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MINING NEWS: Mining companies more confident in Alaska The state’s taxation regime is praised in the Fraser Institute’s annual survey, as is British Columbia’s geological database Sarah Hurst For Mining News
Alaska, Yukon and British Columbia have improved their standings in the annual survey of mining companies published by Canada’s Fraser Institute, but Russia remained low in the ranking of 64 jurisdictions around the world. This year representatives of 322 exploration, development and mining consulting companies responded to the survey, up from 259 last year. (See related news on the Fraser survey in Curt Freeman ’s column on page 13.)
Survey participants answered questions about the regions where they work, assessing their mineral potential, environmental regulations, taxation regime, infrastructure and several other issues. For the sixth straight year, Nevada came out best for policy potential, a composite index based on all the categories, followed by Alberta, Manitoba, Chile, Quebec and Mexico. Russia was seventh from the bottom, with Zimbabwe again considered the worst of all 64 jurisdictions for mining.
Alaska moved up from a disappointing 33rd place in last year’s policy potential index to 13th position this year. British Columbia also rose from 44th place to 23rd and Yukon rose from 34th place to 21st, but Nunavut and Northwest Territories both slipped further down the table, from 48th and 49th place to 53rd and 52nd respectively. Russia’s 58th place was slightly better than its ranking of 61st last year.
Different rankings for mineral potential The picture looks somewhat different when regions are judged by their mineral potential alone, assuming an administration that pursues best practices. In that index, Northwest Territories, Nunavut and Russia are rated joint first together with Nevada, Indonesia, Papua New Guinea, the Democratic Republic of Congo, Ghana, Mali and Peru. By contrast, Alaska is 14th, British Columbia 26th and Yukon only 42nd.
Comments by survey respondents provided some reasons why mining companies might be deterred from exploring the mineral potential of Nunavut and Northwest Territories. “The water boards in the NWT are totally ineffectual and significantly hindering the mining process,” the vice president of an exploration company said. Also in the Northwest Territories, “land claim, land use permitting uncertainties, and protected area strategy are (a) huge hindrance to mineral exploration and development,” the president of another exploration company said. “The Natives are unrealistic. The government is misguided and (creates) too much red tape,” an exploration company president said of Nunavut.
Lack of infrastructure a deterrent Nunavut, Northwest Territories and Russia all ranked poorly for the quality of their infrastructure, with 59 percent, 52 percent and 31 percent of respondents saying that the lack of infrastructure in those areas was a strong deterrent to investment.
Uncertainty concerning the administration, interpretation and enforcement of existing regulations proved to be a significant problem for Russia, with 38 percent of respondents saying that this factor is a strong deterrent to investment in the country, and another 28 percent saying they would not pursue investment due to this factor. “Russia (has) uncertainty of title; high level of corruption; low personal safety assurance,” the vice president of an exploration company commented. Russia was also slammed in the survey for regulatory duplication and inconsistencies.
For Yukon, Northwest Territories and Nunavut there was mild concern about the stringency of environmental regulations, but nothing like the results for Montana and California: 54 percent and 62 percent of respondents said they would not pursue investment in those states due to this factor.
Alaska second on tax regime Alaska ranked second out of the 64 regions, behind Alberta, for having a favorable taxation regime. Yukon and British Columbia also rated highly, while Russia was second to last, with 44 percent of respondents saying the taxation regime was a strong deterrent to investment and another 19 percent saying they would not pursue investment due to this factor. Alaska was also assessed as having a low level of uncertainty concerning Native land claims, by contrast with British Columbia and Northwest Territories, where many see this issue as a problem.
“Canada in general has reasonably favorable policies. However, this is decreasing rapidly due to the uncertainty surrounding the First Nations land claim settlements,” the vice president of an exploration company said. For British Columbia, 39 percent of respondents said that uncertainty over Native land claims was a strong deterrent, and 10 percent said they would not pursue investment due to this factor. For Northwest Territories the figures were similar, 34 percent and 13 percent.
British Columbia came top of the list for the quality of its geological database, with 64 percent of respondents saying that this factor encourages investment in the province. The British Columbia government has “improved infrastructure (maps, etc.) and simplified regulations,” the president of an exploration company commented. “British Columbia (has) rule of law, pro-development government, safe(ty), mineral endowment, (and) exploration infrastructure (drills, helicopters, geologists, databases),” the manager of a producer company with more than US$50 million in revenue said.
No comments about Alaska specifically were published in the survey, but one exploration company president did sound a word of warning that echoes what has been said in recent debate about the Pebble project: “Stop meddling and squeezing the companies after they have a discovery. Don’t change rules after the fact.”
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