Mining Companies Rate Investment Attractiveness of Jurisdictions-Who Makes the Grade?

Contact:

Laura Jones, Director of Environmental Studies,
The Fraser Institute, (604) 714-4547 Email: lauraj@fraserinstitute.ca

Release Date: 13 December 1999

VANCOUVER, BC>>> The Fraser Institute, Canada's leading economic think tank, today released the results of its 1999/2000 Annual Survey of Mining Companies. In the survey, companies accounting for a combined total of over US$857 million in exploration (in 1998) rated the investment attractiveness of mining jurisdictions in North America and internationally.

"Exploration investment is a key indicator of the future health of the mining industry," said Laura Jones, survey coordinator and The Fraser Institute's Director of Environmental and Regulatory Studies. "While many jurisdictions have favourable geology that could easily compete with other regions around the world to attract investment, unfavourable policies increasingly threaten new exploration."

Respondents rated the attractiveness of jurisdictions across North America for exploration investment based on mineral potential, as well as public policies such as taxation, regulatory consistencies, and land use policies. This year's survey was expanded to include Texas, Nunavut, Australia, Argentina, and Peru.

The Winners

The state of Nevada ranks highest for overall investment attractiveness with a score of 85 points out of a possible 100. This top ranking is a result of the state's high rating in policy potential (85) and its top mineral potential rating (100). Quebec is the second most attractive jurisdiction, based on ranking third on both the policy potential index (86) and the mineral potential index (94).

Surprisingly, both jurisdictions beat Chile (76) and Australia (66), even though the latter two countries have reputations of attracting high levels of exploration investment based on mineral potential and favourable investment environments.

Also placing in the top ten jurisdictions for overall investment appeal: Manitoba (69), Peru (59), Ontario (58), Alaska (55), Argentina (55), and Mexico (54). (See Figure 1 for complete rankings).

Losers

Floundering at the other end of the scale are: Maine, British Columbia, Wisconsin, Minnesota, and Missouri-all rank among the least attractive areas for new mining investment.

British Columbia's low rating on the investment attractiveness index (3) is due mainly to its abysmal performance on the policy potential index where it received the lowest score of any jurisdiction (6) for the third year in a row. According to one mining company executive responding to the survey, "B.C. must reverse its position and policies on land use. Miners, loggers, ranchers, etc. must be allowed to use the land instead of being legislated and regulated off of it."

Wisconsin's low investment attractiveness score (3) suggests the impact of that state's moratorium on mining, and a well-publicized aversion to mining. One vice president of exploration complains that in Wisconsin, you "can't get anything done that is meaningful."

Maine received a bottom rating (1) due to its lowest ranking on the mineral potential index (3) and mediocre performance on policy (34). Other low-scoring jurisdictions include: Michigan (6), Texas (6), and California (6).

Survey Methodology

The investment attractiveness index was constructed by multiplying the mineral potential index (which rates regions based on geological attractiveness), and the policy potential index (a composite index that measures the effects of government policies on exploration investment), and dividing by 100.

The 111 companies participating in the survey include 88 junior mining companies and 23 senior companies representing almost 43 percent of the total expenditure in Canada for gold, base metals, and diamond exploration (as estimated by Natural Resources Canada), and close to 35 percent of the exploration expenditures in the United States (as estimated by the Metals Economics Group).

Established in 1974, The Fraser Institute is an independent public policy organization based in Vancouver.

For further information contact:

Suzanne Walters, Director of Communications,
The Fraser Institute, (604) 714-4582,
Email suzannew@fraserinstitute.ca

info@fraserinstitute.ca
4th Floor, 1770 Burrard Street, Vancouver, BC, Canada, V6J 3G7
Tel: (604) 688-0221 Fax: (604) 688-8539 Book Orders: 1-800-665-3558 ext. 580

You can contact us at the above email address for any comments or information requests. Please report any dead links or technical problems.