The Fraser Institute

The Fraser Institute

March 05, 2007 06:00 ET

The Fraser Institute: New Survey Shows Chile and Mongolia in Decline as Attractive Areas for Mining Investment

TORONTO, ONTARIO--(CCNMatthews - March 5, 2007) - The attractiveness of Chile and Mongolia for mineral exploration has dropped significantly in the eyes of mining executives, according to the Survey of Mining Companies 2006/2007, released today by independent research organization The Fraser Institute.

Chile's ranking plummeted to 27th after ranking third last year. Of the 12 policy areas examined in the survey, Chile suffered its biggest declines in the areas of political stability and security.

Mongolia's ranking also fell significantly, dropping to 62nd from 33rd last year, reflective of the regulatory difficulties and lack of openness experienced by mineral exploration companies operating in Mongolia in the past year.

"Our experience with the survey has shown that above all, mineral exploration companies value stability and certainty when it comes to government policy," said Fred McMahon, co-ordinator of the survey and the Institute's Director of Trade and Globalization Studies.

Those themes were emphasized when looking at which jurisdictions ranked the highest in the survey this year where Manitoba finished on top for the first time, knocking off perennial favourite, Nevada, which fell to number three after a six-year run on top. Alberta retained its number two ranking for the third year in a row.

"Manitoba has long been among the top jurisdictions and its number one ranking this year is a result of having clear, consistent policies that are applied evenly and fairly over the long term," McMahon said.

Rounding out the top 10 are Utah, South Australia, New Brunswick, Quebec, Queensland, Tasmania, and Saskatchewan. Six of these jurisdictions were in the top 10 last year and only one, Queensland, was not in the top 20. Full results of the survey are available at

Zimbabwe finished as the bottom ranked jurisdiction with the second-lowest score ever recorded in the Policy Potential Index. Other low-ranking scorers were Venezuela, Bolivia, Mongolia, the Philippines, Papua New Guinea, Kazakhstan, Russia, DRC Congo, and Indonesia.

The Fraser Institute's annual survey asks mining company executives to provide opinions about the investment attractiveness of 65 jurisdictions around the world on every continent except Antarctica, including sub-national jurisdictions in Canada, Australia, and the United States. This year, Colombia was added to the survey.

The overall rankings are based on the survey's Policy Potential Index, a composite index that measures the effects on mining exploration of government policies including uncertainty concerning the administration, interpretation, and enforcement of existing regulations; environmental regulations; regulatory duplication and inconsistencies; taxation; uncertainty concerning native land claims and protected areas; infrastructure; socioeconomic agreements; political stability; labour issues; geological database; and security.

Focus on Latin America

Aside from Chile, several other Latin American countries saw their rankings decline from last year. Mexico, which had been improving year to year, fell out of the top 10, dropping to 28th from sixth overall last year. Argentina fell to 44th after finishing 24th in 2005 and Peru dropped to 52nd from 44th.

Venezuela continues to offer one of the least hospitable environments for mineral exploration, ranking 64th out of 65 jurisdictions. Only Zimbabwe is considered a worse place to do business by the mining industry.

"The anti-business policies of the Chavez government in Venezuela are costing the people of that nation jobs and investment they so desperately need," McMahon said.

Columbia joins the survey

Colombia was added to the survey this year. In the past, Colombia was perceived as too unstable and dangerous to attract much interest from the mining industry. However, Colombia's government has made large strides in improving security and battling criminal gangs and guerillas.

Despite that, Colombia's score on the overall index was quite low, ranking 55th out of 65. Nonetheless, it is far ahead of Bolivia and Venezuela and not too far behind Ecuador and Peru, which ranked 51st and 52nd respectively.

After years of turmoil and bad publicity, it is hardly surprising that Colombia entered the survey at a low level. The key questions will be whether Colombia's improving situation holds into the future and whether the country gains the trust of the mining community.

The Fraser Institute is an independent research and educational organization based in Canada. 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

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