Quebec, Finland, Botswana all shine in favorable mining policy survey

Quebec has been ranked as the “La Belle Province” for its favorable mining policy and investment environment, toppling the “Silver State” from its long-time throne.

RENO, NV - 

The Province of Quebec Thursday topped the annual Fraser Institute Survey of Mining Companies as having the best policy environment in the world for mining exploration and investment, toppling long-time champ Nevada from the number one spot.

The biggest surprise was Finland, which soared from a 29^th ranking last year to the number three spot.

The survey represents the opinions of 372 mining executives and managers internationally on the policy and mineral endowment of 68 jurisdictions on all continents except Antarctica. The companies participating in the survey reported exploration spending of US$1.48 billion in 2007, up from US$980 million in 2006. Survey respondents represented a 14.8% of total global exploration of US$9.99 billion last year.

Among exploration companies responding, 86% said they had increased spending in 2007. For producer companies with more than US$50 million in revenue, 93% indicated increased spending.

"Quebec has always been viewed in a good light by the mining industry, primarily due to its favorable geology, said Fred McMahon, survey coordinator and Director of Trade and Globalization Studies for the institute. "But Quebec's government also provides a favorable policy environment to go along with strong mineral potential. Mining companies feel Quebec's stable policies provide them with the certainty that reduces risks for long-term projects. Year after year, the survey bears out that above all, mineral exploration companies value stability and certainty when it comes to government policy."

Among with Quebec, the top 10 scorers on the survey are Nevada, Finland, Alberta, Manitoba, Chile, Utah, Wyoming, Ireland and Sweden.

The bottom ranked jurisdiction was Honduras, which did not receive a single response that the country does anything to encourage investment. The nation scored "0" in every category. Other low-ranking scorers were Zimbabwe, Ecuador, Panama, Bolivia, India, Indonesia and Mongolia.

If a mining policy structure "is opaque, unstable, and unpredictable-the things that most vex the mining industry-then the process can be easily politicized and good projects opposed by special interests may be rejected while bad projects with powerful supporters may be approved," McMahon said.

The "Current Mineral Potential Index" portion of the survey reveals whether a jurisdiction's mineral potential under the current policy environment encourages or discourages exploration. Jurisdictions which ranked high in the policy potential index but have limited mineral potential rank lower in the "Current Mineral Potential Index."

Mexico, Quebec, Chile, Burkina Faso and South Australia hold the top five spots on the "Current Mineral Potential Index." The bottom five spots are held by Venezuela, Zimbabwe, Montana, Wisconsin and Ecuador.

The "Best Practices Mineral Potential Index" reflects a jurisdiction's pure mineral potential since it assumed a "best practices" policy regime. "From a purely mineral potential, the seven jurisdictions that tie for top spot are Russian, Brazil, Ghana, the Philippines, Indonesia, Minnesota and Papua New Guinea," according to the survey.

When asked about Russia's mineral potential under "current" regulations, only 45% of those responding said Russia's potential was either neutral or encouraging. Under a "best practices" regulatory regime, where managers can focus on pure mineral potential rather than government-related problems, 100% of respondents said Russia's mineral potential was either neutral or attractive.

The jurisdictions with the greatest room for improvement are: Montana, Venezuela, Wisconsin, Ecuador and Minnesota. The jurisdictions with the least room to improve are Ireland, Chile, Alberta, Namibia and Burkina Faso, the survey found.

Botswana broke several records for the good this year in the survey. Its overall score was the highest ever for an African nation, ranking it in the 11^th spot. Zimbabwe would have maintained its dead last ranking, had it not been for Honduras' recording-breaking bad score.

Chile and Peru both rebounded on this year's survey. Chile moved up to the 6^th best posting this year, a substantially improvement over its 27^th ranking in 2006. Peru ranked 52^nd on last year's survey, but moved up to the 28^th spot this year. "This may be due to increasing confidence in the political stability in the nation," the Fraser Institute suggested.

The survey provided an analysis of 13 policy-related factors that contribute to the ability of jurisdictions to attract exploration investment and on two overall questions on the attractiveness of a jurisdiction under current and under best practices policies. This year a question on the availability of labor and skills was added to the survey.

Companies were asked to rate jurisdictions on the following factors on a scale of 1 to 5:

• Uncertainty concerning the administration, interpretation, and enforcement of existing regulations
• Environmental regulations
• Regulatory duplication and inconsistencies (including federal/provincial or federal/state and interdepartmental overlap)
• Taxation regime (including personal, corporate, payroll, capital taxes, and the complexity associate with tax compliance)
• Uncertainty concerning native land claims
• Uncertainty concerning which areas will be protected as wilderness or parks
• Infrastructure
• Socioeconomic agreements
• Political stability
• Labor regulation/employment agreements
• Geological database (including quality and scale of maps and ease of access to information)
• Security
• Availability of labor/skills
• Mineral potential assuming current regulation and land use restrictions
• Mineral potential assuming no regulation or land restrictions (but further assuming industry "best practice" standards)

Survey respondents were also asked for their comments regarding individual countries. Two survey respondents bemoaned the destruction of Indonesia's world-leading minerals investment environment and its replacement with chaos.

An exploration company vice president described Sweden as "a well established government process that is not hijacked by special interest groups. Sweden's Environmental Court is nearly a one-window system to get permits."

The largest threat "to continued investment in the industry is the lack of people to complete the work," said an exploration company president.

In Africa, an exploration company consultant said he thinks Ghana has the most favorable mining environment, while an exploration company president said he feels Zimbabwe faces "major political uncertainty, nationalistic policies, expropriation of interests."

One exploration company president called Argentina's mining environment "death by a thousand cuts. They don't come out and take from you; they just slowly suck the life out of your enterprise, with petty dishonesty, gradual duplicity, and willful incompetence." Another exploration executive noted that the bi-lateral commerce treaties between Canada and Argentina are not enforced, hurting Canadian companies exploring in the country.

The president of a mining company said there is a strong mining base in Mexico and Peru, "balanced environmental policies, and well-tested mineral tenure laws. In addition, a reasonable infrastructure [is] in place including trained/skilled workforce."

Meanwhile an exploration company president said Honduras has "capricious politics, corrupt courts and media. Consultation [was held] between stakeholders including industry to form a new mining law and then politicians do not adopt [the recommendations] even though they started the process. Honduras [has] too much political turmoil. The mining industry and other industries are being used in power struggle for political purposes."

A consultant for an exploration company said China suffers from "uncertainty of land tenure because of the necessity to partner with government entities who prove untrustworthy. After giving our partner in China $300,000+ in cash, land covering the JV [joint venture] area was never transferred into the name of the JV: delay after delay. Finally we gave up on the property and moved out of China. This scenario has been repeated time and time again in China-word is trading in investment circles that everyone who works in China is getting ‘ripped off.'"

New Zealand was criticized for a lack of security of tenure, while an exploration company manager declared that Australia is a good mining jurisdiction due to transparency in legal system and laws. However, a mining-related company president claimed Australia suffers from native title problems, bureaucratic regulatory slowness, and lack of available labor, cost blow outs and timeframe issues. "Australian development [is] being hindered through narrow approach to environmental hurdles."

Even perennial favorite Nevada was accused of having a mess with its staking and claims.

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