Geopolitics and the strategic risks to mining

The mining industry faces increasing geopolitical risk in the coming decades. Constraints such as resource nationalism, corruption and social license could grow to outweigh fundamental limitations like geology or supply and demand (Ernst & Young, 2013; Verrastro et al. 2010). Lurking beneath these more immediate and palpable concerns, however, may be more significant risks entrenched in geography and history. Deep-rooted cultural and strategic forces that emerge slowly ? or erupt suddenly and unexpectedly ? can generate momentous and far-reaching political, social and economic changes. While multinational enterprises routinely assess for political risk, the nature of minerals extraction means long-term and systemic geopolitical conditions are especially important for mining companies to identify and understand. Mine development is a decades-long process that binds companies to the land and makes changing course to avert emerging threats a difficult and costly option. Consequently, geopolitical assessment is a pertinent and valuable tool that mining companies can use to more comprehensively evaluate strategic threats and opportunities. Geopolitics is the study of society, politics and strategy through the lens of geography (Gray, 1996). Its emphasis on relatively permanent physical features of the earth makes geopolitics a uniquely valuable tool for assessing political risk. Topography, climate and natural resources have shaped, constrained and motivated peoples and governments throughout history. These influences transcend regimes, policies and borders ? and even states themselves ? which, by contrast, change often and dramatically. Framing politics against mountains, deserts and rivers supports identification of historical patterns and forecasts of emerging trends. In other words, the physical map provides an objective and consistent model for studying a subjective and dynamic subject such as politics (Sloan and Gray, 1999). Consequently, geopolitical assessment can highlight threats and opportunities that go unaddressed by other risk methodologies that emphasize current conditions (Glancy, 2012). Taken together, the permanence of geography, hindsight afforded by centuries of political history, and interconnectedness of world events makes geopolitical assessment a valuable approach for conceptualizing strategic risk.