Mining Companies Rate Investment Attractiveness of Jurisdictions - What really matters?

Contact:

Laura Jones, Director of Centre for Studies in Risk and Regulation
The Fraser Institute
Telephone: (604) 714-4547
Email: lauraj@fraserinstitute.ca

Release Date: 18 December 2000

VANCOUVER, BC — Attractive geology does not guarantee investment, according to The Fraser Institute's fourth annual survey, 2000/2001 Annual Survey of Mining Companies, released today. In the survey, companies accounting for a combined total of over US$725 million in exploration (in 1999) rated the investment attractiveness of mining jurisdictions in North America and internationally.

"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," said Laura Jones, survey coordinator and director of The Fraser Institute's Centre for Studies in Risk and Regulation.

The results of the survey were used to create several indices. The mineral potential index rates a region's attractiveness for new investment based on its geology. The policy potential index is a composite index that measures the effects of government policies such as regulation and land use on attracting new exploration. An overall investment attractiveness index considers both mineral potential and policy factors.

Figure 1: Policy Potential Index - a composite index that measures the effects of government policies such as regulation and land use on attracting new exploration.

Figure 2: Mineral Potential Index - rates a region's attractiveness for new investment based on its geology.

Figure 3: Investment Attractiveness Index - considers both mineral potential and policy factors.

The Winners

Nevada ranks highest for overall investment attractiveness for the second year running with a score of 95 points out of a possible 100. This top ranking is a result of the state's top score on the policy potential index (93) and high score on the mineral potential index (97). Chile is the second most attractive jurisdiction with a score of 91, based on its high ratings in both mineral potential and policy potential. "Nevada and Chile performed well because they are rich in resources and realize that resource development is economically important to them," comments Jones.

Ontario was the top ranking Canadian jurisdiction (86) with a third place ranking for overall investment attractiveness as a result of its top mineral potential ranking (100), and high policy potential (72).

Also placing in the top ten jurisdictions for overall investment appeal: Peru (82), Mexico (77), Australia (75), Brazil and Alaska (tied at 74), Quebec (73), and Arizona (60).

The Losers

Wisconsin (16), Minnesota (24), Nova Scotia (26), and Washington and South Dakota (tied at 27), all rank among the least attractive areas for new mining investment based on their poor ratings in both mineral and policy potential.

British Columbia's low rating on the investment attractiveness index (43) is the result of its abysmal performance on the policy potential index where it received the lowest score of any jurisdiction (6) for the fourth year in a row. Jones stresses that "B.C. is a prime example of how even resource-rich provinces can deter investors if the policy climate is hostile towards business."

The results of the survey reveal that as exploration opportunities increase, attractive geology is no longer enough to ensure a healthy future for the mining industries in Canada. "Governments who want to keep mining in their jurisdictions must compete to have favourable policy climates that encourage investment," concludes Jones.

About the Survey

The 157 companies participating in the survey include 132 junior mining companies and 25 senior mining companies representing almost 50 percent of the total mineral exploration expenditure in Canada (as estimated by Natural Resources Canada), and over 40 percent of the exploration expenditures in the United States (as estimated by the Metals Economics Group).

This year's survey includes all Canadian provinces and territories except PEI, 14 US states, Australia, Argentina, Brazil, Chile, Mexico, Peru, Indonesia, Papua New Guinea, and South Africa.

Established in 1974, The Fraser Institute is an independent public policy organization based in Vancouver, with offices in Calgary and Toronto.

For further information regarding 2000/2001 Fraser Institute Annual Survey of Mining Companies (4th edition) contact:

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

The media release and study can be viewed on the web site at www.fraserinstitute.ca.

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