Trends in foreign investment : Agreements in the resources industry

Recent agreements between host country governments and foreign investors in the resource industries reflect an effort to meet the objectives of both parties. In some cases majority government ownership is combined with management control and the right of veto on certain policy questions by the foreign investor. Imaginative tax formulas are built into agreements that combine the principle of excess profits taxes with that of a minimum DCF rate of return. Expropriation risk is being limited by employing a high debt-equity ratio. Foreign investors are agreeing to programmes and policies that promote host country economic and social development, while host country governments are quaranteeing foreign investors against changes in laws that would affect their profits.     

Making private capital flows to developing countries environmentally sustainable: the policy challenge

The 1990s have seen a dramatic shift in capital flows into the developing world. Despite pledges made at the 1992 UNCED Conference in Rio de Janeiro, official development aid has declined in real terms. At the same time, private direct investment and lending to developing countries has risen from $44 billion at the beginning of this decade to $256 billion in 1997, supporting a record economic boom in the developing world. Developing countries have become significant sources of capital, as well as hosts to transnational corporations.
Cases illustrating the negative impacts of large investments under environmentally lax conditions are contrasted with the rise of environmental screening of funds by commercial entities, such as banks, insurance companies and investors. Although the new inflows of foreign capital may have brought the spread of Western consumerism, this new economic potential has also contributed cutting-edge environmental technologies, that may assist developing countries leapfrog over the most damaging phases of industrialization.
The article discusses the role of public lending agencies, international organizations and NGOs in setting the investment climate that determines the effects of foreign capital on the natural resources base, communities and the environment. Various mechanisms for defining environmental standards are discussed, and a more active role for governments and the United Nations is advocated.     

环境治理与地方政府——以日本公害防止协定为仍

1964年,日本横滨市政府率先和企业签订公害防止协定,由此揭开了政府和企业签署协定的序幕。协定主要涉及大气污染、水质污染、噪声、振动、恶臭和损害赔偿问题。经过多年实践,公害防止协定在很大程度上解决了公害问题,由此可见地方政府在治理公害问题上的重要性。当前我国正面临严重环境问题,各级地方政府需认真学习日本的做法,不仅要转变政府职能,更要积极主动地行动,从而加快建设资源节约型、环境友好型社会的步伐。     

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.     

Recent Evolution of Petroleum Exploration and Exploitation Agreements in Developing Countries: New Approaches to Introduce More Flexibility and Progressivity in the Contractual Terms

Over the last decade rather important changes have occurred in the legal and economic aspects of international petroleum agreements for exploration and exploitation. In the late nineteen seventies, as a consequence of the strong increase in oil prices, there was a general tightening of contractual terms and conditions. With the present oil market imbalance, characterized by sharp price falls, there is a tendency to ease the applicable contractual terms. In such a rapidly changing environment, the economic terms contained in a petroleum agreement should be properly designed to introduce a certain element of flexibility and progressivity in regard to the government take, without unduly complicating the fiscal package or discouraging potential investors. This is the present challenge for international petroleum negotiators.     

Perspectives on mineral policy in Ireland

Mining firms have a greater incentive to invest in a country with effective and efficient mineral policies, given favourable geological and commodity price conditions. This paper examines and appraises mineral policy in Ireland. The legislative, regulatory and fiscal frameworks for mining are examined. Inherent administrative issues surrounding these policies are also discussed. Despite the positive reviews of Irish mineral policy in the Fraser Institute Annual Survey of Mining Companies 2004/2005, this paper concludes that a number of policy improvements are needed to maximise the industry's potential. The paper suggests that a National Mineral Policy document be produced to provide greater clarity to potential investors through a transparent legislative framework and a balanced fiscal framework.     

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.     

What drives large South African corporations to invest in sub‐Saharan Africa? CEO's perspectives and implications for FDI policies

Foreign direct investment (FDI) flowing into Africa is highly diverse in terms of the origin of the investors, size of the firms, and the sectors of activity. The motivations and factors driving firms' decisions to invest in Africa are equally diverse. A direct survey of senior management in South African firms that are operating in sub-Saharan Africa reveals that the drivers of foreign investment as well as the risks and the strategies to overcome them differ markedly between sectors. A further finding is that there is a limited pool of FDI promotion policies and incentives that governments can institute that are effective in impacting South African corporations' investment decisions. As a consequence, broad-based FDI promotion policies aimed at attracting FDI across all investor groups are likely to have limited impact in attracting FDI from any particular investor group, or in attracting any FDI from multinational companies similar to the South African companies studied here. Such broad based policies probably need to be complemented with policies targeting those specific firms or sectors which countries hope to attract.     

A Paradigm of International Environmental Law: The Case for Controlling the Transboundary Movements of Hazardous Wastes

The production of large quantities of wastes globally has created a commercial activity involving the transfrontier shipments of hazardous wastes, intended to be managed at economically attractive waste-handling facilities located elsewhere. In fact, huge quantities of hazardous wastes apparently travel the world in search of “acceptable” waste management facilities. For instance, within the industrialized countries alone, millions of tonnes of potentially hazardous waste cross national frontiers each year on their way for recycling or to treatment, storage, and disposal facilities (TSDFs) because there is no local disposal capacity for these wastes, or because legal disposal or reuse in a foreign country may be more environmentally sound, or managing the wastes in the foreign country may be less expensive than at home. The cross-boundary traffic in hazardous wastes has lately been under close public scrutiny, however, resulting in the accession of several international agreements and laws to regulate such activities. This paper discusses and analyzes the most significant control measures and major agreements in this new commercial activity involving hazardous wastes. In particular, the discussion recognizes the difficulties with trying to implement the relevant international agreements among countries of vastly different socioeconomic backgrounds. Nonetheless, it is also noted that global environmental agreements will generally be a necessary component of ensuring adequate environmental protection for the world community—and thus a need for the careful implementation of such agreements and regulations.     

Legal aspects of natural resource projects in the CIS

Foreign companies interested in natural resources ventures in republics of the Commonwealth of Independent States must contend with a legal, regulatory and tax environment that is particularly fluid. The approval process for joint ventures, production sharing and export agreements (particularly for natural resources) is complex. Legislation in most CIS countries falls short of adequately addressing investors' concerns or lacks clear guidance on many key issues, such as conditions under which a state enterprise can enter into new business arrangements under current privatization laws. Among other conditions that act as a constraint to investment projects are lack of a sufficiently convertible currency in each CIS country and complex regimes of currency regulation; the absence of financing techniques that are common in market economies (ie secured lending); the need to scrutinize the validity and enforceability of any locally available guarantees and a reluctance by financial institutions to participate in projects in CIS countries (often because they have considerable difficulty assessing the viability of projects). These problems demand an extraordinary commitment in terms of effort and perseverance from potential investors, as compared to projects in other areas of the world. This paper cites the key negotiating issues and transactions that need to be structured with care by a prudent investor.     

Joint mineral ventures in the former Soviet Union: prospects, problems and realities

This paper traces the gradual opening up to foreign investment of the rich mineral endowment of the vast territory of the former Soviet Union, containing the world's largest mineral industry. It analyzes the current status of mineral joint ventures in some of the new Republics, including Russia, Kazakhstan, Tajikistan and the Ukraine, including new legislation and other measures taken by individual states to facilitate foreign investment, as well as prospects, risks and uncertainties associated with investment in FSU mining activities that may be encountered by foreign companies. A successful gold joint venture in Tajikistan is described and evaluated to provide an understanding of the many aspects of an operational FSU project.     

Indigenous Resource Rights and Mining Companies in North America and Australia

A Contrast is made between indigenous resource rights in North America and Australia. The extent to which the indigenous people of these two continents may prevent mining and exploration on their land is examined. It is demonstrated that whereas some Australian Aboriginals have recently acquired limited veto rights to prevent development, the veto rights of the indigenous people in North America are long-standing and unqualified. In addition, the terms and conditions of mining and petroleum agreements which have been entered into by indigenous people in North America are discussed. These agreements are shown to be better than agreements signed with Australian Aboriginals.     

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.     

Proposal for a Transatlantic Platform for Consumer Concerns and International Trade

Consumer concerns pop up. They are relatedto the safety of agrifood products for people, foranimals, and for the environment as well as the socialand ethical implications of certain agrifoodproduction methods. At first sight, the WTO agreementand the SPS and TBT agreements appear to offersufficient legal scope to deal with these concerns andresolve trade conflicts. The events of recent years,however, have shown the limitations of theseagreements in dealing with cultural differencesbetween nations and in dealing with the social andpolitical pressure on national governments to lay downrestrictive, trade distorting measures. It is vitalthat we consider the dynamic relationship betweennational governments, civil society, and the market.In the United States, Canada, and Europe, thisrealization is growing. We propose that these issuesshould be studied by experts in several disciplines:technical experts, hygiene experts and veterinarians,public administration experts, lawyers, philosophers,ethicists, sociologists, and, of course, economists.To unite these disciplines and provide a platform fordiscussion in the light of international tradeliberalisation, the cultural identity of distinctcommunities, and the functioning of the democraticnation state an international network is needed. Wetherefore propose establishing a network to explorethe issues and dynamics described above. The networkshould be international and interdisciplinary withparticipants, initially, from science and government.The purpose of the network would be to present newperspectives to the negotiating parties in the nextWTO round. The first steps to development of thisnetwork have since been taken and an initial group hasbeen established.     

Derivative mine valuation: strategic investment decisions in competitive markets

Successful management in competitive markets requires evaluation methods that respond to global market dynamics and provide investors with relevant information to make strategic investment decisions. These strategic decisions include decisions on investment timing, feasibility study and risk management and mine operating options. Conventional methods do not have the built-in capabilities to help investors handle these strategic issues. Advances in modern finance have had profound impacts on financial markets for options, futures and collaterized securities and offer appropriate tools in solving these problems. In this paper, the authors have extended the Brennan and Schwartz mineral resource model to develop the derivative mine valuation method based on the dynamic arbitrage theory. A copper mining venture has been evaluated using the derivative mine valuation and conventional methods. The results show that the derivative mine valuation method allows investors to maximize the venture's market value by exercising these strategic options.     

Women and biodiversity: The long journey from users to policy-makers

Although there has been a broad acknowledgment that women's local and traditional knowledge is fundamental to guarantee food security and conserve biological diversity, few women are represented at the managerial and decision‐making level of environmental movements and organizations. The United Nations, its agencies and agreements have long promoted the full and effective participation of women in decision‐making processes. So how can commitments contained in international agreements be translated into concrete actions? By using the case of the Convention on Biological Diversity, one of the key agreements adopted at the 1992 Earth Summit in Rio de Janeiro, this article analyses how gender‐equitable initiatives tend to assume an ad hoc character with few governments effectively involving women in their sustainable development strategies. The views expressed in this article are those of the authors and do not necessarily reflect the official position of the United Nations or its subsidiary bodies.     

Agreement about commodity agreements?

In spite of the shifts in global economic power the scope for increased intervention in commodity markets remains restricted. We have witnessed the beginnings of some changes with the increased willingness of the richer countries to discuss the commodity issue. The interest in individual commodity agreements is likely to be extended as consumers place a higher valuation on security of supplies but commodity agreements can only secure moderate and limited objectives. They represent only one of a number of tools which are available in the attempt to secure a new world economic order and they will need to be used in conjunction with increased flows of foreign aid, trade liberalisation, and schemes of compensatory finance. The integrated approach to commodities seems fraught with difficulties as does any realistic scheme for the indexation of commodity prices.     

Mining amid decentralization. Local governments and mining in the Philippines

In recent years, as part of its neoliberal development paradigm, the Government of the Philippines has engaged in efforts to encourage extraction of the nation's mineral resources. The Philippines is also a country where decentralization has devolved substantial powers to local governments. Concern over potentially adverse environmental effects has led to opposition to mining by some local governments in the Philippines. This opposition has led to the withholding of consent to mining projects by local governments and, in some cases, the implementation of moratoriums banning mining. Central to this opposition have been the activities of civil society groups, and their collaboration with local governments. This collaboration has involved the drafting of legislation prohibiting mining and support of candidates for office who are opposed to mining. Collectively, Filipino local governments and civil society groups are examples of the concept of governance, a dispersed process wherein society manages itself for the betterment of all its members. For mining companies seeking to implement projects, it is no longer sufficient to have the consent of the national Government — that of local governance forces must also be considered.     

The Establishment of Marine Protected Areas in Senegal: Untangling the Interactions Between International Institutions and National Actors

International institutions, understood as sets of rules contained in international agreements, are aimed at orienting national governments towards specific policy options. Nevertheless, they can determine a change in national policies and practices only if states are willing and capable of incorporating international obligations into their national legislations and ensuring their application and enforcement in areas that follow completely under national jurisdiction. The establishment of marine protected areas promoted by international agreements as a tool for the protection of marine resources represents an interesting case for revealing the complex interactions between international institutions and national actors. Particularly, the establishment of these areas in Senegal shows the salience of domestic constellations of actors who may support or undercut national commitments to international regimes: political elites, bureaucracies, the general public and target groups. By anchoring the empirical analysis to an actor-centred institutionalist perspective, the article explains how dynamic constellations of actors can distort the penetration of international objectives in the national policy framework. Different constellations of national actors can indeed bend international institutions at different moments: during the formulation of a new law in line with international obligations; in the definition of its implementation framework; and in the enforcement of national policies.     

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.