Reading a jurisdiction: rankings, indices and their limits
Industry surveys and governance indices are a useful first screen for a country, but they are opinions and averages. How to use them, and what to check yourself.
2 min read
Rankings tell you how a jurisdiction is perceived on average. A project's value depends on the specific rules, region and community where it sits.
Common sources
| Source type | What it measures | Watch out for |
|---|---|---|
| Industry surveys of mining executives | Perceived attractiveness of policy and geology, by country or province | Opinions, small samples for some regions, lag behind events |
| Governance indicators | Rule of law, regulatory quality, corruption, political stability | National averages, not specific to mining |
| Resource-governance indices | How well a country manages its extractive sector | Updated infrequently |
| Sovereign credit ratings | Government's ability and willingness to pay its debts | Says little about mining policy directly |
| Political risk services | Commercial country-risk scores and reports | Paid, and methods differ |
How to use them
- Screen: use rankings to see where a jurisdiction sits relative to others, and whether it is improving or getting worse.
- Go to the region: in federal countries, check the state or province, not just the country.
- Read the primary sources: the mining law, the fiscal terms, the permitting rules, and recent decisions on similar projects.
- Look for precedent: have similar mines in the same place been permitted, and how long did it take? Have terms been changed on existing mines?
- Talk to people on the ground: local lawyers, consultants and other operators.
Turning it into a number
There is no standard formula. In practice, analysts reflect jurisdiction in one or more of: the discount rate, a price-to-NAV multiple, a probability of success, or explicit scenarios. The jurisdiction risk article shows how each works and why each risk should be counted only once.
What to take away
Start with the rankings, then go deeper on the specific rules and precedents for the project's region, stage and type of mine. Trends often matter more than levels: a jurisdiction that is getting better can be a source of value.
This is educational material, not investment advice.
Key terms
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Educational material only. Nothing here is investment advice or an offer to buy or sell any security or mineral interest.