Commentary JANUARY ISSUE 2016 The risks of mining speak for themselves: dangerous conditions, remote locations, unsure markets, and difficulty in raising funds from stubborn bankers. A fresh risk may be on the horizon for 2016: political stability. As more and more miners look to new locations, each location carries troubles in one form or another. Rising tensions between Saudi Arabia and Iran have forced financiers to pull up the stakes in the Middle East; Chinese economic slowdown makes it difficult for miners to find a willing buyer for their products; South American corruption scandals complicate the process of permits and authorizations. Verisk Maplecroft annually releases a report on political risk across the globe. Their predictions for 2016 read like a laundry list of headaches for miners. 31 of the 49 countries in sub‐Saharan Africa fall within "high" or "extreme" risk, despite having huge reserves of iron as well as gold, diamonds, oil, and platinum. Brazil, Argentina, and Venezuela are withering under recession as well as protests against elected officials; six total South American countries (out of just 12 in the continent) also have the notorious "high" or "extreme" risk tags. Public financing for mining projects appears to be under severe pressure for a number of nations throughout 2016, and as funds dry up the risk of discontent grows ever greater. Many mining operations will need to turn to private investment in order to bridge the gap between under‐funded state institutions and the operational costs of digging, extracting, and shipping their products.
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