Quebec is #1 (China is #53)

Quebec is #1 (with a score of 97.0) and Honduras sucks big time (with an almost impossible 0.0) according to the "Survey of Mining Companies: 2007/2008" published by The Fraser Institute. [hat tip: Wallace]

Quoting the Survey,

Along with Quebec, the top 10 scorers on the PPI are Nevada, Finland, Alberta, Manitoba, Chile, Utah, Wyoming, Ireland, and Sweden.

Along with Honduras, the bottom 10 scorers are Zimbabwe, Ecuador, Panama, Bolivia, India, Indonesia, Mongolia, Philippines, and Venezuela.

Setting aside my stats questions and concerns about the survey (see note 1), I've gained some very valuable insights. In particular, I found the "What the Miners Are Saying" section really fascinating to read and wish it is longer and more extensive.

Here is an excerpt of some entries related to Quebec,

Quebec: Refusal of the mines department to enforce their own laws in order to support the industry. A stunning about face and lack of balls (excuse me, leadership) by the government.
—President, Exploration Company

Quebec [has] a strong but justifiable regulatory regime, evenly and logically applied, supported by government initiatives to promote exploration and development.
—Exploration Company, President

As someone interested in many things China (e.g. her legal and business environment). Here is an excerpt of some entries related to China (emphasis added),

We spent 1.2 years in China trying to get a partnership in a gold property; we spent US$400,000 without being able to have a partnership organized and clear titles.
—Exploration Company, President

In China, despite favorable policies espoused by central government, there is a disconnect with how those [policies] are interpreted and acted upon in the provinces. Also policies/regulations are enshrined [but] impinge on or don’t recognize technical realities.
—Exploration Company, President

China: Virtually impossible to reach a binding legal agreement.
—Exploration Company, President

China’s government works with groups to find solutions to commission mines and create jobs. [K: This seems to be the only positive comment.]
—Exploration Company, Manager

China [suffers from] uncertainty of land tenure because of the necessity to partner with government entities who prove untrustworthy. After giving our partner in China $300,000+ in cash, land covering the JV [joint venture] area was never transferred into the name of the JV: delay after delay. Finally we gave up on the property and moved out of China. This scenario has been repeated time and time again in China—word is traveling in investment circles that everyone who works in China is getting “ripped off.”
—Exploration Company, Consultant

China [has] an extremely difficult bureaucratic system.
—Exploration Company, Vice President

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Note 1: First of all, I am no statistical expert. But not being an expert has not stopped me from opening my big mouth. (smile) So please consider that yourself warned of my potentially idiotic comments here.

Let me lay out some figures of the surveys as stated in the reports (I have downloaded the previous three years' reports as well).

2007/2008 Survey

Surveys sent to approx. 3000 companies, 372 companies (12.4%) responded. Companies surveyed spent US$1.48 billion, representing a 14.8 percent of total global exploration of $9.99 billion.

2006/2007 Survey

Surveys sent to approx. 3000 companies, 333 companies (11.1%) responded. Companies surveyed spent US$1.02 billion, representing a 14.5 percent of total global exploration of $7.13 billion.

2005/2006 Survey

Surveys sent to approx. 1435 companies, 322 companies (22.4%) responded. Companies surveyed spent US$1.83 billion, representing a 35.9 percent of total global exploration of $5.1 billion.

2004/2005 Survey

Surveys sent to approx. 1121 companies, 259 companies (23.1%) responded. Companies surveyed spent US$574.7 million, representing a 15.1 percent of total global exploration of $3.8 billion.

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Here are some of my questions/observations/suggestions,

1) Because the identities of the surveyed companies are confidential, we don't know how different are the companies participating from year to year. Different companies may lead to somewhat different scores and rankings based on the varying level of expertise of the managers in these companies.

2) Comparing the 2007/2008 and 2006/2007 surveys rankings may give a sense of false improvements or worsening as there were 39 more companies participating in the 2007/2008 survey (372 vs 333). And these companies all contribute to the scoring. At the same time, the percentage of total global exploration expenditures represented in the survey hold around 14.5 - 14.8%.

3) The spending of 2005/2006 surveyed companies represented 35.9% of global exploration spending which one may argue is slightly more "trust-worthy" if the money invested can be used as proxy for how "smart" these companies are. (note: In the long run, the companies that make large and bad investments will not last in the industry and their "stupidity" will be self-corrected by their elimination in the survey results.)

4) Expending on the idea in #3, I think the score given by companies should not be equally weighted. There should be some form of weighted measure linking their exploration expenditures (weighted over say a few years (3?)) to their scores they provide. For example, shouldn't the rating given by a company that spent 200 million should be viewed as more "authoritative" than a company that spent 1 million?

As a thought experiment, if the 372 companies are to be divided into two halves based on their dollars invested from the most to the least, I would argue the combined scores of the top half of 186 companies with more investments will be more "insightful" than the bottom 186 companies. Again, this assumes it is meaningful to use the investment dollars of the companies as proxy for their level of "expertise"/"insightfulness"/"smart".