Mineral title management—the key to attracting foreign mining investment in developing countries?

Abstract

Many developing countries are reforming their mining legislation to attract private foreign investment. The effectiveness of this legislation depends on its proper implementation by the regulatory and administrative regime; mineral title management is considered the cornerstone of this implementation.An analysis of the main criteria to which mining companies refer in making investment decisions reveals that a significant proportion-including security of tenure, regarded as the most important apart from geological potential-reflect perceptions of a country's administrative procedures and government agency functions. An attempt is made to identify the key features of a mineral title management system and to show how in an effective system these features can be made to match the investors' criteria, thus helping to attract foreign mining investment.

Are Alternative Livelihood Projects Alleviating Poverty in Mining Communities? Experiences from Ghana

“…Cash-strapped because of largely misguided mine nationalizations in the 1960s and 1970s (Auty, 1994), many governments have implemented major mining sector reforms, often alongside sustained programs of economic stabilization and structural adjustment. Under reform, mineral policies have been revised to provide a series of financial incentives to help lure previously-wary foreign investors; relevant government agencies have been strengthened; legislation has been redrafted and enacted; and parastatals have been privatized (Morgan 2002). The World Bank alone has provided US$3 billion in financing for 22 mining sector reform projects in 16 developing countries (World Bank, 2004).…”

Perception of Socio-Environmental Conflicts in Mining Areas: The Case of the Mirador Project in Ecuador

“…Since the 1980s, different regulatory reforms to cash in on the investment in the region's sector have favoured the growth in promoting mining operations (URKIDI, 2008, MORGAN, 2002. Vázquez, Espinosa and Eguiguren…”

Social and Political Risks: Factors Affecting FDI in China's Mining Sector

“…Based on the operating Chinese environment, foreign mining companies should adopt different approaches domestically and internationally to successfully face the sociocultural barriers intertwined with the rise of economic nationalism and a complex political scene in China. Related literature has investigated entry modes of investment vehicles (Lee et al, ), and capital flight and risk (Lensink et al, ), in addition to the more general determinants of mining FDI stability (Morgan ; Tole & Koop, ). Otto's (1992a) seminal study on international mining FDI paved the way for projects such as Vivoda's () and our own, and facilitated the similar criteria‐based framework that we employ.…”

“…Additionally, scholars have analyzed how, why, and which factors facilitate/hamper FDI in the mining sector. James Otto's seminal study () recognizes nine main variables (geological, political, regulatory, marketing, fiscal, monetary, environmental and social, operational and profit) that aid with an understanding of the reasons behind a foreign enterprise's decision to invest in a specific country; and Morgan () maintains that the regulatory and administrative system is the influential element for FDI levels. Kasatuka and Minnitt () wisely argue that the noncommercial risks—such as poor administration, expropriation, war and conflict, unstable government, natural risks, and so on—have a serious influence on FDI, while Tole and Koop () suggest that proximity and a stable environment are the most important factors.…”