Jump to content
Sign in to follow this  
minegate

Resource Expropriation and a Possible Response

Recommended Posts

Some governments are again going though this silly exercize of either direct expropriation of both mining and O&G operations or major changes to mining law or agreed royalty regimes.

 

At least a dozen countries are now on this track. Three in Africa, three or four in South America, and possibly half a dozen in central Asia including Russia.

 

Best bet for the companies involved is to put their operations into "maintain and hold" status but more important, upload all data via satellite to their head offices and destroy local computer data bases by destroying the hard drives, and repatriate expat staff.

 

Then put "MIGA" on notice under terms of "political risk" and expropriation coverage.

 

Mugabe doesn't care about MIGA and the rest of the Bretton Woods group, but other countries are and realize the potential impact of having the IMF cut them off if MIGA has to swallow a claim.

 

Oddly, few of these countries actually have operating mines that they think could be a cash cow for a couple of years. Most dollars are tied up inside data from exploration programs and the development plans are inside the data and brains of those developing the project. But not all.

 

Zimplats is at risk but for how long? Mugabe is not long for this world and the PMGs are not going to go away. And there is no way the Zimbab gov't could take over that operation.

 

Crystallex in Venezuela is certainly at risk but really has not much to lose after insurance claims and really nothing for the government to seize at Las Cristinas if the data is gone.

 

Just an few thoughts.

 

Regards

Jim Eckford

CEO

Minegate, Inc

Share this post


Link to post
Share on other sites

You post this on a day that sees FTSE miners falling heavily on news that a task team set up by South African Finance Minister Trevor Manuel has recommended the issue of a proposed windfall tax for the resources industry, which may be earning excessive profits. Russia took BP for a pile recently. Mugabe wants the diamonds and if gold hits $10,000, I suspect governments around the world will want that as well.

 

I don't think any agreement with government whether democratic or otherwise is ultimately worth the paper it is written on. They will make new laws as and when it suits them. The democracies are obviously more trustworthy, but ultimately and if necessary they will also do what they have to do, especially if economic survival is at stake like the US confiscating gold (and silver?) in the 30's. No one should ever rely on government or politicians.

Share this post


Link to post
Share on other sites

It takes on avereage fifteen years, from first exploration boots on the ground until a mine is actually producing. Political risk is real and that is why political risk insurance is available.

 

Jim

 

[qu

 

ote name=No6' date='Feb 27 2007, 01:29 PM' post='15908]

You post this on a day that sees FTSE miners falling heavily on news that a task team set up by South African Finance Minister Trevor Manuel has recommended the issue of a proposed windfall tax for the resources industry, which may be earning excessive profits. Russia took BP for a pile recently. Mugabe wants the diamonds and if gold hits $10,000, I suspect governments around the world will want that as well.

 

I don't think any agreement with government whether democratic or otherwise is ultimately worth the paper it is written on. They will make new laws as and when it suits them. The democracies are obviously more trustworthy, but ultimately and if necessary they will also do what they have to do, especially if economic survival is at stake like the US confiscating gold (and silver?) in the 30's. No one should ever rely on government or politicians.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×