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From Manitoba to Zimbabwe
David McKay
Posted: Tue, 06 Mar 2007

[miningmx.com] -- RESEARCH from the Fraser Institute confirms the reports of those who have spent time tapping rocks in the Democratic Republic of Congo(DRC) that the central African country is the world’s best mining locale, assuming it had no problems. Unfortunately, that’s one of the largest caveats in the history of risk assessment.

Based on the institute’s findings in its 2006/2007 report on mining attractiveness, the DRC ranks 57 out of 65 in terms of policy potential index (PPI). In essence, the PPI is a composite measuring a host of metrics including political stability and bureaucratic consistency. Zimbabwe ranks last, again.

The DRC’s ranking has improved year-on-year, however.

In the 2005/2006 version of the report, the Fraser Institute said the DRC was the third least attractive mining destination. Zimbabwe has been last since the 2004/2005 report, and in 2005/2006 it had the ignominy of reporting the lowest ever points since the survey began in 1997. It couldn’t get worse for Zimbabwe, but it seems to be getting better for the DRC. Assuming the country’s newly elected government stays intact, the DRC should produce improved scores in next years’s report by the institute.

That’s a big ‘if’, however. According to the report, most of the African countries polled are getting lower rankings year-on-year. Botswana, Burkina Faso, Ghana, Mali, South Africa, and Tanzania have become less attractive to mining companies year-on-year.

Only Zambia fares better but one wonders how long this will stay in place. Zambia’s government said royalties on mineral sales would be unilaterally increased to 3% from 0.6% regardless of whether a stabilisation agreement had been signed with the investor.

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What’s most interesting about the Fraser Institute’s report is that were, hypothetically speaking, the DRC to impose ‘best practices’, and assuming there were no land use restrictions, it’s policy and mineral potential would only encourage investment. Other African countries ranked on this metric, such as South Africa, show scores that are either neutral or encouraging of investment.

And to underline the massive potential that exists in the DRC, it’s interesting to note the Fraser Institute provides a ‘room for improvement’ metric. On this scale, the DRC has the fourth biggest scope of improvement behind (in order of ranking) Russia, Mongolia and Bolivia.