There are nine main concerns in the third world. 1 infrastructure -- how much stuff do you have to build.
2. corruption, its price 3. who do you sell your metal to? at what price? 4. what exchange do you get for their peso/bolivar/shekel/etc? IMF or cooked? 5. import duties -- what are they? 25% 50% 100%? Vz used to be 100% to avoid "inflation". 6. crime/terrorism.. security.. what is the risk? 7. mining law-social unrest. -- can you build a mine after you "find" one. 8. Money repatriability. Will banks cash cheques to foreign destinations even for importable equipment? A lot of country's banks will just let the cheque languish on the table so to speak, with no explanation. Cash is landlocked. Paying dividends may end up costing you 50%.
9. Do you own the claims or do you require a no-pay domestic partner?
I must admit I don't know the answers to these questions in many countries. Guyana is easier than most on many but 3,4, and 5 are not answerable by myself.
Most African countries have no official exchange and money is not repatriatable except by bribery arrangement with the central dictator/elected tyrant. There are certain exceptions. Tanzania had good laws on the books up to a point, but the government dragged their feet for months on every application for permits. Vz is a circus on every point mentioned. They buy the metal at their price and they declare the exchange at their rates. You don't get world price, or international exchange (US rates) On 9, many countries now allow 100% ownership (Brazil, Mexico) but some require you to use local contractors, who slow everthing down to an incompetent, corrupt crawl. On 3 and 4, it used to cost you 30% in Vz. It will cost you that in the Congo and other African countries.
The crime/terrorism/kidnapping risk in many SA and Middle east countries is far under-reported by the western press. There are about 3500 kidnappings a year in Columbia. There are perhaps that many in Yemen. Crime in countries like Nigeria, Congo, Liberia, etc... is rife. Money repatriability in most African states is zero. Corruption is a high art. There are certain exceptions. South Africa, Ghana, and Botswana are very different from most other states. In most African banks, cheques to foreign suppliers simply will not cash. Money cannot be withdrawn from payment for foreign shipments of goods and sent out again. This prevented Anglo from development in many African countries. Of course this was partly political, but it seems to work for everyone else too.
EC<:-} |
