Mining investment promotion

Attitudes in developing countries with respect to private investment in natural resources have changed substantially in recent years. Countries must now compete for such investment by ensuring that policies pertaining to state participation, financing, marketing and taxation of mining ventures provide the investor with returns that are commensurate with the risks taken. Governments must also be prepared to help the investor compete on world markets through lower capital and operating costs. This entails granting exemptions of customs, excise and value added taxes as well as providing for policies on taxation, government participation, industrial relations, safety and environment, and procurement and personnel that are in line with international mining industry standards. Efforts to promote mining sector investment through the strengthening of technical ministries, preparation of basic geological and project information, investment symposia and an international mining council can be helpful in bringing opportunities to the attention of the investment community. But, these efforts can only succeed if the policy changes now being put into place continue to evolve and contribute to an atmosphere in which entrepreneurship and private investment can flourish.     

Economic liberalisation, innovation, and technology transfer: opportunities for cleaner production in the minerals industry

The liberalisation of investment regimes for mining over the past decade is encouraging an inflow of foreign investment for mining and mineral processing projects in developing and former centrally-planned economies. This new investment is occurring at a time of technological change within the international mining industry as market and regulatory pressures lead the most dynamic firms to invest in the development or acquisition of new technologies and management practices. The effective transfer and assimilation of these technologies enable mining companies to combine gains in productivity with improvements in environmental management. Joint ventures and other strategic alliances between inwardly investing firms and the newly privatised or remnant state-owned mining enterprises may provide an effective vehicle for the transfer of the techniques for more productive and cleaner operations. Specific examples of innovative process and remediation technologies are analysed and it is suggested that the ability of innovative technologies to improve competitiveness and sustain best-practice environmental management in the recipient is linked to the transfer and effective acquisition of the capacity to manage the complex processes of technological and organisational change. The paper closes with some recommendations for further research directed towards a systematic examination of this hypothesis.     

The competitive position of Canadian copper supply

The author examines the proposition that the Canadian copper industry has reached a mature, less competitive, stage of growth. Employing a break-even-cost approach, he compares the Canadian industry to those of other copper-producing nations in terms of cost competitiveness and prospects for new entrants. He finds little evidence to support the proposition, and concludes that Canada's copper industry will continue to maintain its strong competitive position during the 1980s.     

Taxation of uranium mining in Canada and Australia

The objective of this paper is to compare the nature of the taxation schemes facing uranium mine operators in Australia's Northern Territory and in Canada's Province of Saskatchewan. The findings demonstrate that, although the Canadian system appropriates up to 85% of incremental sales revenue, it is extremely sensitive to industry profitability. Its Australian counterpart is, in contrast, a regressive scheme which, at the current selling price of yellowcake, captures a significantly larger proportion of available economic rent.     

The internationalisation of the Australian mineral industry in the 1990s

Overseas mineral exploration and mining investment by Australian companies increased dramatically from the early 1990s until 1997. In the wake of the Asian economic crisis and lower commodity prices it declined somewhat in 1998 and 1999. Reflecting their international competitiveness, Australian resource companies were actively involved in projects in about eighty nations in 1999. This study assesses the extent of growth in exploration and mining operations, the distribution between large and small companies and the changing regional focus which has been occurring. It also reflects on some of the key influences on this development. These include a strong domestic finance sector, supporting mining services provision, technological competitiveness, a growing attractiveness of offshore locations and increasing structural impediments at home.     

Private capital: What impedes its entry into China's minerals industry

The paper commences with an analysis of the nature and status of private capital investment in the minerals industry in China. Based on the analysis, the authors examine the main barriers in terms of the mineral rights market, industry access and investment security that impede the participation of private capital into exploration and development of China's mineral resources. The discussion addresses how to encourage the participation of private capital into mining investment and it concludes that it is of significant importance to ensure the soundness of mineral rights market, impartiality of industry access, and security of mineral rights.     

Canadian mineral policy debated : Industry reaction to a major federal initiative

The debate on mineral policy between the Canadian federal government and the mining industry is reviewed and policy-making emerges as necessarily an adversarial process. The Canadian federal system provides major obstacles to the formulation of a national mineral policy but does not exclude it. It is argued that industry should play a more pro-active part in mineral policy formulation, seeking with governments a clear hierarchical list of priorities against which discrete policy decisions can be evaluated.     

Rising to the Kyoto challenge: is the response of Canadian industry adequate?

A major weapon in Canada's CO2-emissions reduction arsenal is reliance on moral suasion and voluntary action. In this regard, the Voluntary Challenge and Registry (VCR) program constitutes a major effort to encourage industrial firms to reduce their greenhouse gas emissions. In this paper, we begin by providing a critical review of Canadian climate change policy and Canada's international commitments. We then investigate the effectiveness of Canadian policies by analyzing a survey of industrial firms, examining factors that determine firms' familiarity with, participation in and commitment to the VCR program, and their stated potential to reduce emissions by 2008-2012 (Kyoto's commitment period). Results indicate that voluntary programs are unlikely to make a significant contribution to emissions reduction, with industrial firms indicating that, on average, they plan to reduce emissions by some 1-2% below their 1990 level under the current policy approach, much lower than Canada's 6% reduction target.     

Patience is a virtue: Problems of regulatory governance in the Indonesian mining sector

Mining investment in Indonesia has been at a standstill for a decade. Clearly. international mining companies regard the country as a high risk destination for capital. Yet Indonesia is one of the most highly mineralised countries in the world and has expressed a desire to increase investment in the sector in the coming years. As a first step in this direction the government has introduced a new mineral and coal mining law to replace the highly regarded Contract of Work system. The government argues that this new law will reinvigorate mining investment in the country. This paper suggests that the new mining law will do little to improve the situation. Indeed, it is unlikely that Indonesia will become a preferred destination for mining investment in the foreseeable future. Poor regulatory architecture, endemic corruption, and a lack of institutional capacity continue to be of concern to investors.     

Harnessing the bonanza: economic liberalization and capacity building in the mineral sector

Over the past decade many developing and transition economies have liberalized their investment regimes for mining and privatized formerly state-owned mineral assets. In response, these economies have witnessed increased foreign investment in exploration and development, growth in the number and diversity of mineral projects, and the opening up of new channels for harnessing increased economic and social benefits from development in the minerals sector. The restructuring of fiscal and regulatory regimes to encourage foreign investment, and the associated influx of mining capital, technology and skills, is transforming traditional relationships between mining firms, local communities and the government. This transformation necessitates a re-evaluation of the most effective policy approaches to capture increased economic and social benefits from mineral production. This article considers effective mechanisms for improving the capacity of developing and transition countries to maximize the economic and social benefits of mineral production. Common challenges associated with minerals economies are reviewed. Consideration is given to the opportunities for harnessing foreign direct investment and the possibilities for creating new partnerships between local communities, industry, government, and multilateral development agencies through social investment projects. The article concludes with a series of recommendations for the design and implementation of policy approaches towards harnessing mineral production for economic and social benefit following the liberalization of investment regimes for mining.     

Determinants of foreign direct investment in the mining sector in Asia: A comparison between China and India

The aim of this paper is to assess the conditions that influence foreign direct investment in the mineral industries of China and India. The paper first surveys literature on the determinants of foreign direct investment to identify key conditions, under which host countries attract mining FDI. It then builds an evaluative framework which allows for comparative analysis. The paper then comparatively evaluates the performance of foreign investment regimes that govern mineral industries in China and India. Its findings show that the overall conditions for foreign mining investment in China and India are not favourable and that substantial policy, regulatory and other changes in both countries need to be made if more investment is to flow.     

煤炭产业的环境保护问题及建议

从煤炭产业所面临的产能过剩、环境污染和开发布局不合理的困境出发,说明了煤炭行业环境污染产生的途径和污染源,从经济成本、健康损失和国际影响力、竞争力方面阐释了煤炭产业绿色发展的重要性和必要性。在此基础上,进一步提出并讨论了煤炭产业绿色发展转型的三点政策建议:研发绿色开采技术、推广煤炭清洁利用技术、优化煤炭产业结构。     

Mining economics and the environment

A mining operation can affect the environment adversely and create costs to others that are external to the mining firm, if no constraints are imposed. To deal with this problem of externalities, various regulatory steps can be taken, eg effluent taxation, subsidies, regulation of emissions by command, and use of emission permits that are tradeable. Bargaining between the polluter and the damaged party over the level of production and compensation remains a more theoretical option. Regardless of what regulatory approach is adopted to transform external costs into internal costs, the resulting higher costs will have an impact on the decisions of a mining firm. Information processes, traditionally focused on finding deposits, have now been broadened to include an environmental dimension. Operating practices can be modified to reflect the need for stable long-term solutions of waste disposal problems. On the industry level, environmental regulation may lead to sterilization of resources, to higher prices for some commodities and to distortions of competitiveness among commodity producing countries.     

Effect of tax laws on mineral exploration in Canada

Changes since 1972 in Canadian federal and provincial tax laws have eliminated many of the prior tax incentives offered to the mining industry. These changes provide an opportunity to study the effect of tax laws on a country's mineral resource development by comparing trends in mineral exploration in various provinces with adjoining regions, and by comparing these results with firm behaviour that would be expected from microeconomic analysis. Mineral producers have sought higher, more stable returns, resulting in shifts of exploration into political regions with more favourable and less changeable tax policies. Future supplies of mineral raw materials from a political region are dependent on current exploration effort, which is in turn influenced by the region's tax laws.     

Shortfalls in minerals investments

The international minerals industry continues to have a substantial investment shortfall. The widening exploration and mineral development gaps, not only in the lesser developed countries but also in the developed nations, are sowing the seeds for future mineral supply disruptions and conflicts. Mutuality of interests demands concerted initiatives, individual as well as collective, to reverse the investment trends established by international mineral finance and the multinational corporations in order to pave the way for secure mineral supplies in the future at acceptable prices.     

Joint mineral ventures in the former Soviet Union: prospects, problems and realities

This paper traces the gradual opening up to foreign investment of the rich mineral endowment of the vast territory of the former Soviet Union, containing the world's largest mineral industry. It analyzes the current status of mineral joint ventures in some of the new Republics, including Russia, Kazakhstan, Tajikistan and the Ukraine, including new legislation and other measures taken by individual states to facilitate foreign investment, as well as prospects, risks and uncertainties associated with investment in FSU mining activities that may be encountered by foreign companies. A successful gold joint venture in Tajikistan is described and evaluated to provide an understanding of the many aspects of an operational FSU project.     

Economic risk and mineral taxation on Indigenous lands

Mining generates risk of environmental and social harm for Indigenous peoples but can also generate substantial revenues for them, creating opportunities for community development in a context where economic and social disadvantage is the norm. Especially as mining revenues should, in part, compensate for mining’s negative social and environmental impacts, it is vital that mineral taxation on Indigenous lands reflect a careful assessment of appropriate tax mechanisms and a matching of these with community priorities. Yet little has been written that could serve as a guide for Indigenous decision makers. This article contributes to an understanding of the issues and choices facing Indigenous communities in designing mineral taxation regimes, by focusing on the question of economic risk. Risk arises as a key variable in choosing or designing a mineral taxation regime in three ways. Different approaches to mineral taxation are inherently more or less risky, in the sense that they are more or less certain to generate tax revenues. A second aspect of risk involves the degree of economic certainty or predictability associated with different types of commodities and projects. Third, the risk tolerance of Indigenous peoples and communities can vary significantly. We show how Indigenous groups can integrate and address these different dimensions of risk, by recognising the ‘risk consequences’ associated with different approaches to mineral taxation and choosing an approach that reflects, as fully as possible, the group’s risk tolerance.     

Mineral development prospects of the Indochina area

Reform is under way in several nations within the Indochina area to stimulate economic growth and foreign investment. Though once forbidden, participation by foreign companies in mining exploration and development activities in Myanmar, Kampuchea, Laos, Thailand and Vietnam is now being solicited by the respective governments. This paper presents a preliminary evaluation of mineral and energy resources in the region and outlines possible development scenarios based on economic policies, financial and infrastructural constraints and industry interest. The investment climates for resource-related projects are assessed qualitatively by country. Clearly, the long-term development potential of mineral and energy resources in the Indochina area is large, and the potential gains outweigh any of today's problems.     

The measurement of resource rents: An application to Canadian nickel

Once the ‘risk’ of the industry is recognized, there are at least two sources of higher-than-normal returns to investment in mineral extraction: Ricardian rents to resources with different economic qualities and monopoly rents. An estimate of the relative importance of these sources in the Canadian nickel industry over the period 1961-74 is made and it is found that Ricardian rents and, for one firm, monopoly rents, were important.     

Resource diplomacy in a Canadian perspective

Concern for the supply of resources—renewable and nonrenewable—has been evident during the 1970s. All countries seek to increase the economic and social returns from the exploration, processing and distribution of minerals so as to improve the quality of life of their people. Proper resource management is imperative because of the interdependence of the mineral sector with other leading sectors of the economy and also because of the importance of minerals in the web of international economics. This paper emphasises the significance of recent international events as they affect the mineral industry and the Canadian position in the ever changing world of resource diplomacy.