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A geopolitical crisis and widespread boycott did not stop Paul Rollinson from traveling to Russia and offering some genuine criticisms of the host government’s mining laws.
Federal governments in Canada and the United States urged business leaders to skip an economic forum in St. Petersburg this week in protest of Russia’s seizure of Crimea. Some went along with the boycott, but Mr. Rollinson, the chief executive of Kinross Gold Corp., decided to attend. Russia is a crucial jurisdiction for Toronto-based Kinross, being home to the company’s lowest-cost mines.
With Crimea in the backdrop, there was more-than-usual interest in his presentation at the forum on Thursday.
Mr. Rollinson, who is cautious by nature, kept the geopolitics out of his speech. His message was that Russia has tremendous mineral potential, but needs to change the rules if it wants to attract more foreign mining investment. Kinross, which has expressed this view numerous times in the past, is the largest foreign miner in the country by far.
“We’re looking for certainty, transparency, stability and minimal red tape,” Mr. Rollinson said.
He listed three different areas where Russia’s laws need to improve. Most notably, he said the very definition of a “strategic mineral deposit” has to change so that companies can be confident their assets will not be expropriated if they find something. That kind of uncertainty has kept most companies from even considering a Russian investment.
“The situation now is you can do all of that work, make the discovery, but there’s no certainty you’ll be able to keep the deposit,” Mr. Rollinson said.
Additionally, he would like to see the laws changed so that the claim-staking process is simplified and companies can start mining immediately after they define an economic deposit.
Mr. Rollinson said that if Russia’s mineral exploration was on par with the top 10 countries in the world, the government would receive US$1.6-billion of additional revenue before any discovery is made. Kinross is working with Russia’s Foreign Investment Advisory Council to push for better mining policies.
“We believe Russia has vast mineral wealth and vast potential future opportunities in mining. But it’s under-explored,” he said.
Kinross has been active in Russia since 1995. But in 2006, the company took a big gamble by paying US$3.1-billion for Bema Gold Corp.
For the rest of this article, click here: http://business.financialpost.com/2014/05/22/russia-needs-to-change-rules-to-encourage-mining-investment-kinross-ceo/