The dynamics of relative attractiveness - A case study in mineral exploration and development

Bernadette O'Regan, Richard Moles

Research output: Contribution to journalArticlepeer-review

Abstract

The high mobility of mining investment is often cited in the literature. Consequently, the concept of relative attractiveness is particularly important. In a free market, a mining firm concentrates its exploration investment in countries that present the most attractive investment opportunities. This creates a positive feedback loop in a particular country towards further exploration activity, until, eventually, some limit is reached, thus reducing this particular country's relative attractiveness. In times of steeply descending mineral prices, firms have shifted their investment to regions that are perceived to have more stable mineral policies, reflecting the fact that, in their opinion, these countries have become relatively more attractive as the firms themselves become more risk averse. This is an important point, as it shows that the concept of relative attractiveness is a dynamic concept. A government can control the mineral policy within its own boundaries but, all other things being equal, in order to remain competitive, policies must constantly evolve to reflect the changing dynamics in the mineral policies and prospectivity of other countries. This paper examines the dynamics of relative attractiveness and its impact on the decision-making processes which guide a mining firm's exploration efforts.

Original languageEnglish
Pages (from-to)73-87
Number of pages15
JournalEcological Economics
Volume49
Issue number1
DOIs
Publication statusPublished - 10 May 2004

Keywords

  • Mining investment
  • Simulation modelling
  • System dynamics

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