Original Sixteen to One Mine, Inc.

SUMMARY OF WORLD WIDE MINING - By Michael M. Miller

The Fraser Institute, an independent Canadian economic and social research and educational organization, asked 972 senior and junior mining companies around the world to participate in a survey. Its purpose is to assess how mineral endowments and public policy factors such as taxation and regulation affect investment. The investment attractiveness of 47 jurisdictions in North and South America, Australia, Asia, Africa, India, Russia and Indonesia were included.

 

The 158 companies participating in the survey include 27 senior mining companies and 131 junior mining companies including the Original Sixteen to One Mine, Inc. of California. The effects of increasingly onerous, seemingly capricious regulations, uncertainty about land use, higher levels of taxation, and other policies that interfere with market conditions are rarely felt immediately, as they are more likely to deter companies looking for new projects than they are to shut down existing operations. The industry is reluctant to be publicly critical of politicians and civil servants.

 

"In recognition of the fact that jurisdictions are no longer competing only with the policy climates of their immediate neighbors, but in fact with jurisdictions around the world, we think it is important to continue publishing and publicizing the results of the survey annually, and to make the results available and accessible to an increasingly global audience," says Liv Fredricksen, Coordinator. Email: liv@fraserinstitute.ca.

 

Attractive geology does not guarantee mining investment if a region's policies are bad, say mining executives.

 

Chile claims the highest rank on the overall Investment Attractiveness Index with a score of 94 points out of a possible 100. Quebec was the top-rated North American jurisdiction with an overall investment score of 90. Australia is the next most attractive jurisdiction with an overall score of 89, and Nevada is the highest rated jurisdiction in the U.S. with a score 86.

 

Topics included were:

1. Policy Potential Index

2. Mineral Potential Index

3. Investment Attractiveness Index

 

Mining executives offered the following comments.

 

"The greatest difficulties in this business come from another direction—the ridiculous amount of filings and forms (and outrageous fees) demanded by the multiple securities commissions and stock exchanges. These seem to expand and change monthly."

—President, junior mining company.

 

"USA [has] eco-terrorism-environmental strangulation policies." The county needs a dose of "environmental realism based on good scientific/engineering policies."

—Evaluations Manager, senior mining company.

 

"U.S. [has] toooo many idiots! Who work with junk science and who are out for control at any cost…" It needs to "Get back to the reality that the U.S. is dependent on metals to make the economy grow and prosper same with energy."

—President, junior mining company.

 

The jurisdiction with the most favorable policies is "Australia. Gold mining [is] tax-free. Mining industry [is] highly supported by government at all levels."

—Exploration Manager, junior mining company.

 

"The entire mineral industry in Indonesia for the last 4 years is a horror story. At the current rate extractive industry will be dead in 5-8 years (exploration already is!)"

—Executive VP Exploration, senior mining company.

 

"China, India, Indonesia, Philippines, Zimbabwe, [and] Congo" have the worst policies. "Their cultures either do not value mining highly or they favor locals versus foreigners." Unfortunately, "corruption is not really subject to policy."

—President, junior mining company.

 

Russia has unfavorable policies, including "political, regulatory and legal harassment [freezing accounts] because of refusal to cooperate with continuing and increasing 'payoffs'."

—Evaluations Manager, senior mining company.

 

In South Africa the leaking of a draft Mining Charter for the new Minerals and Petroleum Bill that hinted at compulsory majority ownership of new mining projects has a significant effect on foreign investment and confidence."

—Director, senior mining company.

 

Since all of our mining properties are located in California, much of this survey has limited value; however I conclude my summary with the following observations. The respondents consider regulatory duplication and inconsistencies as a strong deterrent to exploration investment greatest in Russia. California is the third worst location only above Russia and Wisconsin. California ranks third from the bottom regarding environmental regulations, slightly ahead of Washington and Wisconsin.

A statistic worth intellectual pondering was a mathematical table of respondents who indicate factors that encourage exploration investment. A comparison of the percentages found in the column for "Mineral Potential Assuming Current Regulations" and "Mineral Potential Assuming No Land Use Restrictions" places California as the geographical political entity surveyed with the highest percent difference between the two columns at 68%. Go figure.

 

It will prove helpful for individuals considering an investment in remoter or exotic lands to have at least a base understanding of political stability, infrastructure, labor relations, regulations and restrictions. For me, it is only a tangential interest. One undeniable truth about a mining company is it cannot move its mineral deposit to a more favorable location. I like California, especially now that most mining companies view the state near the bottom of desirability. Mister Pocket, we're breaking rock to find you.

 
© 2017 Original Sixteen to One Mine, Inc.