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JOURNAL OF APPLIED BUSINESS AND ECONOMICS
Location Factors for Non-Ferrous Exploration Investments
Author(s): Irina Khindanova
Citation: Irina Khindanova, (2011) "Location Factors for Non-Ferrous Exploration Investments," Journal of Applied Business and Economics, Vol. 12, Iss. 1, pp. 38 - 45
Article Type: Research paper
Publisher: North American Business Press
Abstract:
This paper analyzes the relative importance of geological potential and investment climate for
non-ferrous minerals exploration investments. The analysis is based on log-linear and truncated
models of exploration funding with geological potential and investment environment as location
factors. In order to account for countries sizes, we include the population variable. Models are
estimated using the Metals Economics Group’s exploration expenditures data, one measure of
geological potential, and one indicator of investment climate. Our analysis shows that exploration
does not simply follow geological potential. The investment environment plays a significant
role in allocating exploration budgets by mining companies. This result confirms that a mineral
rich country cannot expect large amounts of exploration money without establishing a favorable
investment climate.
