NAIROBI: Kenya is rated as the worst mining destination in Africa and only slightly better than Hungary and Malaysia in terms of global rankings, according to the 2014 Fraser Institute Annual Survey of Mining Companies.
The survey, which canvasses the views of mining executives from around the world, has placed Kenya at 120 out of 122 jurisdictions worldwide. Kenya's performance was dismal in terms of its policy perception index and best practice mining potential.
The finding by the Canadian firm that Kenya's attractiveness as a mining investment destination is worsening comes at a time when the Senate is about to debate amendments to the Mining Bill, before it is enacted into law.
There are also numerous cases still pending that involve cancellation of mining licences of various firms by authorities. According to the report, when considering both policy and mineral potential in the Investment Attractiveness Index, Malaysia ranks as the least attractive jurisdiction in the world for mining investment.
This is a significant drop for Malaysia which ranked 70 out of 112 in 2013. In the bottom 10 (beginning with the worst) are Hungary, Kenya, Honduras, Solomon Islands, Egypt, Guatemala, Bulgaria, Nigeria and Sudan.
Kenya and Bulgaria experienced large drops from position 79 and 57 (of 112 overall) in 2013, respectively. The Investment Attractiveness Index is a composite index that combines both the Policy Perception Index and results from the Best Practices Mineral Potential Index.
The report, however, notes that while it is useful to measure the attractiveness of a jurisdiction based on policy factors like onerous regulations, taxation levels, quality of infrastructure, and other policy-related questions, Policy Perception Index alone does not recognise the fact that investment decisions are often sizeably based on the pure mineral potential of a jurisdiction.
"Indeed, respondents consistently indicate that roughly only 40 per cent of their investment decision is determined by policy factors," it adds. For instance, the 10 least attractive jurisdictions for investment based on the Policy Perception Index are (starting with the worst) Honduras, Malaysia, Philippines and South Sudan.
Bottom ten
Venezuela, Philippines, and Zimbabwe were all in the bottom 10 jurisdictions in 2013, while South Sudan, Sudan and Central African Republic were included in the just released 2014 survey for the first time.
The four countries that dropped into the bottom 10 in 2014 all experienced significant declines in their rankings. Nigeria dropped from 75 in 2013 to 117 last year, while the other African jurisdiction to fall into the bottom 10, Ethiopia, moved down from 78 to a ranking of 114 in 2014. Malaysia dropped from 69 in 2013 to 120 last year.
Fraser Institute has conducted an annual survey of mining and exploration companies to assess how mineral endowments and public policy factors such as taxation and regulation affect exploration investment since 1997.
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