The Competitive Position of Countries Seeking Exploration and Development Investment
James M. Otto, 2005. "The Competitive Position of Countries Seeking Exploration and Development Investment", Wealth Creation in the Minerals Industry: Integrating Science, Business, and Education, Michael D. Doggett, John R. Parry
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Companies have many countries from which to select when deciding where to spend their limited exploration and development budgets. The evolutionary trends in the investment environment tend to be different for developed, developing, and transitional economies. In developed economies there are issues such as access to land, security of tenure, the not-in-my-backyard syndrome, native title, and permitting delays. In developing nations, the main trend has been to reduce barriers to investment by reforming the regulatory and fiscal systems. Likewise, transition economies have also initiated reform efforts, but these often proceed in a number of steps as socialist ways of approaching the sector are progressively relinquished, typically in several phases of reform. This study identifies over 60 factors that may influence a company’s investment decision to invest in one country versus another. There are numerous criteria that can influence the decision process and these can be used to rank countries. The investment criteria can be divided into nine principal categories: geologic, political, regulatory, marketing, fiscal, monetary, environmental and social, operational and profit criteria, and when applied in a systematic way, can yield a profile of both geologic prospectivity and country risk. Strategies used by governments to attract investment include means by which perceptions concerning geologic prospectivity can be enhanced, as in the provision of information regarding the geologic environment and availability of open ground, regulatory system improvements, and direct marketing. This study concludes that nations can improve the likelihood of mineral sector investment by taking steps to satisfy investor decision criteria through informed policies and laws. Over the past two decades more than 110 nations have revised their mining and related laws or made major amendments to them. The result has been a lowering of many regulatory and fiscal risks; however, many risks remain that are beyond the control of government.