Adelaide, Sep 8, 2006 AEST (ABN Newswire) - A few days prior to the fifth anniversary of 9/11, a key political risk insurance group has told a resources conference in Perth that Africa has been a beneficiary of the swing in investment sentiment towards mining projects with lower risk profiles.
Addressing the Paydirt Media 2006 Africa Downunder Conference in Perth today, London-based political risk insurance (PRI) expert, Mr Mark Gubbins, said Africa had become a first choice since 9/11 for safe profitable metals and minerals investment.
"This had been driven by the ever increasing demand for natural resources in the past five years and escalating geopolitical destabilisation in South America and the Middle East particularly," Mr Gubbins said.
A Partner, Trade & Political Risk with PRI specialist firm, FirstCity Partnerships Limited, Mr Gubbins said the long-term impact on the mining sector from the New York attacks in 2001 had been a re-rating of the risk profile for countries seeking to protect but boost the scale of investment in their resource developments.
"Post September 11, Africa looks a lot more attractive than most other countries," Mr Gubbins said.
"Despite this positive perception, however, PRI underwriters' country rating of African countries - on a risk scale of A to E - shows the majority of these countries rating D or below - a level portraying some more serious risk concerns.
"Africa's resources sector has an opportunity to further mitigate this political risk profile by ensuring sound investment practices, legal due diligence and process and risk transfer to commercial insurance markets.
"However, no amount of insurance will convert a bad mining deal in Africa into a good one."
Mr Gubbins warned Africa's mining sector not to become blase about their PRI rating.
"PRI market perceptions of African risks acknowledge it is not Latin America nor the Middle East nor former Soviet Republics - and where is the "War on Terror" evident on the African continent?
"But there are other factors the PRI sector takes into account and that includes political violence, war and forced project abandonment.
"It will be essential in the future for the African resources industry to engage early with PRI insurance markets, and seek to insure political risks while retaining and managing economic risks of a resource-focused country and mining project."
Contact
Kevin Skinner
Senior Consultant
FIELD PUBLIC RELATIONS
231 South Road
MILE END SA 5031
Tel: (08) 8234 9555
Fax: (08) 8234 9566
Mob: 0414 822 631
kevin@fieldpr.com.au
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