Mining Journal Intelligence: Global mining risk improves despite Ukraine, tax concerns

PERTH, Australia, Jan. 18, 2023 /PRNewswire/ — The global risk environment for mining companies improved marginally last year, despite concerns about potential tax hikes and Russia’s invasion of Ukraine, according to a new report by Mining Journal Intelligence (MJI).

The MJI World Risk Report 2022, featuring MineHutte ratings, showed a slight improvement in its global Investment Risk Index (IRI) score, to 60 from 59 in the 2021 report.

The IRI is built on a combination of 10 ‘Hard Risk’ metrics taken from established risk-related indices – including MineHutte’s Regulatory Risk Ratings and Corruption Exposure Risk index – and an accompanying ‘Perceived Risk’ score, from the MJI’s World Risk Survey of over 800 mining professionals. A higher score means lower risk.

The metrics fall within five categories: Legal, Governance, Social, Fiscal and Infrastructure. This year’s report includes scores from 109 jurisdictions.

The marginal improvement in 2022 follows previous declines in global IRI scores from 61 in the inaugural World Risk Report in 2017 and a high of 62 the following year. The figures were 61 in 2019 and 59 in 2020.

“Overall risk faced by mining companies globally has improved marginally, in part driven by a more stable economic backdrop following global COVID-19 lockdowns and a better average energy security performance among the 109 jurisdictions,” Mining Journal Intelligence editor Sam Williams said.

“But there is some way to go for risk to recede to the levels seen prior to the start of the pandemic.”

TAXES, UKRAINE WAR

One positive for the sector was in corporate and mining-specific taxes, which make up two of the three metrics measured in the Fiscal category.

While many governments have threatened to increase tax revenues from mining in the wake of the COVID-19 pandemic and amid continued strong prices of many metals, little changed in the 2022 report, with scores for both metrics increasing by a point to 72 and 66, respectively.

“Mining companies may be relieved that despite much debate globally, tax and royalty hikes appear to have been largely avoided, although this does not rule out higher taxes in the coming years,” Williams said.

While Russia’s invasion of Ukraine will have a big impact on risk within those jurisdictions, some metrics measured – including those relating to conflict and political stability – reflect the reality prior to the start of the war. The full effects of the invasion will be fully reflected in the in the 2023 World Risk Report, due out later this year.

Canada was the highest ranked region in the report, with an average score of 78, followed by the US with 73.

Mining Journal Intelligence is part of by UK-based Aspermont, publisher of the Mining Journal and other titles.

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