Mining Industry Overview

1. Developing a national mining industry

Mineral resource deposits are found in a very wide range of geological environments in many different regions of the world. Whilst many countries have large, diverse, mature mining industries and other industries closely linked to mining, others have virtually no established industry despite the known occurrence of significant, potentially economic mineral deposits.

The factors which tend to inhibit countries with favourable geological environments from developing large mining industries are largely the same as the risk factors for mining investments:

  • Insufficient geological information

  • Lack of an established industry erodes investor confidence

  • Inadequate enabling legislation and onerous licensing requirements

  • Uncertainty over regulatory requirements and risk of change: licensing requirements, environmental controls, financial provisions, especially royalties and taxes

  • Uncertainty over repatriation of earnings

  • Inadequate infrastructure, including road and rail network, ports and the long distances to reach them and insufficient and unreliable energy sources

  • Inadequate skills base

  • Lack of support industries

  • Political instability, including risk of conflict; security of personnel and installations

  • Unnecessary bureaucracy and corruption

Reasons why countries fail to attract mining investments to spur development of the industry

  • Legislative environments which are not conducive to mining investment

  • Focus on alternative investment opportunities, for example oil and gas in Nigeria

  • Lack of capital funding

  • Political instability

  • Lack of a traditional mining culture