Which regions are the most attractive for mining investment?
An annual survey reveals Australia has again polled strongly in the global landscape for mining investment
Each year the Fraser Institute, an independent, non-partisan Canadian policy think-tank, conducts its Annual Survey of Mining Companies. The survey is an attempt to assess how mineral endowments and public policy factors affect exploration investment.
The purpose of the survey is to create a ‘report card’ that governments can use to improve their mining-related public policy to attract investment in their mining sector to better their economic productivity and employment. The results also offer a snapshot to all mining stakeholders of the most attractive jurisdictions in the world for mining investment, providing insight into trends shaping the global mining industry.
This article is a summary of the full results of the most recent 2022 annual survey.
Survey background
The survey was circulated electronically to approximately 1,966 individuals between August 23 and December 30, 2022. Survey responses have been tallied to rank provinces, states, and countries according to the extent that public policy factors encourage or discourage mining investment.
A total of 180 responses were received, providing sufficient data to evaluate 62 jurisdictions. By way of comparison, we evaluated 84 jurisdictions in 2021, 77 in 2020, 76 in 2019, and 83 in 2018. The number of jurisdictions that can be included in the study tends to wax and wane as the mining sector grows or shrinks due to commodity prices and sectoral factors.
The Investment Attractiveness Index
An overall Investment Attractiveness Index is constructed by combining the Best Practices Mineral Potential index, which rates regions based on their geologic attractiveness, and the Policy Perception Index, a composite index that measures the effects of government policy on attitudes toward exploration investment.
While it is useful to measure the attractiveness of a jurisdiction based on policy factors such as onerous regulations, taxation levels, the quality of infrastructure, and the other policy related questions that respondents answered, the Policy Perception Index alone does not recognise the fact that investment decisions are often to a considerable extent based on the pure mineral potential of a jurisdiction. Indeed, respondents consistently indicate that approximately 40 percent of their investment decision is determined by policy factors.
The top rated jurisdictions
The top jurisdiction in the world for investment based on the Investment Attractiveness Index is Nevada, which moved up from 3rd place in 2021. Western Australia, which topped the ranking last year, ranked 2nd this year. Saskatchewan continues to be on the podium, dropping slightly from a rank of 2nd in 2021 to 3rd this year. Rounding out the top 10 are Newfoundland & Labrador, Colorado, the Northern Territory, Arizona, Quebec, South Australia, and Botswana. The United States, Canada and Australia each have three jurisdictions in this year’s top 10, followed by Africa (1).
The Policy Perception Index
While geologic and economic considerations are important factors in mineral exploration, a region’s policy climate is also an important investment consideration. The Policy Perception Index (PPI), is a composite index that measures the overall policy attractiveness of the 62 jurisdictions in the survey.
The index is composed of survey responses to policy factors that affect investment decisions. Policy factors examined include uncertainty concerning the administration of current regulations, 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, labor regulations, quality of the geological database, security, and labor and skills availability.
The top rated jurisdictions
Nevada ranked first this year with the highest PPI score of 100, moving it up from sixth place in the previous version of the report. Botswana took the second spot held by Morocco (which dropped out of the top 10) in 2021. Along with Nevada and Botswana, the top 10 ranked jurisdictions are South Australia, Utah, Newfoundland & Labrador, Alberta, Arizona, New Brunswick, Colorado, and Western Australia. The United States is the region with the greatest number of jurisdictions (4) in the top 10 followed by Canada (3), Australia (2), and Africa (1).
Australia and Oceania
Considering both policy and mineral potential, Australia continues to be the most attractive region in the world for mining investment. Western Australia (2nd), Northern Territory (6th) and South Australia (9th) appeared in the global top 10 on the Investment Attractiveness Index in this year’s survey. Tasmania, South Australia, and New South Wales increased their PPI scores this year in comparison with the results from 2021.
Tasmania was the Australian jurisdiction with the highest increase in its PPI score (+16.7 points) since last year, climbing to the 12th spot when considering only policy. When evaluating Tasmania, miners expressed decreased concern about the uncertainty regarding protected areas (-67 points), disputed land claims (-57 points), and labour regulations (-40 points).
However, Tasmania ranked last among all the Australian jurisdictions when considering overall investment attractiveness. South Australia, which increased its PPI score by 12.9 points, improved its ranking by going from 16th (out of 84) in 2021 to 3rd (out of 62) in 2022. Respondents expressed decreased concerns over the uncertainty regarding disputed land claims (-46 points), protected areas (-31 points), and its socioeconomic agreements and community developments (-25 points).
New South Wales saw its PPI score increase by a little over 2 points this year and its rank improved from 33rd (of 84) in 2021 to 20th (of 62) in 2022. This year, miners expressed decreased concern over regulatory duplication and inconsistencies (-43 points), uncertainty regarding the administration and enforcement of regulation (-40 points), and environmental regulation (-34 points).
Despite an almost 6-point decline in its PPI score, Western Australia continues to be Australia’s highest ranked jurisdiction when considering investment attractiveness. Considering policy alone, the state went from ranking 4th (of 84) in 2021 to 10th (of 62) in 2022. Miners expressed increased concern over its taxation regime (+17 points), uncertainty regarding environmental regulations (+16 points), and regulatory duplication and inconsistencies (+13 points).
Find out more
The full survey results, available at the Fraser Institute website, go into more detail surrounding the survey including breakdowns of respondents and a subsection on an analysis of permit times.