Saskatchewan the best place to invest, Fraser Institute says

Saskatchewan takes the crown as the most attractive jurisdiction for investment in the Fraser Institute’s annual Survey of Mining Companies 2016, moving up from second place in 2015, and dethroning Western Australia.

The survey’s authors Taylor Jackson and Kenneth Green compiled 350 responses from mining and exploration companies to assess 104 jurisdictions worldwide on their mineral endowments and policy factors, such as taxation and regulation. In comparison, the 2015 report included 449 responses and 109 jurisdictions.

Half of the 2016 responses came from exploration companies, with the rest comprising mainly producers and consulting firms.

The Canadian think tank started the annual review in 1997, after it noticed mining leaders were uncomfortable with disclosing their investment thoughts around certain jurisdictions and their mining policies in fear of government retribution.

“It occurred to us to do an anonymous survey of the people who steer and guide mining investments around the world. We started just with Canada and quickly expanded out,” Green said in a March 2 talk in Toronto.

The Fraser Institute aims to create a “report card” that governments can use to improve their mining-related policy to bring in investments and grow their economic productivity and employment.

“Mining is a pathway out of poverty for developing communities, and it is one of the planks in the platform of economic prosperity for developed countries — and it is super important that governments understand that and get their policies right,” Green says in an interview.

Investment attractiveness rankings

Based on the survey’s Investment Attractiveness Index, which combines results from the Policy Perception Index (PPI) and the Best Practices Mineral Index to assess the attractiveness of a jurisdiction, Canada’s potash and uranium-rich province of Saskatchewan claimed the top spot in 2016. As in previous years, the index placed a weight of 40% on policy perception and 60% on mineral potential.

Neighbouring province Manitoba, a leading base metals player, came in second, after ranking 19th in 2015. Western Australia, an iron ore destination, dropped two spots to third. Nevada slipped down one to fourth, while Finland stayed in fifth.

Also in the top 10 is Quebec, moving up two spots to sixth, and Arizona, advancing 10 spots to seventh, followed by Sweden, the Republic of Ireland and Queensland.

Along with Manitoba and Arizona, Sweden and Queensland were not in the top 10 in 2015.

Out of the top 20 jurisdictions for investment attractiveness, Canada claimed six spots. Those are for Saskatchewan, Manitoba and Quebec along with Yukon at 15th, Newfoundland and Labrador at 16th and Ontario in 18th place.

Compared to 2015, Newfoundland and Labrador moved up from 25th, while British Columbia declined to 27th from 18th.

“British Columbia is quite unhappy with that. But what we tell them is that we can’t change their rankings. Only they can change their rankings,” Green notes.

Nova Scotia again ranked as the least attractive Canadian jurisdiction, followed by Alberta, which saw the biggest decline among its peers, dropping 13 spots to 47th.

The authors say Alberta’s decline reflects lower scores on the PPI, as a larger percent of respondents noted that several policy factors, including regulatory duplication and inconsistencies, were “deterring investment.”

The survey includes all Canadian provinces and territories, except for Prince Edward Island.

The U.S. has five jurisdictions in the top 20, including Nevada, Arizona, Utah, Idaho and Alaska, while Australia took four spots with Western Australia, Queensland, South Australia and Northern Territory.

Finland, Sweden, Ireland, Ivory Coast and Botswana were also in the top 20.

Canada has a regional median investment attractiveness score of 77.21, up slightly from 2015. It is again the second most attractive region in the world, behind Australia, which ranks first. The U.S. came in third again.

Argentina continues to rank as the least attractive region for mining investments. Its regional median investment attractiveness score dropped seven points to 35.51 in 2016.

Five of Argentina’s provinces are in the bottom 10, or among the least attractive jurisdictions in the world. These provinces include Jujuy — which ranks as the world’s least attractive — Neuquen, Chubut, La Rioja, previously in last place, and Mendoza.

Rounding out the bottom 10 are Venezuela, Afghanistan, India, Zimbabwe and Mozambique.

“The moral of the story is a stable and transparent government, stable politics and policies, and a stable and utterly predictable regulatory system — those will get you in the top 20 of the most attractive places to invest. Volatility, uncertainty, crime, violence, legal hostilities with Aboriginals, those will get you to moving toward the bottom,” Green says.

PPI rankings

Based on the Policy Perception Index (PPI) — which measures 15 policy areas, including taxation regime and political stability — the Republic of Ireland came in first for the fourth year in a row. Saskatchewan came in second, moving up from fourth place.

The other top-10 ranked places to invest in based on policy alone are Sweden, Finland, Nevada, Manitoba, Wyoming, New Brunswick and Western Australia.

For Canadian jurisdictions, the Northwest Territories and the Yukon saw both their PPI scores and ranks improve significantly. The Northwest Territories saw the largest PPI score increase of 8.5 points, which helped it move to 48th place from 58th. The Yukon added 8 points to its PPI score and now ranks 25th.

Respondents still indicate uncertainty around land claims and infrastructure as main deterrents to investments in both jurisdictions, Jackson and Green add.

Alberta’s PPI score and ranking dropped the most in Canada. It is now the fourth lowest ranked place in Canada based on policy alone, after being the second highest in 2015. Globally, it ranks 28th compared to seventh in 2015.

The Canadian jurisdictions that rank the lowest on policy, starting from the bottom, are Nunavut, the Northwest Territories and British Columbia.

“The two policy areas that continue to significantly hamper British Columbia are uncertainty concerning disputed land claims and uncertainty over which areas will be protected,” the authors write.

Despite this, Canada has the highest regional median PPI score of 86.91, and similar to 2015 ranks as the world’s top region for mining investments based on policy. The U.S. comes in second, followed by Australia.

The region with the lowest median PPI score is Asia, replacing Argentina, which saw its 2016 PPI score climb 12 points to 50.33.

Globally, the least attractive jurisdictions based on PPI rankings are (beginning with the worst): Venezuela, Afghanistan, Zimbabwe, Mongolia, The Philippines, Indonesia, Chubut, South Sudan, Mendoza and Ecuador.

Venezuela, Zimbabwe and the Argentine province of Chubut were also in the bottom 10 in 2015.