada, and Australia, the African region generally performed the best. Although none of the top 10 countries were from Africa, seven African nations still ranked in the top half, accounting for 70% of the total surveyed regions in that continent. The Latin American region ranked next, with six countries placing in the top half, representing 50% of the total surveyed countries in that region. The Asia-Pacific region continued to lag behind both Africa and Latin America; all 10 countries surveyed ranked in the bottom half, with Kazakhstan being the best-performing country at 40th place. Compared to the previous year, countries in the Asia-Pacific region also experienced significant declines: China dropped from 44th to 54th place, India fell from 51st to 60th place, and Papua New Guinea slid from 39th to 48th place.
3. Mineral Potential
The “Mineral Potential” index is an indicator used by mining company executives to assess the attractiveness of a region for mineral exploration investments, based on their understanding of geological and mineral conditions. (Survey respondents are asked to assume that there are no land-use restrictions within the area and to disregard any policy impacts.) In other words, this index evaluates the potential for mining investment purely from the perspective of mineral resources.
The top 10 countries or regions with the greatest mineral potential this year, in order, are:
These include Papua New Guinea, Quebec Province in Canada, Nunavut Territory in Canada, Western Australia, Finland, Manitoba Province in Canada, the Northern Territory in Australia, Tanzania, Queensland in Australia, and Indonesia. Compared with the previous year, there have been significant changes: Canada and Australia both saw notable rises in ranking, each gaining two spots to reach three in the top 10. Meanwhile, Russia, Brazil, Ghana, and the Philippines—formerly ranked in the top five last year—dropped to 28th, 30th, 39th, and 24th places, respectively.
The regions with the least mineral investment potential are Nova Scotia in Canada, Wisconsin in the United States, Spain, Mali, Washington State in the United States, South Dakota in the United States, Guatemala, Namibia, Ireland, and Zimbabwe.
In the U.S., Canada, and Australia, Australia performed best on this indicator—only Tasmania ranked in the lower half, while the other six states and territories all ranked in the upper half. Canada came in second, with eight provinces and territories placing in the upper half, accounting for two-thirds of the total number surveyed. The U.S. performed worst, with only four states ranking in the upper half, representing 28.6% of the total number surveyed.
The situations in Latin America and Africa are relatively similar, with countries in the top half and bottom half each accounting for 50%. Although the Asia-Pacific region has only four countries in the top half—representing 40% of the total number of countries surveyed in that region—two of these countries have even made it into the top 10. China ranks 41st, placing fifth within the region.
References: Fraser Institute Annual Survey of Mining Companies 2007/2008, 2008/2009