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Determinants of Foreign Direct Investment in the Mining Industry

  • Vlado VivodaEmail author
Chapter
Part of the The Political Economy of the Asia Pacific book series (PEAP)

Abstract

A range of social, political, and economic factors determine where mining companies invest their scarce capital. This chapter identifies nine areas of risk that investors need to consider before investing in the sector. These include high sunk costs, the finite life of a deposit, and the long period to achieve a positive financial return. Add to this, legacy issues and it is clear that mining is a high-risk venture. This chapter argues that increased attention to the nine areas of risk may benefit mining companies in the future.

Abbreviations

BIT

Bilateral investment treaty

EITI

Extractive Industries Transparency Initiative

EPI

Environmental Performance Index

FDI

Foreign Direct Investment

FIFO

Fly-in-fly-out

GIS

Geographical Information System

GUCAS

Guided Uniform Criteria Assessment System

ICSID

International Centre for the Settlement of Investment Disputes

IRR

Internal Rate of Return

MEG

SNL Metals Economics Group

NGO

Non-governmental Organisation

NVP

Net Present Value

PMSEIC

Prime Minister’s Science, Engineering and Innovation Council

UNCTAD

United Nations Conference on Trade and Development

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Copyright information

© Springer International Publishing AG 2017

Authors and Affiliations

  1. 1.Centre for Social Responsibility in Mining, Sustainable Minerals InstituteThe University of QueenslandSt LuciaAustralia

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