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

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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).  


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