Risk And Reward For Mining Investment In Bolivia

A financial-economic model incorporating physical, market and policy variables has been developed for mining investment in Bolivia. Additional risk criteria emanating from political instability, new mining legislation, recent environmental regulations and a new minerals taxation system are accounted for and are integrated into the investment decision model. Results of the model indicate that geologic and market variables have the dominant effect on the investment-worth function. Among policy variables, exchange rate and taxation policies have the most significant influence. Depreciation allowance for infrastructure development has negligible weight in the investment-worth function. The business structure of the firm considering investing in the Bolivian Polymetallic Project, is found to be an instrumental factor in the investment-worth outcome.