Jurisdictions a jostlin’

Mining companies are typically loathe to publicly and directly criticize the governments that have jurisdiction over their operations, so an anonymous survey of attitudes held by mining company executives towards the world’s key mining jurisdictions provides a rare opportunity for large numbers of mining executives to express what they really think.

There’s only one study like this — the influential Annual Survey of Mining Companies — and it’s prepared each year by The Fraser Institute, Vancouver’s free-market policy factory.

The institute has just released the ninth annual version of its survey, and it’s showing that British Columbia is coming out of the doghouse and starting to stand tall again in the mining world.

The Fraser Institute launched its mining-company survey in 1997, originally as a way to show B.C.’s then-socialist government and the province’s citizens that anti-mining policies and attitudes were damaging the local mining industry — one of the pillars of the provincial economy.

This ninth iteration of the survey was co-ordinated by Fred McMahon and Michael Cust, and the respondents were comprised of 101 presidents, 36 vice-presidents, 30 managers, 10 consultants, 37 others, and 108 who did not indicate their position. The companies that responded have combined exploration budgets for 2005-06 of US$1.8 billion, or about a third of the global total.

Respondents were asked to only give their opinions on policies and jurisdictions with which they were familiar. In the last couple of surveys, the number of jurisdictions has grown to 64, from just the provinces and territories of Canada in 1997, the survey’s first year.

In terms of “policy potential,” the 10 most-favoured jurisdictions for mining companies, in descending order, are Nevada (the perennial number-one pick), Alberta, Manitoba, Chile, Quebec, Mexico, Saskatchewan, Arizona, Ontario and Utah.

The biggest positive change on the policy potential list is British Columbia, which climbed to 23rd spot from 44th last year. Last year’s survey was the first time that B.C. did not rank in the bottom 10 of the “policy potential” index and, this year, B.C. ranks in the top half for the first time.

The improvement stems from the election of the centre-right B.C. Liberal Party in May 2001 and its adoption of pro-business policies that put an end to the “lost decade” of the 1990s, when B.C. was ruled by the anti-mining zealots of the New Democratic Party.

The survey results pointedly show, as McMahon notes, that “damage to a province’s reputation can take years to repair.”

On the downswing in mineral-policy perceptions are Canada’s Atlantic provinces, with New Brunswick slipping to 18th from 16th, Nova Scotia falling to 35th from 30th, and Newfoundland and Labrador dropping to 39th from 35th.

Still, Canada’s provinces and territories hold their own against competitors. Globally, the worst jurisdictions on the policy potential index are Zimbabwe (which posted the lowest-ever score in the survey’s history), Papua New Guinea, the Democratic Republic of the Congo (DRC), Venezuela, the Philippines, Indonesia, Russia, Zambia, Bolivia and California.

The jurisdictions deemed to have the greatest “room for improvement” were Russia, Peru, Mali, Ghana, the DRC, Papua New Guinea, Indonesia, Canada’s Northwest Territories, Nunavut and Nevada.

As for the survey’s “current mineral potential” index, the top 10 spots, in descending order, are held by mining’s familiar list of go-to destinations: Chile, Nevada, Mongolia, Quebec, Mali, South Australia, Ghana, Mexico, Ontario and Western Australia.

Dragging along the bottom of the current mineral potential index are the usual suspects, which tend to be the worst performers on the mineral policy index: Colorado (dead last, again), California, Zimbabwe, Ireland, Wisconsin, Washington, Minnesota, Ecuador, the DRC and Venezuela.

However, from a purely geological point of view, the most attractive jurisdictions for exploration are a more varied bunch: Nevada, Nunavut, Canada’s Northwest Territories, Indonesia, Papua New Guinea, the DRC, Ghana, Mali, Peru and Russia.

The least appealing jurisdictions, geologically, are all First-Worlders: Nova Scotia, Alberta, Finland, Ireland, Wisconsin, New Brunswick, New Zealand, Sweden, Tasmania and Spain.

The Fraser Institute then combines its policy and mineral potential indices to form a composite index, which is somewhat arbitrarily weighted at 40 per cent by policy and 60 per cent by mineral policy.

At the top of the composite index are Chile, Nevada, Western Australia, Quebec and Brazil. (One Canadian success story deserving mention is the Yukon, which has risen to the top third of the survey.) At the bottom are New Zealand, Wisconsin, Tasmania, Washington and South Dakota.

While the Fraser Institute’s survey gives mining execs a forum to praise and to vent, it also serves as a gentle reminder to government officials that they do not develop their mineral policies in a vacuum: whether they like it or not, their jurisdiction is competing against dozens of others around the world.