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Regulatory risk still at the top of delegates’ minds

Over 80 per cent of delegates at Coaltrans India 2014 always consider regulatory risk when evaluating international investments. Around 4 per cent only look at price and technical aspects, while 13 per cent believe regulatory factors are relevant only once they have already decided to invest.

Over 80 per cent of delegates at Coaltrans India 2014 always consider regulatory risk when evaluating international investments.
Around 4 per cent only look at price and technical aspects, while 13 per cent believe regulatory factors are relevant only once they have already decided to invest.

Just under 30 per cent of delegates said they perceived all countries to have relatively similar regulatory risk profiles, while 70 per cent believe resource nationalism, taxation, ownership restrictions and approvals processes are surprisingly different in many nations.
Only 15 per cent of delegates at Coaltrans India 2014 said lawyers do not add value to their consideration of an international investment. Two-thirds believed lawyers could add value if they paid a lot.

Robert Milbourne, Mining and Natural Resources Partner at Norton Rose Fullbright, who was speaking at the event, said: “Regulatory differences can be the make and break in your return over time and the adequate and early assessment of what those regulatory changes and distinctions are should become part of the standard vocabulary of all leading mining executives when you consider the opportunities in front of you.”

Based in Brisbane in Australia, Mr Milbourne advised delegates at the conference that when considering a foreign investment in challenging jurisdictions such as Zimbabwe, Mongolia and Indonesia, they should always be aware of bilateral investment treaties. There are now over 3,000 of these in existence.

“These bilateral investment treaties and their kindred agreements allow for protection for the investor against discrimination by a Government and they most importantly provide for you to have recourse against that Government in arbitration internationally so you don’t have to be subject to regulatory enforcement inside that jurisdiction,” he said.

“There have been a number of clients that I’ve had  consider pulling out of early stage exploration projects in countries such as Myanmar or parts of Africa because of the regulatory risks. That regulatory risk can be mitigated through these treaties.”

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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