Top-10 Worst Mining Jurisdictions in the World

10. Indonesia, Grade 25.1/100 Assuming industry “best practices,” the first country on our list would actually be the 10th best country on the Policy Potential Index, according to the 658 survey responses the Fraser Institute received. That’s probably because Indonesia is one of the world’s largest producers of tin (ranked second after China), coal (ranked the third largest thermal coal exporter after Australia and South Africa) and copper (ranked third largest, after the USA and Chile). It also produces significant quantities of gold, nickel and sulfur (above). Whereas Latin American countries so often struggle with indigenous opposition to mining companies holding lands, Indonesia has deep issues simply creating and managing a regulatory system. One CEO said, “In Indonesia, disputes between local and federal government have in several cases given two different companies access to the same ground.” Major issues among respondents were security, political stability and infrastructure, which paint a familiar picture of the Indonesia we so often see in the headlines: Religious tension has increasingly brought violence; Indonesia has the largest population of Muslims in the world, and is increasingly a center for extremism. 9. DRC Congo, Grade 24.1/100 DRC Congo is another one of those countries that has vast potential. Assuming industry best practices, the Fraser Institute survey respondents ranked it 19 out of 71 countries. Diamonds, gold and rare minerals are plentiful. However, one of the most important minerals in the DRC is coltan, from which niobium and tantalum are extracted. The latter two minerals are important in the manufacture of cell phones, DVD players and computers. The trouble in the DRC is a war that has raged on/off since 1996 that has claimed from five to six million lives, depending on the report you read. The conflict is complex, involves several neighboring countries and is partly rooted in disputes over land ownership, but mostly it is a battle for the vast natural resources the region possesses. 8. Kyrgyzstan, Grade 22.5/100 Kyrgyzstan was a new addition to the survey this year (as were Guatemala and Norway). Although this country is not particularly rich in resources, it still places fourth overall in the category of Room to Improve. One junior mining executive wrote, “Kyrgyzstan! The government is totally corrupt and ignorant of modern economics.” While Kyrgyzstan enjoys fewer problems when it comes to relations with indigenous peoples and policy regarding protected wilderness areas, it’s in the realms of policy, taxation, political stability and infrastructure (for which Kyrgyzstan found itself in last place) that this nation shows its true colours. After protesters and opposition party members deposed the last government in the 2005 Tulip Revolution, the country has struggled to stabilize – and modernize. Nevertheless, little historic exploration and substantial gold reserves make this an attractive target for some exploration companies. 7. Zimbabwe, Grade 19.1/100 Zimbabwe is one of the most tragic stories in most every regard. The country’s dictator is a complete nut-job who has abused his power more openly than just about any world leader outside of Saddam Hussein. Moreover, Zimbabwe once enjoyed a prosperity like few other countries in Africa. Today the country has little economy to speak of, almost no infrastructure and what political structures remain are of little actual benefit to anyone but a small group of Robert Mugabe supporters. As the President of one company with over $50 million in annual revenues stated, “Zimbabwe—would anyone go there?” 6. Bolivia, Grade 16.5/100 In the 470 years since the Spanish Conquest, Evo Moralez is the first indigenous leader of Bolivia. For resource investors, that’s the end of the good news. Moralez, a leftist of the same stripes as Hugo Chavez, in his first term in office nationalized natural gas, mining and telecommunications companies. And he’s just getting going. With another election due to take place this December, most analysts expect more nationalization in a post Moralez victory. Although 79% of respondents realize that Bolivia has mineral potential — given no land use restrictions — this is simply not a safe place to put investment dollars. 5. India, Grade 16.2/100 Liquid metal ( iron ) being poured in a ladel in pig iron plant in India India is a curious case when it comes to foreign investment in mining. While the pool of labour in the country is generally excellent, India’s infrastructure, existing geological database and regulatory duplication and inconsistencies make the place often a quagmire of red tape and chaos. Nevertheless, mining in India is a huge industry. An estimated one million people, including contract workers, are engaged in mining in India, the world’s second largest mining workforce after China’s. However, in mining, India has often presented unwieldy barriers to entry. Canadian mining companies have discovered it’s difficult to reach lease agreements on land. As a message on India’s Ministry of Finance website states, “Foreign investors should be prepared to take India as it is with all its difficulties, contradictions and challenges.” That’s as clear as mud! 4. Honduras, Grade 11.8/100 The National Palace of Guatemala City, which is located at the northern end of Plaza Mayor, serves both for official receptions and as an art gallery. Here the score starts sinking rapidly. Honduras is one of the western world’s most underdeveloped countries. Hurricane Mitch destroyed much of the country’s infrastructure along with the banana crop, the country’s third most important source of agricultural export revenue — who hasn’t eaten Honduras bananas their whole life long? Mining investment is seen as a potential boost to the economy; Honduras produces lead, zinc, silver as well as gold and copper. The Fraser Institute found that Honduras struggles in many respects including political stability, quality of infrastructure and concerns regarding aboriginal land claims. 3. Guatemala, Grade 5.1/100 There are just a handful of mining companies still operating in Guatemala, largely due to issues surrounding indigenous groups. While companies like Inco for years operated in Guatemala, which is rich in antimony, lead, tungsten, nickel and copper, the country’s weak governments are typically short on clear mining regulations. The result has too often led to disenfranchised and poor indigenous communities around mine sites. Today, new projects are often met with resistance. To be sure, Guatemala has great promise: In the Fraser report, 74% of respondents stated that country has mineral potential — assuming no land restrictions were in place. However in every other respect, the CEOs questioned said the country did not encourage investment, particularly when it comes to agreements with the government and communities. 2. Ecuador, Grade 4.1/100 The second lowest scorer on the Policy Potential Index is Ecuador. Surrounded by Columbia to the north and Peru to the east and south, Ecuador is a mineral rich country, but with deep political fissures and indigenous struggles. Ecuador has one of the world’s worst policy environments, but would tie for top rank in investment attractiveness under a “best policy” regime.