Mercer’s Cost of Living survey is taken in March of every year. According to Wikipedia, the way it works, is that the survey covers 214 cities around the world, where it measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household good and entertainment. The main reason for the survey is to help multinational companies and governments determine compensation allowances for their expatriate employees. New York is then used as the base city, and all the other cities are compared against New York. The cost of housing plays an important part in determining where cities are ranked. Wikipedia goes on to say that the two main factors that determine a city’s ranking in Mercers survey, are the relative strength of the relevant currency against the US dollar over the prior 12 months, and price movements over the prior 12 months, compared to those in New York.
According to the results by Mercer, in 2012 Tokyo in Japan was the top most expensive city to live in as an expatriate. I know this is not really relevant to those in mining, as mining in Japan is minimal, due to the fact that Japan possesses very few mining resources. However, what was of interest was that Luanda in Anglo came in as second, not far behind Tokyo. This will affect those in the mining industry, as it is a region with great potential, due to the fact that it is the country with the largest and the most diversified mining resources in Africa.
What is interesting to note was that in 2011, not only was Luanda considered to be the most expensive city in the world to live in for an expatriate, but that it was for the second year in a row. It seems however, that Tokyo managed to slip into first place in 2012.
It is really hard to believe that Luanda could be such an expensive city to live in for an expatriate, when you take into consideration that Angola was plagued with what was known to be one of Africa’s longest and bloodiest civil wars, which only ceased in 2002. Also, that around a third of Angolans live in Luanda, and that around 57% of them live in poverty. When you take all of the above into consideration, it is quite remarkable that Luanda is in the top 2 most expensive cities in the world to live in, as an expatriate.
It seems that once the fighting in Angola stopped, it was replaced with a tremendous amount of construction in Luanda. The main reasoning behind this sudden flurry in construction was the reported 15.3 billion pounds worth of international oil reserves, as well as the wealth of mining reserves located in Angola. In 2011 it has been reported that renting a luxury two bedroom unfurnished apartment in Luanda cost around $ 7000 per month. Compare that to the fact that in New York you will pay nearly half, and New York is also considered an expensive city to live in, that is a staggering amount to have to pay each month.
So ultimately because of this economic boom in Angola, multinational companies have to pay enormous amounts to send their expats to Luanda. During recent years, local and international investors have arrived on the scene, as well as an influx of migrants coming from other countries and cities that are looking for better lives. Along with this so has the standard of living increased dramatically. There is a shortage of space in Luanda, so with the huge demand for property and food in Luanda, so have the prices gone through the roof.
However if you take all the above into consideration, the reality is that as many as two thirds of Luanda’s five million residents live in shanty-town squalor. The poor and destitute, use cardboard, corrugated iron and planks of wood to make shelter. They cook on open fires and have either no or sporadic access to water or electricity. It is amidst all the poverty, despair, squalor and dust, that you will find affluent suburbs, where the privileged live, and it’s in these affluent areas that the expatriates would be based. Because accommodation is so expensive, it is going to be an expatriate’s biggest expense, so it is vitally important for expatriates to factor these expenses into any contract negotiations before moving to Angola.
Osaka in Japan was rated the 3rd most expensive city to live in for expatriates, with Moscow in Russia fourth, and Geneva in fifth position. Russia is not only the biggest country in the world; it is also one of the richest mining jurisdictions on earth. Judging from these results where mining companies and mining expatriates, are going to be most affected in these top five countries, is probably going to be for those with mining operations that require expatriates in Russia and Angola. Russia because of the fact that it one of the richest mining jurisdictions on earth, and Angola because it is home to one of the largest and most diversified mining resources in Africa.