Though much of the article contains practical, obvious advice for seasoned investors, Jim Jones has an interesting piece in Business Times on the tactics of managing political risk for mining in Africa.

The choice of country is clearly defined by geology. But, as Leon pointed out, mutual security depends on legal structures. He said Botswana ranks highly in the Fraser Institute’s analysis of jurisdictions that are fair and favourable to foreign investment. Botswana’s mining laws afford little in the way of discretion to ministers or the officials who administer them.

Discretion is the keyword. Ministerial or administrative discretion can (and often does) open the door to corruption.

Smaller companies are particularly vulnerable to demands for bribes or “facilitation fees” to speed up administrative processes.

When you are up against a corrupt government and faced with, say, expropriation or the loss of assets, better that you have adhered rigorously to the legal and social agreements that came with your entry into that particular jurisdiction.

The fewer loopholes bent politicians can find, the greater your chances of winning in the courts.

The case of First Quantum, which was deprived of its minerals assets in the DRC, is salutary. It has won its international arbitration case against the government but has still to receive a penny of compensation. Yet the internationally binding arbitration gives First Quantum the right to compensation from another company that might acquire its lost assets.

There is no single rule governing every venture into Africa. An agreement that might be appropriate for an exploration company, hoping to prove a resource and then flip it to a developer, might be wholly inappropriate for the developer of that resource.

If your project delivers obvious benefits to host countries and host communities, the better the chances of your seeing it through all its stages from opening to closure.