It seems like yesterday that commodity prices were soaring (ah, the
good ole days) and that meant that oil companies and mining companies
were suddenly surveying the world for opportunities. It led them to some
pretty scary countries and investors/speculators have always had to be
aware of that country risk as in the last 24 hours, we’ve been very much
reminded of that.
First of all, Russia, which has never seemed like a safe place to us, has
decided to change the rules on the massive $20 billion Sakhalin natural gas
project. That involves two Japanese companies, Mitsui & Company and
Diamond Gas-Mitsubishi Corporation, along with the project operator Shell.
The bottom line seems to be that the Russian interests suddenly want in on
the project now that much of it has been built and paid and naturally, they
probably want to get in at the bottom. Scary!
Another place that I certainly would never want to visit would be Chad.
According to some analysts that follow that country, it’s arguably one of
the poorest countries in the world and the suggestion is that it’s also one
of the most corrupt.
Chevron Corp. and Petronas have invested a big chunk of money there
and you guessed it, now that the facilities are built and the cash flows are
coming, Chad orders these two companies to leave the country. Once
again, Chad was never on our list of safe places to speculate on.
For those who follow Don Coxe’s work, you might be a little bit nervous
about something he is saying about a country that many people assume
would be a safe place to be—Mexico.
He writes on a piece dated September 8th: “If Mexico is in fact a near
zero political risk country, and that’s no longer clear. Lopez Obrador has
said he is going to set up a parallel government when Felipe Calderon is
inaugurated as incoming President. Already, you’ve got Oaxaca shut down
entirely by a teachers’ strike, and the radicalism is spreading. The problem
with this is that ordinarily you could say, “well, you send in the police and
restore order”, but the Mexicans know that historically, just about the largest
level of corruption that the consumer see upfront is from the police
force. And, travelers in Mexico who have been involved in car accidents of
any kind, can attest that the only way to get yourself out of situations like
that is to pay off a policeman.”
“So, I draw this to your attention, the problems they have in Mexico:
the society is not politically mature enough to be able to get a consensus
on doing the kinds of things that are needed, even if Calderon is left in
power.”
This is a little bit scary because many of the great little gold and silver
stories, many of which have been beaten up in the last little while admittedly,
are based out of Mexico. And just how worried should one be about
that. |
