Understanding Government Intentions
Political Risk Analysis
Our client, a mining company, was interested in exploiting gold deposits in an Andean country. The company, however, was concerned about the regulatory stability of the country, whose political leadership had in recent years acted against foreign investors in mining and other sectors. Over the previous 12 months, the government had suddenly begun courting the international mining industry and had reversed some of its negative policy initiatives to attract foreign investment.
Americas Market Intelligence (AMI) began by researching the new mining policies and consulted the expertise of a local lawyer. The wording of the new policies left several undefined clauses that could be exploited by unscrupulous regulators. Through local players in government and the local mining industry, AMI learned the truth behind the government’s true intentions with its apparent courtship of international mining companies.
AMI’s findings led the client to decide not to pursue investment in spite of the attractive geological findings. As predicted, the government’s welcoming posture dissolved as its own debt problems were overcome and the administration survived the next elections intact.
Since then, other mining companies have resumed their complaints over the unequal treatment they receive vis-à-vis local mining investors.
AMI’s analysis presented long term growth prospects throughout Latin America, enabling the client to plan strategically for its future operations.