Fraser Institute Report on mining-friendly jurisdictions

On December 30, 2002, the Fraser Institute, a Canadian right-wing think tank, released a report rating the attractiveness of different mining jurisdictions to mining companies. The objectives of the report are clear: the Institute says: "We hope that this survey and companion index will encourage policy makers to create fair, stable, and consistent regulatory frameworks in which mining companies, as a proxy for other industries, can operate without experiencing what appears to be institutionalized bias."

It is clear from the survey that a vote for mining-friendly policy is a vote against fair taxation, against collective bargaining, against environmental protection, against Aboriginal land rights and against protected areas. In January, we undertook a critique of the report.

- The report is almost entirely based in the subjective opinions of mining companies, in response to a number of questions asking them how they rate each of the named jurisdictions on a variety of factors: taxation, regulation, mineral potential, etc.

- There is also an 'Objective survey': "As a complement to the survey opinions presented in the first section of the report, (an) appendix has been added to include data on factors such as taxation and labour with which to compare the attractiveness to the mining industry of the business climates of the Canadian provinces and territories".

The "objective" index looked at 24 variables in 5 different categories: taxation, regulation, labour, land access, and infrastructure

Taxation: The first indicator is the total taxes paid over the13-year lifetime of a hypothetical gold mine. The tax burden includes federal taxes, provincial income and capital taxes, and provincial mining taxes. Those jurisdictions with capital taxes and lower rates of taxation generally are considered less attractive. Another taxation indicator is "a standardized page count on provincial mining tax acts and their supporting regulation... Jurisdictions with lengthier legislation are considered to have more onerous tax systems."

Regulation: "The regulation category includes 10 variables... The first two indicators measure the complexity and costs of environmental regulation in a jurisdiction, first by measuring the percentage of exploration and deposit appraisal expenditures spent on environmental compliance, and second, through a page count of the environmental acts and regulations that affect mining, including provincial and territorial parks acts, endangered species legislation, and water and fish protection acts. The next 8 variables apply to regulations and permitting procedures specific to the mining industry. The first is a page count of mining acts and regulations a higher page count (standardized for page size and bilingual publishing) indicates more onerous policies We also looked at the way reclamation bond requirements are administered in each jurisdiction. Although there appears to be some variability within jurisdictions, some allow bonding requirements to be met over time, while in others the bond must be posted up front.

Labour: "The labour category contains two indicators: the extent of unionization of the general labour force, and... the number of labour disputes that have occurred in the mining sector in the past decade (1992 to 2001)."

Land Access: "Three variables form the land access category First, the index uses data from Indian and Northern Affairs Canada to determine the percentage of land claims that remain unsettled in each province... The second variable is the percentage of the land base in a jurisdiction that is off limits to exploration because it is protected. The final variable, which is used to assess uncertainty concerning new land to be set aside, looks at how much growth there has been in protected areas in the last year."

Infrastructure: "There are five indicators in the infrastructure category this year: railway density, road density, and ports, geo-science availability... the percent of exploration and deposit appraisal expenditures (averaged over five years, 1997 to 2001) spent on land access."

The Fraser Institute report is available on line at