The Impact of Politics, Economics and Local Legislation on Exploration and Mining in Pacrim Countries

In addition to the geologic risk of a particular project, the criteria that an international exploration company (æIECÆ) utilises when making an investment decision in a particular country should also include a critical analysis of the political, judicial and fiscal regime of the host country. A key investment criteria of an IEC is mineral tenure and the security and continuity of that mineral tenure under the host countryÆs existing legal system as well as the host countryÆs overall legal, political and fiscal framework, the latter of which can affect the projectÆs overall economic viability in a number of ways. The authors, Steve Vaughan and Michael Bourassa of Aird & Berlis, Toronto, Canada, have taken the position that developing an understanding of a countryÆs legal tradition is a crucial first step in analysing the mineral regulatory regime of a particular country. This paper continues their efforts to overview the most recent legal trends affecting the worldÆs mineral industry and attempts to analyse, categorise, compare and contrast differing legal systems, cultural backgrounds and economic philosophies relating to the development of mineral rights in Pacrim countries and the resulting commercial, legal, and political framework which ultimately drives the relevant mineral legislation. For the convenience of organisation of this analysis, the authors have divided the Pacrim countries into four smaller groups, firstly, on the basis of their legal tradition and, secondly, by their geographic location:Common Law Countries: USA, Canada, Australia and New Zealand; Spanish Civil Code Countries: Mexico, Central America (Panama, Nicaragua, El Salvador, Guatemala), South America (Chile, Peru, Ecuador, Colombia). Communist or Former Communist Countries: Mongolia, China, Russia. Countries of the Pacific Southwest: Phillippines, Indonesia, Malaysia, Indo-China (Vietnam, Laos, Cambodia, Thailand), Papua New Guinea. The discussion starts with an analysis of the various types of legal regimes, attempts to classify or categorise them, reiterates the necessity for the rule of law and those factors which encourage mineral exploration and development and discusses and recommends the expansion of a practical country competitiveness rating system developed by the Fraser Institute. In addition to the fundamental issue of mineral tenure û what it is and how secure it is û the paper discusses how different legal systems have shaped different approaches taken by individual nations to attract foreign mineral investment. The paper analyses the best practices and experiences accumulated in different Pacrim countries with varying legal traditions and identifies a practical country competitiveness rating system which the authors believe should be expanded to cover all minerally endowed countries. This rating system will permit countries to identify their mineral regime weaknesses and adjust their legal systems to better attract mineral investment and will also permit exploration and mining companies to compare their jurisdictional choices with those selected by their competitors.