http://natna.wordpress.com/south-boulder-forced-and-sovereign-risks-why-eastafro/
By Sam B
5 Nov 2012
Eastafro today posted an article by one Stuart
McKinnon<
http://eastafro.com/Post/2012/11/05/south-boulder-agrees-to-submit-an-alternative-5050-profit-sharing-proposal/>written
for "The West Australian", that included the following statement:
"The *sovereign risks* for Africa-focused explorers have again been
highlighted with South Boulder Mines *being forced to present*a 50/50
profit-sharing proposal to the Eritrean government over its Colluli potash
project."
"*Sovereign risks*" and "South Boulder Mines *being forced*" is the thesis.
There is nothing in the South Boulder press release (see
HERE)<
http://natna.wordpress.com/potash-deal-5050-profit/>that
indicated that it was "forced to present a 50/50 profit-sharing
proposal" (even if South Boulder was actually forced, nothing in the PR
says it). All we know so far is that "South Boulder* has agreed* to submit
an alternative proposal". They could have done so because they did not like
the counter proposal, nothing says forced. The notion that STB was forced
and the intimation of sovereign risk, despite the accommodation investment
environment created to all the mining companies working in Eritrea, are
reflections of Stuart McKinnon's biases.
The use of the word forced (an intentional injection) has altered the story
for a normal course of investment or business negotiation to one of
"sovereign risks" - which is a major component of a country and political
risk. It is the risk associated with investing in a country where one risks
their work, investment and/or capital being frozen, appropriated and/or
nationalized by the host country. Eritrea has been designated high country
risk - sovereign, political etc, - for sometime and it has been shedding
that image slowly but surely.
Eastafro's propagation of this story, where a nations, in this case
Eritrea, changed the rules of the game after the fact in order to control a
bigger piece of the pie will only heighten and exacerbate the perception of
risk inherent in doing business with and in Eritrea. It deters further
investment in the country and creates a wrong image based on facts that
don't exist.
Every country, including the US, Canada, Australia and others in Asia and
Latin America have declared one or more commodities "strategic" and have
changed the rule of the game after the fact to control that commodity or
industry. If Eritrea considers Potash a "strategic asset", like Canada
already practically has, it is its prerogative. There is nothing at this
point to indicate with any certainty that that is the case here.Thus a
report about sovereign risks and a company being force that puts a negative
light is unwelcome, especially more so, when there is nothing to justify
it. Eritrea has not appropriated or nationalized anything according to the
press release. So why propagate such negative story in one of Eritrea's own
cyber abodes?
SAM
Blog Page
http://www.natna.wordpress.com
Received on Wed Nov 14 2012 - 21:36:52 EST
