improves most, Chile remains the leader.
BY LATINVEX STAFF
The Dominican Republic saw the worst decline in Latin America on the
latest annual global survey of mining executives from
the Fraser Institute, an independent, non-partisan Canadian public policy
“The Dominican Republic fell the most between survey years…reflecting
lower ratings for trade barriers (-19 points), the legal system (-13 points),
and uncertainty concerning the administration, interpretation, and enforcement
of existing regulations (-13 points),” the institute said.
The Dominican Republic now ranks in 97th place among 112 nations
worldwide – a dramatic drop from 60th place a year earlier.
“Mining policy is simply inconsistent and
confusing, which discourages investment,” a producer company with less than $50 million in revenue
said in the survey.
In February 2013,
Dominican president Danilo Medina
shocked local business leaders and foreign investors when he gave a state of
the union speech attacking Canada-based Barrick Gold, the largest foreign
investor in the country.
Unless it agreed to renegotiate its contact with the government, he would
impose a new tax on the company, he threatened. “The market may be starting to
re-evaluate its mild preference for the ruling party after the taste it seemed
to show for resource nationalism this week,” the Financial Times wrote after
the speech. “This sends a very negative signal to current and potential
investors in the Dominican mining sector,” William Malamud, executive vice
president of the American Chamber of Commerce in the Dominican Republic,
In the end – in August -- Barrick agreed to a new
contract whereby it paid an additional $1.5 billion to the Dominican
prize predictability and stability,” Ken
Frankel, chair of the
Canadian Council for the Americas (CCA), told the Inter-American Dialogue’s
daily Latin America
Advisor recently. “This has become a challenge for
the Canadian mining sector which has experienced modifications of investment
and royalty rules and contracts well after massive amounts of money have
already been sunk into the ground.”
The $4 billion Pueblo
Viejo mine – which is 60 percent woned by Barrick Gold and 40 percent owned by
Goldcopr -- is the largest foreign direct investment in the Dominican Republic
and has resulted in the Dominican Republic becoming the fastest-growing Latin
American exporter to Canada, according to a Latinvex analysis of data
from Statistics Canada.
Gold output at Pueblo Viejo jumped from 67,000 ounces in
2012 to 488,000 ounces last year. This
year, Barrick expects to see between 600,000 and 700,000 ounces. The mine is
expected to reach full capacity in the first half of 2014 following completion
of modifications to the lime circuit, Barrick said in its latest earnings release.
Meanwhile, Glencore Xtstrata’s Falcondo operations have also run into
problems. The Dominican national assembly in October declared the Loma Miranda
area a national park, calling into question future plans to develop a major
mine that will add another 20 years. It is still awaiting environmental
approval for the new mine. Dominican government officials have sent mixed
signals on the approval, although the latest indication is that it will be
In addition to Pueblo Viejo and Falcondo, a third
significant project, the Cerro de Maimon gold and copper mine, is being
developed by Cormidorm, a joint venture between two companies from China and
Dominican officials say that the country has proven
mineral and metal reserves worth a total of $60 billion.
PANAMA IMPROVES MOST
The average Policy Perception Index score for the rest of Latin America and the
Caribbean Basin was almost unchanged from 2012/2013 despite the new addition of
Nicaragua (ranked 80th) and Uruguay (82nd) to this year’s survey.
Chile remains the top-ranked jurisdiction in the region, ranking 30th (of
112) in 2013, and a decline from 23rd (of 96) in 2012/2013 despite a small increase
in its PPI score. Venezuela is again the lowest ranked at 111/112 in 2013 (from
94/96 in 2012/2013) and drop ping its PPI score as a result of lower infrastructure
ratings (decreased by 8 percentage points).
Panama improved its score and ranking most for the region, climbing to 58th (of
112) from 63rd (of 96), reflecting better ratings for uncertainty concerning
environmental regulations (+22 points) and regulatory duplication and overlap
This was followed by Peru which moved from 58/96 in 2012/2013 to 56/112 in 2013
with improved perceptions for labor availability and skills (+8 points) and
labor regulations/employment agreements and labor militancy/work disruptions (+7
The average PPI score for Argentina declined significantly in 2013, reversing
a notable increase in the 2012/2013 survey year. All of the Argentinian
provinces lowered their PPI scores this year, with the exception of Jujuy and
Salta which had higher scores than in 2012/2013. Argentina dropped from 39th to
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