Chile loses top ranking in Fraser Institute survey

Vancouver – Mining executives say Manitoba and Alberta have the best policy environments in the world for investment.

But in a surprising development, Chile is no longer considered by the mining industry to be among the worlds top 10 jurisdictions for doing business.

Those are among the key findings of a 2006/2007 survey by the Fraser Institute, which asked mining company executives to state their opinions about the attractiveness of 65 jurisdictions around the world.

The results are based on responses from 333 companies and take into consideration factors that impact mining exploration, such as government policies, taxation, native land claims and environmental regulations.

[None of the respondents in the survey are named].

For the first time this year, 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.

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 years survey, according to the Fraser Institute, is the drop in Chiles ranking to 27th from 3rd 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 which followed.

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

However, McMahon said it is important not to overstate Chiles 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 Chiles economic model, he said.

Meanwhile, the survey noted that it has seldom received as many negative notes about one jurisdiction has as it did about Mongolia this year.

According to one of the mining industry respondents, Mongolia has literally overnight changed policy from one of openness to one that heavily penalizes foreign owned mines.

As a result, its ranking in the survey has dropped to 62nd this year from 33 a year ago.

Mongolia is being closely watched because financier Robert Friedlands Ivanhoe Mines (IVN-T, IVN-N) and Rio Tinto (RTP-N, RIO-L) hoping to develop the huge Oyu Tolgoi property in that country.

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

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