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A significant increase in conflict, terrorism and regime instability in the Middle East and North Africa, along with deepened global political violence and resource nationalism, are the main risks mining investors will face in 2014, according to a report published Thursday by UK-based risk consultancy Maplecroft.
In its sixth annual Political Risk Atlas (PRA) the firm tell investors to pay special attention to possible populist moves in Indonesia, Brazil, India and South Africa as national elections in these countries will likely boost resource nationalist rhetoric and policies.
According to Maplecroft close to 10% of the countries studied have shown a significant increase in their risks levels, with foreign investors facing more political violence, resource nationalism and expropriations.
In the last year alone, says the report, the risk of resource nationalism has increased 15% as a consequence of governments attempts to offset the risk of societal unrest through tax increases, tougher regulations or outright expropriation.
Asia and Africa in the hot seat
Maplecroft’s Political Risk Atlas 2014 also reveals that social unrest is likely to increase in politically unstable nations, such as Bangladesh, Belarus, China, Kazakhstan, Saudi Arabia and Vietnam.
Following the Arab Awakening, the study reveals that Syria became the country to fall the most in the firm’s risk index, dropping from 44th place in 2010 to the 2nd position in the 2014 ranking, above only Somalia.
For the first time, Egypt is categorized as “extremely risky,” falling from the 27th spot in 2013 to the 15th this year. The country’s drop in ranking comes as a result of the post-coup violence and increased terrorist activity in the Sinai Peninsula, where attacks went up from 20 incidents of terrorism in 2011-2012, compared to 105 incidents in the period 2012-2013.
Mali (22nd compared to 40th in 2013), and Mozambique (63rd compared with 79th) also experienced significant increases in risk, primarily driven by a dramatic rise in political violence.
Maplecroft’s report includes 52 indices developed to enable companies and investors monitor the key political issues and trends affecting the business environment of 197 countries.
12 Comments
prashant
I don’t know why have they placed India in this list, its a democratic state and cant be compared with other unstable government
murray
Cause the corruption is so severe it may as well be classified as a terrorist attack.
Aruna Gaitonde
Maplecroft’s reseachers should do their homework well before publishing such results. I suggest they close shop and publish a tabloid instead !
Matt
Prashant,…. India and Brazil are not considered unstable, the author should have made it clear….they were countries that are trending towards more nationalist populist policies.
Ben
Come and invest in canada, no issue here, very stable, gov wants the mines to get investors, lots of qualified workers.
shanti kumar chiluka
Sorry Prashant broadly the author is right. However, The article is right but is it possible to give more authentic report on each of these troubled countries, so that people will be cautious. Or if you say one can contact you confidentially.
shanti kumar chiluka
Ben Certain Countries like Canada are definitely good, but cost of exploration/ mining is too expensive and very tight margins of profits, which can through out any one any time. Kindly open up if you can.
Ben
Shanti- that’s because we don’t exploit our people. Effective management makes better profits.
Resource worker
Well don’t come to Canada just yet. We are in the middle of a battle between industry (mining, oil, gas) and special interest groups. It is not settled yet even though it appears industry will prevail. Nothing is over till the New prosperity mine, the pipelines, Lng terminals, site c, quebec mining laws ect ect.
bonjovi
Saudi Arabia politically unstable? Can anyone throw more light?
dawn
South Africa is oppulent and corrupt to the core. With elections coming up, who knows what might happen.Watch this space
Kwame
One thing that investors cannot run away from is the Nationalisation of resources in Africa. Politicians have come to realisation that minerals are a finite resource and cannot keep on being plundered without the nation benefiting from them. So if they call it a risk its going to be a risk for a lifetime. South Africa always has issues i,e Labour unrest, corruption, high taxation, Mozambique is politically unstable, DRC has conflict minerals, Zimbabwe Indigenisation of all mining activities 51/49 in favour of the natives and countries like Tanzania and Kenya have started implementing the same law although with different ratios. Of cause politics and business cannot be separated in Africa or anywhere in the world. What Western and European investors should be worried about are their bureaucratic steps they take when they want to invest compared to the Chinese who have excessive cash. And what the African Union should be putting as the main agenda is to address the unethical business conduct by the east.