Title: Determining factors of investment in mineral exploration

Authors: Ronal Vicente Estrella Amaro; Carlos Edmundo Miranda Farfán; Walter Ernesto Sánchez Sánchez; Anwar Julio Yarin Achachagua

Addresses: Escuela Universitaria de Posgrado, Universidad Nacional Federico Villarreal, Avenida Camana 1014, Lima, Peru ' Facultad de Ingenieria Geologica, Escuela de Post Grado Gerens S.A., Universidad Nacional San Antonio Abad del Cusco, Avenida de La Cultura 773, Cusco, Peru ' Escuela de Postgrado Gerens S.A., Av. Primavera 1050, Santiago de Surco, Lima, Peru ' Facultad de Ingeniería Industrial, Universidad Nacional Mayor de San Marcos, Calle Germán Amézaga 375, Lima, Peru

Abstract: The objective of this study was to identify the critical factors that favour attracting a greater investment in mineral exploration. An explanatory methodology was used. Through econometric models, the relationship and/or interaction between the variables that had an impact on the defined dependent variable was demonstrated. This study used a new proxy variable to quantify geological potential: mining production value. Likewise, a new variable, land area/population, and other variables such as exploration expenditures, index of economic freedom, mining reserves, surface area and population were included. Following the formulations of previous studies, three models were estimated: linear logarithm, normalised and competitiveness model. It is concluded that, the greater the geological potential and investment climate, the higher investment in mineral exploration will be. Meanwhile, high population density leads to the opposite effect. Future studies should consider other variables or even new formulations to more robustly explain the competitiveness of countries to appear attractive to mineral investments.

Keywords: investment factors; investment in exploration; mineral exploration; econometric models; mining production value; geological potential; land area; exploration expenditures; index of economic freedom; mining reserves; investment climate.

DOI: 10.1504/IJMME.2021.116873

International Journal of Mining and Mineral Engineering, 2021 Vol.12 No.2, pp.85 - 105

Received: 06 Mar 2020
Accepted: 01 Feb 2021
Published online: 05 Aug 2021 *

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