The LatAm part of the Fraser Institute 2010/2011 mining country risk report
Out last week, The Fraser Institute annual report is the mining industry standard on world political risk factors. As regards LatAm, here’s how the region’s countries stack up on the world scale.
Note that in 2011 Fraser surveyed 79 countries/regions for its report and the lower your score, the higher up you are on the league table and the better the place is for mining. The IKN-generated chart has colour-coded the Fraser data for easier reading and the best of LatAm is (once again and with little surprise) Chile, which is the eighth best place to go mining in the world according to Fraser. Second place goes to Mexico (35th in the world) and third place Colombia (40th place and has moved up a lot, as we’ll see in a moment). Peru and Brazil (48th and 49th) get a qualified pass and then we come to the riskier jurisdictions. Panama in 68th place does not impress anyone and let’s note that LatAm hods four of the world’s bottom five places for mining (Guatemala 75th, Bolivia 76th, Venezuela 78th and Honduras 79th).
Now we turn to the evolution of mining political risk in the region (according to Fraser) and this chart that tracks how country scores have changed in the period 2006 to 2011.
Two things to note about the above chart. Firstly, in 2006 there were only 65 world jurisdictions covered by The Fraser Institute and now there are 79, so if a country has neither improved nor deteriorated in the last five years we’d expect to see a slight downmove in its world ranking. For example, a country such as Brazil doesn’t seem to have changed that much since 2008 or so. Secondly, the main positive has been the improvement in Colombia in the period in question. Back in the 2006/2007 report, Colombia was the seventh ranked region and sat behind Chile, Mexico, Brazil, Argentina, Ecuador and Peru. This year’s report has Colombia in third place in the region with only Chile and Mexico in front of it.
A final comment or three from your author. One thing to note is the difference in attitude between last week’s general political risk qualification of Colombia as the region’s riskiest country (the Maplecroft report) compared to the Fraser judgement that Colombia is improving in strictly mining terms. Another is that the Fraser report has an information gap or two, with a particular hole in the shape of Nicaragua. Nica is a pretty friendly place to go mining at the moment (as long as you pick your in-country region wisely) as companies like B2Gold prove, but Fraser has no coverage on the country. Hopefully that will change in the years to come as the report’s scope widens further. But overall, the Fraser calls and their country ranking is one I generally agree with, bar a nitpick there or a quibble there. This section also reminds me that our quarterly update on mining risk is due some time this month (the last one came in IKN83, December 5th). We’ll get round to that once PDAC is out the way.