Clyde Russell is a Reuters market analyst. The views expressed are his own.
LAUNCESTON, Australia, April 11 (Reuters) – Asia-Pacific countries are the best-placed to supply the region’s future commodity demand, but rather than encouraging mining it appears they are making it harder for explorers and producers.
Virtually every key resource-rich nation in the region slipped in annual rankings compiled by the Fraser Institute, a Canadian-based free-market think-tank that surveyed 742 mining companies for its report, released in February.
And it’s not just that Asian commodity producers slipped, the results showed that Indonesia was the worst mining jurisdiction, and was joined in the bottom 10 by Vietnam and the Philippines.
Australia, which prides itself on being a welcoming and secure place to do business, also saw the rankings of five of its six states and the Northern Territory decline, although all remained in the top 50 jurisdictions.
And while China and India are both major commodity importers, they are also significant producers and for them the survey was bleak reading.
China’s ranking slipped to 72nd out of 96 in 2012-13 from 58th out of 93 the prior year.
India managed to improve on its 89th spot from last year, but at 81st it is still anchored near the bottom.
Both these nations are increasingly dependent on commodity imports and therefore keen to increase local output, but it also would appear they aren’t making it easy for explorers to come in and exploit domestic opportunities.
However, in any survey it’s important to look at what is being asked, and of whom, in order to gauge what it means.
The Fraser survey appears mainly to cover small to medium mining companies, as it stated that the exploration spending of the 742 companies that responded was $6.2 billion in 2012.
This isn’t an insignificant amount, but it is only about 10 times greater than what BHP Billiton, the world’s largest mining company, spent on minerals exploration last year.
The survey measures the overall policy attractiveness of the 96 jurisdictions, but appears weighted more toward policies than geological quality.
“Policy factors examined include uncertainty concerning the administration of current regulations and environmental regulations, regulatory duplication, the legal system and taxation regime, uncertainty concerning protected areas and disputed land claims, infrastructure, socioeconomic and community development conditions, trade barriers, political stability, labour regulations, quality of geological database, security, labour and skills supply, corruption, and uncertainty,” is how the report puts it.
In other words, is the country or state an easy place to do business or is it risky? What the survey doesn’t tell us is the quality of reserves, ease of mining and transport.
For the rest of this column, click here: http://in.reuters.com/article/2013/04/11/column-russell-asia-mining-idINL3N0CY3YT20130411