Agree that there is a degree of sovereign risk involved, but there are also various key points and mitigating factors to be considered in relation to this topic. For example, just a few considerations are:
- sovereign risk exists in every project/country, so this risk is not isolated to KP2. Even in Aus recently, a gold mine was denied a mining license for failing to achieve Govt approvals.
- the DRoC and the RoC are very different countries in sovereignty and in nature. KP2 operates in the RoC which is arguably far more stable than the DRoC.
- KP2 has a broad range of influential stakeholders and investors which range from the Chinese (PowerChina), to the Middle East (Oman and potentially UAE), to the South Americans (SQM), to Europe (UK), and all these influential stakeholders/investors who have billions of dollars invested in the RoC via various projects would/could apply pressure on the RoC if the RoC Govt was too unreasonable.
- the RoC has a long history of stable investment in its local the oil and gas industry.
- The Minister of Mines of the RoC has openly and publicly shown support towards KP2 and the Kola project. He was even at the signing ceremony for the EPC contract with PowerChina.
There are more considerations which can be listed, and while i agree that there are always various risks with all projects, IMO, the sovereign risk factor with KP2 in the RoC is being well mitigated and well managed.
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