Risks and opportunities for foreign investment in the mineral sectors of the Central Asian Republics: Kazakstan,Kyrgyzstan, Tajikistan and Uzbekistan

With the dissolution of the former Soviet Union in 1991, the nations of Central Asia gained independence and began the transition to market driven economies. Both the political and economic transformations of the Central Asian Republics (CARs) (Kazakstan, Kyrgyzstan, Tajikistan and Uzbekistan) have been difficult primarily because of a holdover of various centrally planned `command and control' approaches to national development. The extensive mapping and exploration of the CARs during the Soviet era (approximately 1921–1991) led to the discovery of several hundreds of mineral deposits that were subsequently evaluated, and it is this `pool' of known, but undeveloped, deposits which is of major interest to foreign and domestic companies. However, foreign investment in the mineral sectors of the CARs is at best quite modest and there are very few positive signs that foreign investment will increase dramatically in the near term. The major risks that the mining industry faces as it works in the CARs arise primarily from the fact that the nations are transitional economies which lack both a comprehensive legal framework and experience in dealing with foreign mining corporations and their practices. The major risks are political, economic, financial, infrastructure, contractual, environmental, social and cultural and workforce related. If all individual risk factors are weighted equally, the relative ranking of the countries (from least risk to most risk for mineral development) would be Kyrgyzstan, Kazakstan, Uzbekistan and Tajikistan respectively. However, such a classification scheme does not effectively weight the importance of mineral potential. If the risk criteria are weighted with respect to geologic potential, the ranking of the countries would be (from least risk to most risk) Kazakstan, Uzbekistan, Kyrgyzstan and Tajikistan, respectively.     

Harnessing the bonanza: economic liberalization and capacity building in the mineral sector

Over the past decade many developing and transition economies have liberalized their investment regimes for mining and privatized formerly state-owned mineral assets. In response, these economies have witnessed increased foreign investment in exploration and development, growth in the number and diversity of mineral projects, and the opening up of new channels for harnessing increased economic and social benefits from development in the minerals sector. The restructuring of fiscal and regulatory regimes to encourage foreign investment, and the associated influx of mining capital, technology and skills, is transforming traditional relationships between mining firms, local communities and the government. This transformation necessitates a re-evaluation of the most effective policy approaches to capture increased economic and social benefits from mineral production. This article considers effective mechanisms for improving the capacity of developing and transition countries to maximize the economic and social benefits of mineral production. Common challenges associated with minerals economies are reviewed. Consideration is given to the opportunities for harnessing foreign direct investment and the possibilities for creating new partnerships between local communities, industry, government, and multilateral development agencies through social investment projects. The article concludes with a series of recommendations for the design and implementation of policy approaches towards harnessing mineral production for economic and social benefit following the liberalization of investment regimes for mining.     

Determinants of foreign direct investment in the mining sector in Asia: A comparison between China and India

The aim of this paper is to assess the conditions that influence foreign direct investment in the mineral industries of China and India. The paper first surveys literature on the determinants of foreign direct investment to identify key conditions, under which host countries attract mining FDI. It then builds an evaluative framework which allows for comparative analysis. The paper then comparatively evaluates the performance of foreign investment regimes that govern mineral industries in China and India. Its findings show that the overall conditions for foreign mining investment in China and India are not favourable and that substantial policy, regulatory and other changes in both countries need to be made if more investment is to flow.     

Mineral potential and scope of investment in the Republic of Yemen

On 22 May 1990 the Yemen Arab Republic and Peoples Democratic Republic of Yemen were unified to form the Republic of Yemen, with a population of about 14 million people in an area of about 580 000 km². The Republic of Yemen is hoping to develop its mineral industry. Possessing a well established geological database plus a newly issued mining law and investment law, Yemen is inviting all investors, whether from the Yemeni private sector or foreign companies, either solely or in joint ventures to investigate opportunities in minerals and construction and industrial materials.     

Mine capacity and mineral price

The loss of foreign mineral supplies may affect domestic supply and price. To investigate the assumption that prices, a simple mine investment model that relates mine capacity to deposit attributes is used. A test of the model to see how well it approximates industry investment practice illustrates its accuracy. The model suggests that price changes can substantially affect the optimal capacity of planned or existing mines as well as the mineral supply in the USA.     

Mineral development prospects of the Indochina area

Reform is under way in several nations within the Indochina area to stimulate economic growth and foreign investment. Though once forbidden, participation by foreign companies in mining exploration and development activities in Myanmar, Kampuchea, Laos, Thailand and Vietnam is now being solicited by the respective governments. This paper presents a preliminary evaluation of mineral and energy resources in the region and outlines possible development scenarios based on economic policies, financial and infrastructural constraints and industry interest. The investment climates for resource-related projects are assessed qualitatively by country. Clearly, the long-term development potential of mineral and energy resources in the Indochina area is large, and the potential gains outweigh any of today's problems.     

Economic liberalisation, innovation, and technology transfer: opportunities for cleaner production in the minerals industry

The liberalisation of investment regimes for mining over the past decade is encouraging an inflow of foreign investment for mining and mineral processing projects in developing and former centrally-planned economies. This new investment is occurring at a time of technological change within the international mining industry as market and regulatory pressures lead the most dynamic firms to invest in the development or acquisition of new technologies and management practices. The effective transfer and assimilation of these technologies enable mining companies to combine gains in productivity with improvements in environmental management. Joint ventures and other strategic alliances between inwardly investing firms and the newly privatised or remnant state-owned mining enterprises may provide an effective vehicle for the transfer of the techniques for more productive and cleaner operations. Specific examples of innovative process and remediation technologies are analysed and it is suggested that the ability of innovative technologies to improve competitiveness and sustain best-practice environmental management in the recipient is linked to the transfer and effective acquisition of the capacity to manage the complex processes of technological and organisational change. The paper closes with some recommendations for further research directed towards a systematic examination of this hypothesis.     

Mining during the next 25 years: issues and challenges

This article examines possible future trends in the mining industry in the light of past developments. After a preliminary discussion, the article considers various aspects of demand, supply, corporate structures, geographic distribution of investment, and social and environmental factors influencing the minerals industry. Scepticism is expressed about the smooth, exponential growth envisaged by many commentators. Some risks are elaborated, and a digression about gold is included.
The article argues that, while the minerals industry has concentrated on reducing cash costs through technical innovation and productivity improvement, new approaches may be needed in future that are not directly linked to economies of scale. Contracting out is an interesting trend with major implications.
The view that the mineral industry's corporate structure is becoming increasingly concentrated is challenged. Developments in consumer countries as well as historical precedents strongly suggest a more diverse structure.
The spread of minerals investment from North America and Australasia, and the resurgence of foreign direct investment in minerals projects, are placed in context and discussed from the viewpoints of both companies and host countries.
Although the appropriate responses to many of these issues can only properly be made by governments at all levels, the industry has to play its part.     

Managing mineral dependence: Papua New Guinea 1972–89

Papua New Guinea (PNG) managed the mineral booms of 1973–74, 1979–82 and 1987-89 well compared with other mineral exporting economies. Orthodox macroeconomic policies were one reason for this while the cushion afforded by the slow withdrawal of Australian aid was another. PNG also renegotiated MNC mining contracts in its favour without curbing foreign investment, but it managed its fragile political unity less well. Secession closed a large mine in 1989 while successful rent-seeking left wage indexation unreformed. Relatively high wages, exchange rate overvaluation and foreign investment controls in non-mining sectors retarded structural diversification: mineral dependence remains uncomfortably high a generation after the start-up of the first copper mine.     

我国利用外商直接投资与环境保护问题

随着改革开放的深入发展，我国利用外资规模不断扩大，特别是近几年来，利用外商直接投资的额度每年都上新台阶。外商直接投资对我国经济发展起到了重要作用，但往往人们在注重经济发展时，却忽视了环境污染问题。目前我国迫切需要正确处理好利用外商直接投资与保护环境的关系，采取有效的对策，实现二者的协调发展。     

Environmental regulation of exploration and mining operations in Asian countries

This paper offers a new perspective on the environmental laws in Asian nations affecting the exploration, mining, and reclamation activities of the mineral resource industry: the perspective of the senior government officials in those countries, whose job is to enforce these new environmental laws. The article presents the results of a 1998 survey of national environmental officials in Asia conducted by the Colorado School of Mines and the Metal Mining Agency of Japan. Officials in 10 diverse countries—Cambodia, China, Indonesia, Lao PDR, Malaysia, Myanmar, Mongolia, Philippines, Thailand and Vietnam—responded to a detailed questionnaire covering applicable laws, agencies, protected areas, covered mineral activities, financial assurance, environmental impact assessment, public involvement, environmental standards, permit and reclamation requirements.
The survey confirms that Asian nations are part of the global trend towards national government regulatory structures that balance mineral development objectives with environmental considerations. The survey also shows developing regulatory systems (some embryonic, some more mature) utilizing a combination of mining and environmental acts, and often an 'insider' perspective of the national officials administering the laws. While that perspective is not without its biases (not least the rigor of enforcement), it may nevertheless be of use in company planning. The emerging regulatory picture contradicts the conventional notion that it is the 'lower' level of regulation in Asia that is attracting foreign direct investment in mining.     

Imperatives for attracting investment and technology in the Indian mining sector

In India, the mineral resource inventory and the production of a large number of important minerals have registered significant increases during the last few decades. Yet the country continues to be a net importer of many high value and scarce minerals and metals, like gold, diamond, and several base metals. Exploration and development of the resources of these minerals are technology- and capital-intensive. To bring technology and capital through foreign direct investment (FDI) into the Indian mineral sector, it is imperative to lay stress on: accurate resource estimation and categorization, as well as realistic projection of the true values; rationalization of legislative measures based on R&D studies and reorganization of the implementation machinery; conducive tax structure; notification of acts and rules applicable to offshore mineral resources; time-frames for granting licences and leases; encouragement to labor productivity by rationalizing labor laws; reforms in the monetary system to increase market competitiveness of Indian minerals; and judicial reforms. FDI in the Indian mineral sector is important to firm up the knowledge-base of mineral resources and their optimum exploitation.     

Corporate social responsibility in the mining industry: Perspectives from stakeholder groups in Argentina

Since the liberalisation of its investment regime in the 1990s, Argentina has seen a rise in foreign direct investment into large-scale exploration and exploitation of mineral resources. However, many social groups (local communities, grassroots movement and the church) often strongly oppose new mining projects on the grounds of environmental, ethical and economic concerns. In a situation marked by widespread conflict, mining companies continue operating and develop Corporate Social Responsibility (CSR) initiatives which are often promoted as a means of contributing to the sustainability and development of the nation. The paper develops a framework to highlight how the principles of stakeholder theory could be used as conceptual and practical guidance for conflict-resolution oriented CSR policies. The framework is further used to analyse two case studies of conflictive mining projects in Argentina. The paper explores how key stakeholders perceive contribution of CSR to welfare and the socio-economic development of mining communities and sustainable development of the nation. It demonstrates that institutional and social stakeholder networks often strongly oppose the idea of voluntary self-regulation implied by CSR in situations characterised by weak governance. Even though the CSR of companies could be improved in areas of corporate communication, transparency, stakeholder engagement and dialogue, it is not seen as a panacea for the social conflicts in the sector.     

Shortfalls in minerals investments

The international minerals industry continues to have a substantial investment shortfall. The widening exploration and mineral development gaps, not only in the lesser developed countries but also in the developed nations, are sowing the seeds for future mineral supply disruptions and conflicts. Mutuality of interests demands concerted initiatives, individual as well as collective, to reverse the investment trends established by international mineral finance and the multinational corporations in order to pave the way for secure mineral supplies in the future at acceptable prices.     

US resources policy: The 1982 report to congress

This paper analyses the extent to which the new Reagan mineral policy will encourage increased US production, substitution, recycling and conservation, domestic stock-piling and diversification of foreign supplies. Major inadequacies of the mineral policy are the transfer of responsibility for research and development from the government to the unprepared private sector, the lack of emphasis on short-term research and development in mineral processing technology, and the lack of coordination between minerals policy and national security and foreign policy. However, overall the policy is a positive step towards reducing the current US minerals supply vulnerability.     

Private capital: What impedes its entry into China's minerals industry

The paper commences with an analysis of the nature and status of private capital investment in the minerals industry in China. Based on the analysis, the authors examine the main barriers in terms of the mineral rights market, industry access and investment security that impede the participation of private capital into exploration and development of China's mineral resources. The discussion addresses how to encourage the participation of private capital into mining investment and it concludes that it is of significant importance to ensure the soundness of mineral rights market, impartiality of industry access, and security of mineral rights.     

Environmental issues for developing countries arising from liberalized trade in the mining industry

This review analyses some of the environmental and economic implications of current trade policies and changes in the world trading system for mineral producers and consumers. A principal factor which determines environmental performance is whether firms have the resources and capabilities to undertake innovation. We therefore place particular emphasis on the anticipated effects of liberalized trade on innovation and competitiveness at the firm level. Evidence indicates that improvements in environmental management would be expected to occur irrespective of the country hosting the investment. Due to the opening investment climate and relatively large quantities of mineral reserves, we expect these effects to be positive for many mineral producing developing countries. One difficulty which may arise is whether policy measures to promote production efficiency and develop innovation in mining and mineral processing operations could be interpreted as protectionism. The creation of new lines of credit, to promote, but not subsidize, technological and organizational innovation, may be the best way forward for developing countries .     

Patience is a virtue: Problems of regulatory governance in the Indonesian mining sector

Mining investment in Indonesia has been at a standstill for a decade. Clearly. international mining companies regard the country as a high risk destination for capital. Yet Indonesia is one of the most highly mineralised countries in the world and has expressed a desire to increase investment in the sector in the coming years. As a first step in this direction the government has introduced a new mineral and coal mining law to replace the highly regarded Contract of Work system. The government argues that this new law will reinvigorate mining investment in the country. This paper suggests that the new mining law will do little to improve the situation. Indeed, it is unlikely that Indonesia will become a preferred destination for mining investment in the foreseeable future. Poor regulatory architecture, endemic corruption, and a lack of institutional capacity continue to be of concern to investors.     

Local Dirt, Global Dreams: mining investment and land use change in Arizona

A central problematic for researchers working at the interface of economic and environmental change is the development of research designs and methodologies that can satisfactorily link economic processes of global reach (such as direct investment) to environmental change at local and regional scales. This article reviews recent efforts to couple economic and environmental change and finds that relatively little effort has been made to use the direct investment process as a means of linking industrial restructuring to land use change. The article argues that direct investment, when conceptualised as a political-economic process involving the assemblage of a package of rights (to land, water, pollution permits etc), can be an effective vehicle for tracing through the impacts of industrial restructuring on local environments. To develop this analytical approach, an empirical case of mineral investment in the Gila Valley of eastern Arizona is presented. The case study identifies the acquisition of land and water rights as central strategic issues for mineral firms seeking to make investment, and traces through the impact of these acquisition strategies on existing patterns of land ownership and land use.     

不同来源地外商直接投资与工业能源消耗强度——基于江西省11个设区市的实证研究

运用2007—2010年江西省11个设区市的面板数据,分析外商直接投资对地区工业能源强度的影响。根据来源地不同,将直接投资分为港澳台直接投资和其他外商直接投资两类。研究表明,港澳台直接投资和其他外商直接投资对地区工业能源强度有显著的正影响;与港澳台投资相比,其他外商投资对地区工业能源强度的影响更大。