Mining investment risk hit a seven-year high globally in 2023, with mining companies and investors affected by rising legal and regulatory headwinds, according to Mining Journal Intelligence's (MJI) new World Risk Report 2023, featuring MineHutte ratings.
The report - an industry-leading measure of mining investment risks covering 121 jurisdictions this year - revealed a 2.1-point fall in the global average Investment Risk Index (IRI) score, the report's main measure of overall risk, to 58.5 (lower scores mean higher risk).
The 58.5 figure represents a B rating, meaning upper moderate risk. The score is down from 60.6 in 2022, or BB (lower moderate risk). (Averages are adjusted to exclude jurisdictions added to or removed from the rating tables in 2023).
Adjusted average IRI scores have fallen gradually since the inaugural World Risk Report in 2017, from a high of about 62 in 2018.
The World Risk Report 2023 provides a comprehensive evaluation of mining investment risk, with 80% of IRI scores based on 11 ‘Hard Risk' metrics, from established risk-related data. The remaining 20% is based on ‘Perceived Risk,' calculated from the World Risk Survey 2023, in which more than 600 mining professionals rated jurisdictions they are familiar with.
Risk is assessed across five categories - Legal, Governance, Social, Fiscal, and Infrastructure.
Legal risk
The drop in average IRI in 2023 was partly due to weaker Legal scores.
The Legal category - which is the highest-weighted category, accounting for 40% of the IRI - is based on Regulatory Risk Ratings from MJI's partner MineHutte, which measure risks inherent in legislative frameworks, plus survey responses.
On an adjusted basis, average global Legal scores dropped to 51.7 in 2023 from 53.3 last year.
The fall in IRI was also due in part to changes in how Infrastructure scores were calculated and weaker Fiscal performance, due largely to lower GDP growth. Scores in the Social category improved year-on-year.
Top and bottom risk
Canada and the US remained the lowest-risk mining regions in 2023, with average regional IRI scores of 73, or A ratings (low risk). Asia and Africa were the highest-risk regions, averaging 48, or CC (high risk).
Wyoming and South Dakota were the lowest-risk jurisdictions, both on 79 (AA). The Democratic Republic of the Congo (DRC) remained the highest-risk jurisdiction despite a four-point improvement to 34 (D rating), a score matched by Venezuela, a new entry to the rankings.
The World Risk Report 2023 featuring MineHutte Ratings is available for purchase as an e-reader report here and can be accessed for free by Premium subscribers from the same page.
Mining Journal Intelligence and MineHutte will be presenting key findings of the report in a free webinar, World Risk Report 2023: Troubling times for mining?, on November 29 at 3pm UK time. To register click here.
