The 15 Best and the 15 Worst Mining Jurisdictions in the World

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April 15th, 2011

 

With the announcement yesterday that Bolivia President Evo Morales will announce a decree on May 1st to “dismantle the privatization model” of the mining industry and expropriate all assets owned by private mining companies, is this just an isolated example or will this be the start of a trend that many other governments will follow? Since gold and silver mining companies will exhibit the fastest earnings growth rate among any industry for the next several years, one should expect to consider political risk as a much greater part of the equation when investing in mining stocks in coming years.

So where are the riskiest mining jurisdictions in the world and where are the safest? According to the most recent Fraser Institute survey, here are the mining jurisdictions that graded the best and the worst for “encouraging mining investment” and granting “legal processes that are fair, transparent, non-corrupt, timely, and efficiently administered”. In order to rank these mining jurisdictions from top to bottom, the Fraser Institute asked mining executives and exploration managers in 79 mining jurisdictions around the world to grade the effect of government policies on mining operations (including restrictive regulations, uncertainties about land use, and the ever looming issue of restrictive taxes), the nature of trade, environmental, and operational barriers, and the effect of mineral potential on additional exploration investment. Furthermore, to encourage objective responses to the survey questions, the Fraser Institute surveyed all mining executives anonymously.

By comparing the grades of the jurisdictions below, you should be able to assess the risk and future probability of an Evo Morales type event happening to a mining company whose shares you own.