Facts ‘N’ Figures: Chile loses top ranking in Fraser Institute survey

Vancouver — Mining executives say Manitoba and Alberta have the best policy environments in the world for mining investment, and no longer consider Chile to be among the world’s top 10 jurisdictions for doing business.

These were among the key findings of a 2006-2007 survey by the Fraser Institute, which asked mining company executives about the attractiveness of 65 jurisdictions around the world.

The results are based on responses the business-friendly think tank received from 333 companies and take into consideration factors that affect mining exploration, such as government policies, taxation, native land claims and environmental regulations.

For the first time, Manitoba emerged as the leading place to do business, knocking off Nevada, a perennial front-runner, which fell to third place after six years on top.

“Manitoba has long been among the top jurisdictions, and its number one ranking this year is as a result of having clear, consistent policies that are applied evenly and fairly over the long term,” said Fred McMahon, co-ordinator of the survey and director of trade and globalization studies at the Fraser Institute, in a release.

Alberta retained its number two ranking for the third year in a row. However, after years of improvement, British Columbia has stalled (after climbing out of the bottom 10 two years ago) and is the lowest ranked of the Canadian provinces.

Still, the big news in this year’s survey, according to the Fraser Institute, is the drop in Chile’s ranking to 27th from third last year.

“Most worryingly of the 12 policy areas examined in the survey, Chile suffered its biggest declines in the areas of political stability and security,” McMahon said.

The drop is attributed to labour disputes in Chile, particularly at the Escondida copper mine and the settlement that followed.

“The key question is whether this year’s decline represents a sea-change for Chile in the eyes of the mining community, or merely a brief squall,” McMahon said.

The fact that this year’s decline is not the first storm that Chile has felt in recent years will likely trouble some in the industry who might worry that this is a portent of growing uncertainty in the country, he said.

However, McMahon said, it is important not to overstate Chile’s decline in the survey. “While the country is showing some worrying signs, the government does not seem to be facing any imminent threat and appears committed to Chile’s economic model,” he said.

The survey also found that Mongolia is no longer seen as a positive place to invest, with the Fraser Institute noting that it has seldom received as many negative notes about one jurisdiction as it did about the northern Asian country this year. According to one mining industry respondent, Mongolia has literally changed its policy overnight from one of openness to one that heavily penalizes foreign-owned mines.

Mongolia is being closely watched because financier Robert Friedland’s Ivanhoe Mines and Rio Tinto hope to develop the huge Oyu Tolgoi property in that country.

Negotiations recently began between representatives of Ivanhoe and Rio Tinto, and a designated working group of Mongolian government officials assigned by the cabinet to produce a draft investment agreement needed to spur development of Oyu Tolgoi.

Once it is approved by cabinet, any draft agreement would be submitted to parliament for ratification.