The Fraser Institute

The Fraser Institute

February 23, 2012 06:32 ET

The Fraser Institute: Miners Bullish on Canada, Finland, Sweden in New Survey While Most U.S. States Get Lukewarm Reception

TORONTO, ONTARIO--(Marketwire - Feb. 23, 2012) - Five Canadian provinces, two American states, and a pair of Nordic countries dominate the top 10 rankings in the annual Survey of Mining Companies: 2011/2012, released today by the Fraser Institute, Canada's leading public policy think-tank.

The survey also found that miners are increasingly pessimistic about commodity prices such as copper and nickel, though they remain bullish on gold.

While Canadian province New Brunswick topped the global rankings this year, the emergence of Finland as the No. 2 ranked jurisdiction and Sweden in the seventh spot reflects the mining industry's growing interest in this region. Finland and Sweden have ranked among the top 10 for the past three years, with Finland this year climbing to second position overall from fifth in 2011, and Sweden remaining unchanged at seventh.

"The presence of Finland and Sweden among the world's most preferred mining jurisdictions shows that environmental stewardship and natural resource development can go hand in hand," said Fred McMahon, Fraser Institute vice-president of international policy research and coordinator of the survey.

Rounding out the rest of the top 10 are: Alberta (Canada) in third place; Wyoming (United States) ranked fourth; Quebec (Canada) ranked fifth; Saskatchewan (Canada) ranked sixth; Nevada (United States) ranked eighth; Ireland ranked ninth, and Canada's Yukon Territory in 10th spot.

Seven of the same jurisdictions ranked among the top 10 last year; newcomers include New Brunswick, Ireland, and the Yukon, replacing Manitoba (Canada). Utah (United States). and Chile. The decline of Chile, which fell to 18th spot from eighth in last year's rankings, is one of the surprises.

"Chile had been the only jurisdiction outside of North America to consistently rank among the top 10 since the inception of the survey. It has now been replaced by Finland and Sweden, which have emerged as mining superstars," McMahon said.

McMahon also noted that while Wyoming and Nevada continue to be viewed positively by the mining sector, the policies in most American states offer little in the way of encouragement to miners.

Said the head of one exploration company: "In the United States, the lack of understanding of the natural resource sector is astounding. Unfortunately, many of the policy decisions implemented by the states and federal government in the U.S. in the past 20 years have made exploration and mining virtually impossible to undertake, and are bound to have horrific consequences for the nation, in terms of commodity prices, national security, and job growth."

The Fraser Institute's Survey of Mining Companies: 2011/2012 is based on the opinions of mining executives representing 802 mineral exploration and development companies on the investment climate of 93 jurisdictions around the world (new additions this year include Missouri, Dominican Republic, Egypt, Guyana, Laos, Mauritania, Morocco, Poland, Suriname, and eight provinces of Argentina). The companies participating in the survey reported exploration spending of $6.3 billion US in 2011 and $4.5 billion US in 2010. The complete survey is available as a free PDF download at www.fraserinstitute.org.

Other notable changes this year included South Africa climbing to 54th from 67th overall, likely signalling a favourable reaction from the mining industry towards South Africa's intention to cancel its proposed mine nationalization program.

In Australia, four of seven states and territories measured dropped in the global rankings (South Australia to 19th from 11th, Tasmania to 30th from 28th, New South Wales to 32nd from 20th, and Victoria to 44th from 31st), while the Northern Territory finished strong in 11th position, up from 27th, Western Australia jumped to 12th from 17th, and Queensland rose to 28th from 38th.

The bottom 10 scores went to Vietnam, Indonesia, Ecuador, Kyrgyzstan, the Philippines, India, Venezuela, Bolivia, Guatemala, and Honduras.

Democratic Republic of Congo (DRC), Madagascar, and Zimbabwe, which were among the worst-ranked jurisdictions in the 2010/2011 survey, managed to climb out of the bottom 10 this year.

The report also notes that miners appear relatively pessimistic about future commodity prices, reporting that they expect level or reduced prices for silver, copper, diamonds, coal, zinc, nickel, potash, and platinum. The only exception was gold, where a vast majority of respondents expected increased prices.

Reduced optimism is also reflected in miners' investment intentions. This year, 68 per cent of respondents said they expected to increase their exploration budgets in 2012, compared to 82 per cent who planned to hike their exploration budgets in 2011.

"The key to establishing a positive investment climate is for governments to have a clear, sensible vision for mining policy and to stick to it," McMahon said.

"By upholding the rule of law, respecting negotiated contracts and property rights, and eliminating risk with regard to tax increases and red tape, nations can attract mining investment and reap the economic and social benefits of new jobs and increased prosperity."

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 85 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.

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