Environmental Engineering Reference
In-Depth Information
TABLE 1.4
Country Risk Factors
Government Stability
A measure of the government's ability to carry out its declared programme(s) and its ability to stay in offi ce. This will
depend on the type of governance, the cohesion of the government and the governing party or parties, the proximity of
the next election, the government's command of the legislature, popular approval of government policies, and so on.
Investment Profi le
This is a measure of the government's attitude to inward investment as determined by the assessment of four sub-
components: the risk to operations, taxation, repatriation, and labour costs.
Internal Confl ict
This is an assessment of political violence in the country and its actual or potential impact on governance. The highest
rating is given to those countries where there is no armed opposition to the government, and the government does not
engage in arbitrary violence, direct or indirect, against its own people. The lowest rating is given to a country embroiled in
an ongoing civil war. Intermediate ratings take into account kidnapping and terrorist threats.
Corruption
Incorporates the most common form of corruption such as bribes and protection payments, but is more focused on
actual or potential corruption in the form of excessive patronage, nepotism and suspiciously close ties between politics
and business.
Law and Order
Law and Order are assessed separately. The Law subcomponent is an assessment of the strength and impartiality of the
legal system, while the Order subcomponent is an assessment of popular observance of the law.
Ethnic Tensions
This component measures the degree of tension within a country attributable to racial, nationality, religious or language
divisions. This may be particularly important where a mine investment may span a particular ethnic enclave, creating
potential for disruption due to uprisings or hold-up.
Bureaucratic Quality
The institutional strength and quality of the bureaucracy is another shock absorber that tends to minimize the revisions of
policy when governments change. Therefore, high scores are given to countries where the bureaucracy has the strength
and expertise to govern without drastic changes in policy or interruptions in government services.
Source:
based on Howell (2001) and Hartley and
Medlock (2005)
are a major factor in attracting mineral exploration and investment. While country risks
may sometimes be as dramatic as war or invasion of mining sites by protestors ( Case 1.3 ),
more common are administrative delays in granting permits, or changes to the legislative
and regulatory framework, which can impose additional costs on a project. These issues
arise in developed as well as in developing countries. Many governments feel free to apply
and increase taxes and royalty assessments at will, and to change permit regulations and
restrictions on operations. A change of rules for operations after investment has been made
may, for example, result in increased cutoff grade levels, thereby reducing ore reserves or,
in some cases, eliminating all profits, leading to closure. Yet another subtle form of country
risk includes the use of a mining project by governments, political parties and non-govern-
ment organizations (NGOs) for their respective political agendas.
Until a host jurisdiction
develops a reputation for
integrity, competence, effi ciency,
and transparency, large-scale
investors will tend to avoid
placing themselves in situations
where critical outcomes depend
on decisions of corrupt and
unpredictable politicians and
bureaucrats.
Environmental Risks
The costs of environmental and occupational health and safety compliance or obtaining
permits may have a negative effect on cash flow or, at its most extreme a catastrophic envi-
ronmental or public liability incident may lead to a mine shutdown or prevent further
development in the affected region (Wexler and Lovric 2006). Environmental legislation
differs from country to country but most adopt the 'polluter pays' principle to pollution
 
 
Search WWH ::




Custom Search