The Fraser Institute: Gloomy Outlook for Global Mining Industry With at Least 30 Per Cent of Exploration Companies

  TORONTO, ONTARIO, Feb 26 (MARKET WIRE) -- 
The global economic slowdown has cast a pall over the mining industry
with the vast majority of mining executives saying they expect a severe
pull back in exploration activity and at least 30 per cent of exploration
companies going out of business, according to the Survey of Mining
Companies 2008/2009, released today by independent research organization
the Fraser Institute.

    "Survey responses indicate this year that the mining sector expects
dramatically decreased investment plans along with a large number of
companies either reducing activity or going out of business all
together," said Fred McMahon, coordinator of the survey and the
Institute's Director of Trade and Globalization Studies.

    The survey found that more than four out of five mining executives
believe that at least 30 per cent of exploration companies will be forced
out of business in the current economic downturn. Of that total, two out
of five respondents believe 30 per cent of the world's exploration
companies will be forced out of business, with another two out of five
stating that 50 per cent or more of exploration companies will be forced
out of business.

    More than 90 per cent of respondents believe the exploration and
development activities of exploration companies will be curtailed, with
57 per cent saying the activity will decline "a great deal". Nearly 85
per cent of respondents say that the activities of production companies
will be curtailed, though only 31 per cent believe that the activity of
production companies will decline a great deal. This comes after years of
soaring exploration and development activities, as demand for commodities
and their prices rose. Almost 70 per cent of survey respondents indicated
that they had increased exploration and development activity over the
past five years.

    "All this is bad news for an economy looking forward to recovery. With
large numbers of exploration companies expected to go out of business and
a vast majority of companies planning to curtail exploration and
development investment in 2009, the world may face a shortage of raw
materials and skyrocketing commodity prices as the world economy moves
past the recession and into renewed growth," McMahon said.

    The Fraser Institute's Survey of Mining Companies: 2008/2009 represents
the opinions of 658 mining executives and managers worldwide on the
policy and mineral endowment of 71 jurisdictions on all continents except
Antarctica. Companies participating in the survey reported exploration
spending of US$3.4 billion in 2008 and of US$3.02 billion in 2007. The
complete survey is available at www.fraserinstitute.org.

    Despite the overall gloom, industry executives give many of Canada's
provinces top marks for policies that encourage mineral exploration and
development.

    For the second year in a row, Quebec is ranked number one overall in the
annual survey. Wyoming earns the number two spot, moving up from number
eight spot last year, with perennial favourite Nevada dropping one spot
to number three. Alberta is the second highest ranked Canadian province
at number four overall.

    The Canadian picture

    Overall, seven Canadian provinces were ranked among the top 10 best
jurisdictions in the world for mining policy: Quebec (1st overall),
Alberta (4th overall), Newfoundland & Labrador (5th overall), New
Brunswick (6th overall), Manitoba (8th overall), Saskatchewan (9th
overall), and Ontario (10th overall).

    Rankings for other provinces are: Nova Scotia in 12th, Yukon Territory in
15th, British Columbia in 24th, North West Territories in 40th, and
Nunavut in 43rd.

    "The survey represents the views of the mining industry about individual
provinces and territories at a given point in time. While the rankings
for some provinces have gone up or down, most of the changes are
relatively small and are in line with the year to year variability of a
survey," McMahon said.

    Significant international developments

    Chile joins Wyoming and Nevada as the only other non-Canadian
jurisdiction to crack the top 10, ranking in seventh place. Chile is also
the highest rated Latin American nation, followed by Mexico in 28th spot
and Peru in 30th.

    Among Australian states, South Australia has the highest ranking at 16th,
followed by the Northern Territories in 20th and Western Australia in
21st.

    Botswana is the highest ranked African nation (18th), followed by Mali
and Namibia in 33rd and 34th spots, respectively.

    The bottom 10 scores belong to Venezuela, Ecuador, Guatemala, Honduras,
India, Bolivia, Zimbabwe, Kyrgyzstan, Democratic Republic of the Congo,
and Indonesia.

    "Unfortunately, these are all developing nations which most need the new
jobs and the increased prosperity that mining can produce," McMahon said.

    "Mining is a fully international business and the survey results once
again demonstrate that jurisdictions must be prepared to compete on an
international basis to attract mining investment. Jurisdictions that fail
to recognize rule of law or respect negotiated contracts and property
rights will not be successful at attracting mining investment."

    The Fraser Institute is an independent research and educational
organization with locations across North America and partnerships in more
than 70 countries. Its mission is to measure, study, and communicate the
impact of competitive markets and government intervention on the welfare
of individuals. To protect the Institute's independence, it does not
accept grants from governments or contracts for research. Visit
www.fraserinstitute.org.

Contacts:
The Fraser Institute
Fred McMahon
Director of Globalization Studies
(416) 363-6575, ext. 226
Email: fred.mcmahon@fraserinstitute.org

The Fraser Institute
Dean Pelkey
Director of Communications
(604) 714-4582
Email: dean.pelkey@fraserinstitute.org
Website: www.fraserinstitute.org

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