November 17, 2017

Research before you leap into an “investment landmine”  

  Mining investors may be naïve to believe that there are similar operating conditions in most mining jurisdictions globally. More often than not, they only realise that they could have acted differently, after irrevocably exposing their resources to risk. In view of that, investors have to be cautious.

A paper presented during the Canada-Southern African Chamber of Business Corporate Social Responsibility (CSR) Seminar, which took place in Toronto last month, outlines this topic articulately.

Written by Veracity CEO, Steven Fox, the paper accentuates the significance of organisations finding out background information about the jurisdictions in which they intend to invest. This is because corruption is not the sole “investment landmine”, as there are others as well, he points out.

Fox singles out notable “investment landmines” as local employment issues, monitoring political power structures and engaging stakeholders. Most dangerous “investment landmines” exist in the most opaque, high-risk jurisdictions.

Consequently, to manage this situation, Fox stresses that investors have to find out what’s really exists on the ground.  He calls on companies to widen their sources of information, warning against reliance on Transparency International rankings. “Ask a lot of questions. Do your homework on the ground and do it in advance because this could save you from potential headaches later on.”

Precisely, environmental, social and governance issues should be top priorities. In depth research should be dedicated to regional affiliations, power blocks and allegiances to mitigate danger.

More to the point, Fox says it is critical for organisations to keep track of changes in the political climate, as well as establishing a relationship with community leaders, who are as important as people at the top.

The moral for investors intending to enter foreign jurisdictions is to research before they leap.

Veracity offers organisations advice on political, corruption and reputation to clients globally. Fox is a specialist in mining, energy and telecommunications sectors, with a track record in African mining.

 

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