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CAN’T MISS!
10+ Reasons for the Failure of
Mineral Investment Projects Abroad
With the gradual exhaustion of high quality resource development, as well as the global economic downturn, and the overall domestic mining industry is depressed, and a large part of the mineral investment projects are struggling. At this situation, some countries or regions with low developed economic but good mineral resources have become the main destination of a lot of Chinese companies and investors.
However, some projects seem to be particularly good, are big problems indeed for these companies or investors, and very difficult or will never bring the expected returns.
According to what we have seen and heard, some reasons for the failure of mineral investment projects are summarized as below:
Timing of the Project Is NOT Right
The policy of two successive administrations in many countries changes a lot. Previously popular investors or investment projects may not be welcomed by the next administration. And the results of un-welcomed are possibly to be stopped to work or cancel the license by unwarranted charges.
During the general election, many government jobs are paralyzed or suspended. The new government will be less efficient for half a year or a year.
Prospecting Target Area Is NOT Right
Some projects are prospecting in the potential metallogenic area only by their subjective ideas. Sometimes the area has no known data to prove that it’s a good metallogenic area, or there is no obvious folk wisdom which shows there has good resources. Prospecting in this area, there is no difference as looking for a needle in the ocean. Even if there is a real mine, the initial cost is also difficult for the small and medium companies or investors to bear.
Superstitious Experience, Disregard of Science and Technology
There is always big difference in the characteristics of ore deposits in different countries. In the countries and regions where have rich resource and low development, there are a lot of coop mine, which means there is a high grade ore, but the amount of ore is very small. Especially in some small scale manual mining, there have very high grade ore, but the horizontal and vertical extension of continuous may be not good.
If you are too superstitious in experience, and not carry out the work of prospecting in accordance with the scientific scheme, blind optimism and willful investment, maybe there is a big pitfall waiting for you there.
Application of Unreasonable Resource Evaluation Criteria
China's mining development experience is rich and the level of selection and metallurgy is high, so China's resource evaluation standard is relatively some lower. The cost of production and daily life is generally higher abroad, and the industrial grade of resources should be relatively higher to ensure the profitability of the project. In some regions of China, the flotation tailings with 0.5g/t gold grade can also have value of leaching, while many of leaching tailings abroad are much higher than them.
Applying the Wrong Technical and Economic Parameters
No matter how high the grade of raw ore is, the actual amount of the gold can be recovered is the real basic parameter in the technical and economical assessment of the project.
We once met a case. The leaching recovery rate of the primary gold ore which is hard to leaching is calculated according to the leaching recovery rate of oxidized gold ore to forecast the economic benefit. Finally, all invest of the investor went to the air.
Equipment Investment Is Too Early
One company in north China, just after they acquired the right to exploration in one country of the eastern Africa, they ordered a lot of sets of equipment for heap leaching, flotation and CIL plants and sent to the local port before they find the real ore body. At last, although the equipment was rusty and scrapped, they have never been used once. Thus, the equipment wasted a lot of purchase and detention costs
Personnel Recruitment Is Too Early
Professional talents are the key to the development of companies. However, the demand for talents in the company has some difference in every stage. The exploration stage main need the geological engineers and at the stage of production, need some professional mining and process engineers. If the unsuitable engineers are arranged in the unsuitable stage, it is not good to the companies or the employee.
Specialize In One Subject
In practice, though you are an expert in one or some types of mines or processes, but when you work on the others types, you may need study and some time to adapt. For example, the company in north china just mentioned before, they arranged the engineer in iron mine to deal with gold mine, however there are a lot of differences in the iron mine and gold mine, so they cannot deal with the gold mine very well, this also bring difficulties to the development of the company.
Inaccuracy of Policy Interpretation
Some countries have a lot of requirements on the proportion of local shares, the proportion of labor and revenue and so on, the investors need to be very careful to accurate them. Otherwise, when project starts operating or begin to have benefit, the local government or departments can use the corresponding reasons to bring problems or even close the plant at any time.
Problem on the License
Because of some legacy problems, some countries exist serious phenomenon of over-issue and certification without examination for prospecting permits and mining licenses.
We have met one case, in one of the eastern Africa countries, the investor from China bought a mining license which can be checked in their national mining management system, however, at the same coordinate range, there is another company which also have the mining license but did not register in the system, and they have worked there for many years and every year they will go to the local mining department to be registered and update. In this situation, the government will certainly not judge the previously mining license invalid, thus the Chinese investor lose his all invest on this project.
Environment Protection Is Never Small Case
Some developed countries require a large sum of deposit for cyanide leaching plants, just only this deposit; some small and medium-sized investors cannot be able to bear it. What’s more, we should clearly know that even the low-developed countries maybe also have strict requirement for environment protection. As former colonial countries, their legal systems are also very comprehensive. The act of destroying the environment will be published by fine or put to the jail.
Participation in Political Activities
Cooperating with potentate will certainly good for your business. Therefore, many investors participate in the campaign actively or passively. However, if you supporting people lose power, you will be involved too.
Problems of Visa
According to my research, a lot of workers working abroad do not get the effective working visa. If they were found by the local immigration, they will be deportation and placed on a blacklist or will be asked to pay a large sum of money.
Problems of Tax Bureau
Besides immigration, the local government departments which small and medium-sized investors most often deal with is the tax bureau, tax bureau officials often ask for tips, on the other hand, in order to pay less tax, many investors are willing to bribe, all these will not only encourage corrupt behavior of officials, but also increasing the operating risk of the projects
Partners Are Important
No matter the patter is from local or from you country, He may be an angel, or he may be a vampire, as well. Therefore, before cooperation, must be clear discrimination
Employee Professionalism
The professionalism of the employees will judge the operation situation and profit or loss of the project.
Relationship between Local and Foreign Employees
Keep good relationship with the local and foreign employees are also good for the running of the project. A lot of Chinese investors or companies did not abide by local customs and laws, killing and eating the wild animals and fire local employees at well, have left a very bad impression on many countries or regions.
For further information, please contact：
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Qiang Liu |
Serena Fu |
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eric.liu@hot-mining.com |
serena.fu@hot-mining.com |
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+86 13699096165 |
+86 15108333341 |
