Mineral Policy

6. Regulatory consistency and effectiveness

Mineral investment is a highly competitive, global business. The Fraser Institute based in Canada conducts an annual survey of almost 500 mining companies worldwide to determine the most and least attractive countries for exploration and mining investment. In its most recent survey of 2014/2015, it states that a jurisdiction’s policy environment accounts for 40% of its decision on whether to invest. The other 60% depends on the geological potential of the area in question. The Institute has developed a Policy Perception Index (PPI) that assess the overall policy attractiveness of some 109 countries included in the assessment.

Regional Results of International Policy Perception Index PPI (2015)

A key parameter affecting a country’s PPI is the Government’s institutional and regulatory effectiveness which covers aspects such as administration, interpretation and enforcement of regulations. This factor assesses how well the mining authority or other government departments with a responsibility to govern an aspect of the mining industry administer their mandate.

Mineral sector development will benefit from strong institutions that have sufficient human resource capacity to process applications, a modern system of mineral license management, such as a mining cadastre, an effective mine inspection function and comprehensive geological data.

Regulatory consistency

As noted earlier, investors need a predictable and secure governance regime to proceed with a mine development plan on schedule. 

Sometimes government agencies have regulatory responsibilities and regulations that may conflict with or duplicate other legal frameworks charged with regulating the mining industry. For example, a country’s land laws may include general requirements for involuntary community resettlement and compensation. There may also be mining-specific resettlement requirements in a mining law or in an environmental law that specify the parameters for environmental and social impact assessments. Sometimes these regulations may be slightly different, the same, or markedly different.

The process of understanding the different pieces of legislation that regulate a mine can be time-consuming and costly for mining companies. Uncertainty can cause unnecessary delays and result in a higher overall country risk rating for countries where legislation is unclear, deterring investment.

To facilitate investment, some countries have implemented the concept of a “one-stop-shop”. This is a policy decision to encourage investment by facilitating the regulatory permitting process across government. It means that instead of a mining company having to go to many different regulatory authorities to get approval to mine, there is one mining authority which takes on this responsibility.