Risks Associated With Setting Up A Mining Operation In Malaysia – Essay Example

Download full paperFile format: .doc, available for editing

Proposes to overcome the existing risk by employing modern technology and well-trained personnel. It will raise the necessary funds within Malaysia by giving potential investors a chance to buy its shares. The financial and economic analysis depends on a wide scale of assumptions such as price, demand, and cost. The most important risk, which is associated with Zeus Plc. , is a large amount of investment, which is done in the context of the new project to be started in Malaysia (Madura, 2000). In this new project, the total investment will be approximately US$1.5 billion, which is a large amount and needs to be allocated properly.

In a financial context, the costs that are estimated by the company for the project might not be sufficient for its successful completion. The entire process may not only have an adverse impact on the land but even on people living in nearby areas (Cashore, Auld, and Newsom, 2004). Furthermore, mining can be described as land or environment usage, which impacts health and accident hazards, surface disturbance, and excessive consumption of those resources that are irreplaceable (Gunningham, 2002).

These factors can be considered as environmental risks and possess a wide scale of indirect effects on the mining industry (Rittenberg, Johnstone and Gramling, 2011). Political risk is greatly tied with the mining industry and is a major concern for all those investors who are interested in such projects (Ribi, 2009). There is high risk towards achieving reliability of the system due to the development of advanced technology, escalating costs of equipment, and complexity related to modern systems of mining (Dlabay and Burrow, 2007). The capital-intensive structure of the mining industry ultimately results into long payback periods in terms of existing technology and greater risks are tied to the introduction of new technology into the system (Brunsson and Jacobsson, 2000).  

References

A.M. Best Company, 2014. AMB Country Risk Report, New Jersey: A.M. Best.

BRTF. 2004. Avoiding regulatory creep. London: Better Regulation Task Force, Cabinet Office Publications & Publicity Team.

Brunsson, N. and Jacobsson, B. 2000. A world of standards. New York: Oxford University Press.

Cashore, B., Auld, D. and Newsom, G. 2004. Governing through markets: Forest certification and the emergence of non-state authority. New Haven: Yale University Press.

Das, S. 2006. Risk Management: The Swaps & Financial Derivatives Library. New York: John Wiley & Sons.

Dionne, G. and Garand, M. 2002. Risk management determinants affecting firms’ values in the gold mining industry: new empirical results. Economics Letters. 79(1). pp. 23-25.

Dlabay, L., and Burrow, J., 2007. Business Finance. USA: Cengage Learning.

Edwards, P. and Bowen, P. 2013. Risk Management in Project Organisations. Berlin: Routledge.

Fight, A. 2005. Introduction to Project Finance. London: Butterworth-Heinemann.

Finnerty, D. J. 2013. Project Financing: Asset-Based Financial Engineering. New York: John Wiley & Sons.

Gatti, S. 2013. Project Finance in Theory and Practice: Designing, Structuring, and Financing Private and Public Projects. London: Academic Press.

Gunningham, N. 2002. Regulating small and medium sized enterprises. Journal of Environmental Law, 14 (1), pp. 3-32.

Gupta, P., Lamech, R., Mazhar, R. Wright, J. 2002. Mitigating Regulatory Risk for Distribution Privatization – The World Bank Partial Risk Guarantee. Available at: http://siteresources.worldbank.org/INTGUARANTEES/Resources/Final_Layout_Mitigating_Regulatory_Risk_Paper_Nov_19-02.pdf. [Accessed on. 13th October 2014].

Heidegger, M. 2010. Being and Time. New York: SUNY Press.

International Federation of Accountants. 2002. Managing Risk to Enhance Shareholder Value. NewYork: International Federation of Accountants—Financial and Management Committee.

Kliem, L. R., and Ludin, S. I., 2007. Reducing Project Risks. Hampshire, England: Gower.

KPMG., 2011. Business risks facing the Mining Industry. Available at: https://www.in.kpmg.com/SecureData/ACI/Files/Top_20_Risks_the_Mining_Industry.pdf [Accessed on 13th October 2014].

Kunreuther, H. 2002. Risk analysis and risk management in an uncertain world. Risk Analysis, 22 (4), pp. 655-664.

Madura, J. 2000. International Financial Management. New York: South-Western College Publishing.

Merna, T. and Njiru, C. 2002. Financing Infrastructure Projects. Melbourne: Thomas Telford.

Nevitt, P. K. and Fabozzi, F. J. 2000. Project Financing. New York: Euromoney Books.

Ribi, E., 2009. Outsourcing, unemployment and welfare policy. Journal of International Economics, 78 (1), pp. 168-176.

Rittenberg, L., Johnstone, K., and Gramling, A., 2011. Auditing: A Business Risk Approach. USA: Cengage Learning.

Wilson, A. 2013. Global Mining Survey Results for 2012/2013 reveals a shift in Canadas top-ranked jurisdictions. Available at: http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/articles/global-mining-survey-results-for-2012-2013-reveals-shift.pdf. [Accessed on. 13th October 2014].

Yescombe, E. R. 2013. Principles of Project Finance. New York: Academic Press.

Zafar, A., and Julian, C. 2012. Factors impacting International Entrepreneurship in Malaysia. Journal of Small Business and Enterprise Development, 19 (2) pp. 136

Zastre, M. 2013. Turning high risk into high potential. Available at: www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCUQFjAA&url=http%3A%2F%2Fwww.grantthornton.cn%2Fupload%2FTurning-high-risk-into-high-potential.pdf&ei=7Gs7VL-AJMiTuAT48oGACQ&usg=AFQjCNFDrNefCieXVqACq0GU0ZDtwzuXFQ&sig2=3LjH7f9jLGJmyKXpNUD21g&bvm=bv.77161500,d.c2E. [Accessed on. 13th October 2014].

Download full paperFile format: .doc, available for editing
Contact Us