TORONTO—Alberta is now seen as the world’s most attractive jurisdiction for mineral exploration and development, ending Quebec’s three-year reign as the preferred destination for mining investment, according to the Survey of Mining Companies: 2010 Mid-Year Update, released today by the Fraser Institute, Canada’s leading public policy think-tank.
The updated survey of international mining executives, conducted between June 1 and June 30, is a follow-up to the Fraser Institute’s Survey of Mining Companies: 2009/2010, released in April.
Alberta now ranks first in the world after being ranked fourth overall in the 2009/2010 survey. Finland, which was third, moves up to second overall.
“After ranking Quebec as the best place in the world for mining investment for three years in a row, it appears that miners’ confidence in the province has been shaken by increases in mining taxes which were announced without consultation in Quebec’s spring budget,” said Fred McMahon, coordinator of the survey and the Institute’s vice-president of international policy research.
The survey results also appear to reflect concerns about Bill 79, the review of Quebec’s mining law, and could be seen as a blow to the province’s reputation for offering stable government policies.
The Fraser Institute’s Survey of Mining Companies: 2010 Mid-Year Update is based on the opinions of mining executives representing 429 mineral exploration and development companies on the investment climate of 51 jurisdictions around the world. The update was conducted following the global recovery in commodity prices and the introduction of new regulatory hurdles and taxation in many jurisdictions.
The survey results also show that Australia, to a much greater extent than Quebec, experienced a dramatic decline in rankings, following the Australian government’s plans to impose a heavy Resources Super Profits Tax (RSPT) on the mining industry. While the tax was cancelled after the survey was conducted—though miners will still face significant tax increases—the results reveal the mining industry’s strong opposition towards the RSPT. South Australia dropped to 15th place from 10th, the Northern Territory dropped to 30th from 14th, Western Australia fell to 28th from 19th, Queensland dipped to 33rd from 24th, and New South Wales fell to 38th from 20th.
“Despite the cancellation of the RSPT, it is unclear how the mining industry will react to newly announced tax changes, the structure of which is still uncertain,” McMahon said.
“But the results of this updated survey make one point abundantly clear: governments that change mining policies in mid-stream without consulting the industry risk driving away investment.”
Canadian jurisdictions generally fared well in the survey. The Yukon rose from 13th place in the 2009/2010 edition to fourth overall, and both Saskatchewan and Newfoundland and Labrador moved up one spot, placing fifth and seventh, respectively. Ontario moved up one spot to 20th while Nunavut climbed to 22nd.
British Columbia, which industry executives have in the past blasted for its multiple layers of regulation, little coordination between various government agencies, and uncertainty around aboriginal land claims, improved its ranking to 26th, although it remains ahead of only the Northwest Territories, which moved up to 32nd overall.
Overall, the top 10 jurisdictions are Alberta, Finland, Quebec, Yukon, Saskatchewan, Chile, Newfoundland and Labrador, Botswana, Alaska, and Nevada. Seven of the jurisdictions ranked among the top 10 are the same in both the updated survey and the previously released 2009/2010 report. The three exceptions are New Brunswick, which was not included in the updated survey; Manitoba, which fell from ninth place to 11th; and South Australia, which dropped from 10th to 15th.
The bottom 10 scores went to Ecuador, Mongolia, Kazakhstan, Bolivia, Venezuela, Zimbabwe, Russia, Colorado, Indonesia, and Tasmania.
The Philippines, Democratic Republic of Congo, and California, which were among the worst-ranked nations in the 2009/2010 survey, managed to climb out of the bottom 10.
“In order to attract mining investment, jurisdictions must uphold the rule of law and respect negotiated contracts and property rights. Jurisdictions that fail to do so can not compete successfully on a global scale,” McMahon said.
“Though Canada’s overall performance in the survey remains strong, Quebec has done an about-face in recent months, damaging its reputation for stable mining policy. The government would be well advised to refrain from thickening regulations and increasing royalties.”