Weekend's Top Story: Fraser survey says New Brunswick is mining heaven, Honduras is the pits

"The best mineral deposit has no value if government regulations and taxation prevent production." The latest ratings from the Fraser Institute see some significant changes from a year ago.

Author: Dorothy Kosich
Posted: Friday , 24 Feb 2012
http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=145993&sn=Detail&pid=102055

RENO (MINEWEB) -

New Brunswick in Canada has vaulted to the top of rankings as the world's most attractive jurisdiction for mineral exploration and development according to the Fraser Institute's latest survey of mining companies.

The survey of 802 mining exploration and development companies on the investment climate of 93 nations, provinces and states ranked Honduras as the worst jurisdiction for mining exploration and development.

The companies participating in the Fraser Institute's Survey of Mining Companies: 2011/2012 reported exploration spending of US$6.3 billion in 2011 and US$4.5 billion in 2010.

"New Brunswick shot to the top of the rankings as miners lauded the province for its fair, transparent, and efficient legal system and consistency in the enforcement and interpretation of existing environmental regulations," said Fred McMahon, Fraser Institute vice-president for international policy research and survey coordinator.

"Combine that with a competitive taxation regime and minimal uncertainty around dispute lands claims and New Brunswick has emerged as a superstar in the view of the global mining community," he observed.

Alberta, which had occupied the top spot on last year's Fraser Survey, dropped to third on the list.

Nevertheless, Canadian jurisdictions claimed five of the top 10 spots this year. New Brunswick, Finland, Alberta, Wyoming, Quebec, Saskatchewan, Sweden, Nevada, Ireland, and the Yukon Territory were ranked in the top 10 this year. The bottom 10 scorers are Honduras, Guatemala, Bolivia, Venezuela, India, Philippines, Kyrgyzstan, Ecuador, Indonesia and Vietnam.

"Miners appear to be more pessimistic about future mining commodity prices, at least in comparison to the heady optimism about mining places in the recent past," the survey observed. "Miners are expecting level or reduced prices for almost all the commodities we examine: silver, copper, diamonds, coal, zinc, nickel, potash, and platinum. The exception is gold."

The survey found miners "were especially pessimistic about diamond prices. Prices for gold and silver, on the other hand, were expected to fare better than other minerals."

This year the survey determined, "The strongest growing commodities in Latin America (Chile) and Africa (Botswana) are perceived to have the lowest level of corruption among developing nations. Even more interestingly, they are perceived to have less corruption that four Canadian provinces (Quebec, Manitoba, British Columbia, and Alberta), and two US states (Montana and Washington)."

"Spain and Poland had the highest levels of corruption among high-income nations, immediately followed by Nunavut and the Northwest Territories, although...these territories have improved in this survey. ‘Of more concern is the fact that a large number of miners would not invest in these jurisdictions due to worries about corruption around 16% for Spain, Poland, and the Northwest Territories, and 8% in the case of Nunavut."

The 10 jurisdictions considered by the survey respondents to be the most corrupt are India, the Philippines, Indonesia, the Democratic Republic of Congo, Venezuela, Papua New Guinea, Guatemala, Honduras, Madagascar, and Zimbabwe. The respondents consider Sweden, Norway, Finland, Missouri, Minnesota, Michigan, Idaho, Arizona, Saskatchewan, and South Australia the least corrupt jurisdictions.

WHAT MINERS ARE SAYING

Those surveyed also submitted a number of comments to the Fraser Institute.

"Everything is in chaos with such an emotional market based on international monetary ambiguity and fiascos. The junior exploration sector will continue to be hammered as risk money sits on the sidelines. Trying to obtain financing to satisfy long-term exploration objectives will be really difficult. The investment banking community views long term as 6 months (!) which can be a company killer."

--Exploration company president

"I work in Bolivia and while it can be difficult at times and the policies guiding the mining industry can seem to fluctuate wildly, the untapped mineral potential of this country for many commodities is so incredible that working there is worth the risks."

--Exploration company president

"The best mineral deposit has no value if government regulations and taxation prevent production."

--Exploration company manager

"Victoria [Australia] inhibits exploration and mining through ridiculously obstructive conditions on licenses, bowing to the complaints of a few at the expense of the many. De-bottleneck license conditions, allowing exploration and mining to take place with reasonable expectations and commitments."

--Manager in a producer company with more than US$50 million revenue

"In the United States, the lack of understanding of the natural resource sector is astounding. Unfortunately, many of the policy decisions implemented by the state(s) and federal government in the United States in the past 20 years have made exploration and mining virtually impossible to undertake, and are bound to have horrific consequences for the nation, in terms of commodity prices, national security and job growth."

--Exploration company president

"In the Northwest Territories, the regulatory review process is cumbersome and time consuming. Too many small projects (that have no impact on the environment) are being referred to environmental assessment. These referrals generally come from the aboriginal community where land claims remain unsettled. The federal minister of Indian and North Affairs Canada has commissioned a number of reviews with no measureable results, which continues to frustrate industry and in turn stymies new and longer term exploration activities."

--Exploration company vice president

"Botswana encourages and assists project development; it is the jurisdiction other African countries should strive to copy."

--Exploration company president

"Zimbabwe: They are enacting the same approach as [they did] to farms under Mugabe-take over all mines possible...I have heard top officials state ‘do not worry about foreign investment and ownership, they will never get their profits out of the country.'"

--Exploration company president

"Ecuador: Just a joke. No real guidelines. Government goes on case-to-case basis, reserves right to change development regime at any time."

--Exploration company president

"Venezuela has crossed the line from socialism to stealing. Social responsible and acknowledgement of community rights cannot be used as a guise to steal."

--Exploration company president

"Sweden boasts efficiency in permitting and supporting new mines. From discovery through to commissioning of a new mine took us about four years."

--Producer company with more than US$50m revenue, company president

"Russia wants you to bring big bags of money and hand the keys over when it comes time to reap the rewards of your risk...The mentality in Russia is similar to a parasite-suck as much life out of something as possible without entirely killing the host."

--Exploration company president

"Kyrgyzstan: Once a feasibility study is completed, the license is revoked."

--Exploration company vice president

"Mongolia suffers from corruption and no security of tenure. The court system is ineffective and agreements are voided at the whim of the ruling party. International oversight of mineral tenure system."

--Exploration company president

iPad Version: Picture -New Brunswick coat of arms- photo courtesy of the Province of New Brunswick