Modern Mining Marchh 2017

COMMENT

Ivory Coast and Botswana shine in latest Fraser Institute survey

I nteresting to see that Ivory Coast has emerged as the top mining destination in Africa in the Fraser Institute’s Annual Sur- vey of Mining Companies 2016 in terms of its ‘Investment Attractiveness’. It is fol- lowed by Botswana, Ghana, the DRC, Zambia and Eritrea. Regrettably, South Africa comes in at a lowly 13th in the African rankings, slipping by two places since the previous survey in 2015 and barely beating South Sudan. In the Fraser Institute’s own words, the survey “is an attempt to assess how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment.” An overall Investment Attractiveness Index is constructed by combin- ing a Best Practices Mineral Potential Index, which rates regions based on their geologic attractiveness, and a Policy Perception Index (PPI), which is a composite index that measures the effects of government policy on attitudes towards exploration investment. The latest report is based on 350 responses and rates 104 mining jurisdictions around the world, including 18 in Africa. The survey identifies the Canadian prov- ince of Saskatchewan as the top jurisdiction in the world for mining investment (it has moved up one notch since 2015) with another Canadian province, Alberta, coming in sec- ond and Western Australia third. Rounding out the top ten are Nevada, Finland, Quebec, Arizona, Sweden, the Republic of Ireland and Queensland. While Ivory Coast may be the top coun- try in Africa, a glance at the full Investment Attractiveness Index shows that it is only rated at no 17 in the world. Still, this is a very cred- itable showing. South Africa, by contrast, is way down the index in seventy-fourth place – a drop of eight places since 2015. The scale of South Africa’s fall from favour as a mining destination becomes apparent if one considers that in 2002 the country was ranked 13th in the world (although far fewer jurisdictions were included in the survey back then). Which are the worst mining jurisdictions in Africa? Not surprisingly, Zimbabwe is ranked stone last on the continent and is also in the bottom ten measured globally, along with Mozambique. For those wondering which is the very worst mining jurisdiction in the world, it is apparently the Argentinian prov- ince of Jujuy, which – I must confess – I’ve never heard of before. Commenting on Africa’s showing in the lat- est survey, the authors say that Africa’s median

score on policy factors (the Policy Perception Index) has improved. “This was also the case for the region’s median investment attractive- ness score,” they continue. “Africa’s overall attractiveness now ranks it ahead of the regions of Oceania, Latin America and the Caribbean, Asia and Argentina.” Four African countries – the DRC, Ghana, Ivory Coast and Zambia – experienced improve- ments of over 10 points on their PPI scores, with the DRC exhibiting the largest improvement in Africa based on miners’ perceptions of policy. Like South Africa, Namibia – which at one stage was a front-runner in Africa – is slipping in the rankings. Says the survey: “Namibia’s score and rank deteriorated for the second straight year. In 2014, Namibia was ranked as the 19th most attractive jurisdiction in the world when only policies were considered. The country fell to 29th in 2015 and dropped again to rank 38th this year. After this year’s decline, Namibia no longer ranks as the second most attractive juris- diction in Africa based on policy.” One of the survey’s respondents, incidentally, makes the following comment on Namibia: “A draft policy of local ‘previously disadvantaged’ persons is being circulated. It models itself after South Africa which has clearly failed in its broad-based objectives. There is great danger to all existing or new companies in Namibia.” Of course, the question of how seriously one should take the Fraser Institute’s findings always crops up each year when the latest sur- vey is published and there are those who believe that its ratings should be taken with a pinch of salt. Certainly, one can point to some anomalies and I notice, for example, that Morocco, which was the top ranking country in Africa in 2015 (based on the Investment Attractiveness Index) does not even appear in this year’s survey. One also has to ask whether it can really be true that countries such as the DRC, Ethiopia and Eritrea are better mining investment des- tinations than South Africa, a country with a modern infrastructure, a world-class banking system and a depth of mining expertise prob- ably unequalled in the world. Nevertheless, the survey is extremely influ- ential and one can only hope that our Minister of Mineral Resources and his top civil servants will study it closely and be galvanised into action. South Africa should be rated as the top mining country in Africa. The fact that it is not is inexcusable and a sad reflection on the policies – at least in respect of mining – of our present government. Arthur Tassell

“Africa’s overall attractiveness now ranks it ahead of the regions of Oceania, Latin America and the Caribbean, Asia and Argentina.”

March 2017  MODERN MINING  3