Mining companies face a host of opportunities every day. Sustained strong demand forraw materials in rapidly developing markets coupled with relatively stable global economic growth and supply constraints for certain metals and energy commodities is boosting prices and prompting a push for new development, investment, and exploration.

As an industry, the resources sector has historically been exposed to political pressures and instability, especially when projects have been located in emerging or unstable markets. Significant start-up costs, relative inability to withdraw quickly from a troubled situation, and political sensitivity of natural resources in many host countries make mining operations vulnerable to two categories of risk: acts of a government and political violence.

Acts of a government can include:

• Seizure of assets – either outright, or creeping,” where a series of steps eventually deprive investors of the benefit in their investment
• Prohibitive tax increases that target foreignowned businesses
• Forced sale or abandonment of overseas investments
• Default on payment obligations
• Currency restrictions that block the transfer of funds
• Frustration of contracts or lease agreements with international buyers and suppliers
• Absence of an adequate dispute resolution procedure or forum

Political violence that halts production or causes damage to equipment can include:

• War and civil war
• Terrorism and sabotage
• Revolution and rebellion
• Strikes, riots, and civil commotion

Often, several of these threats are present in a single country.