International mining taxation issues and comparisons

This paper presents the quantitative results of recent research on Canada's minerals and metals industry, and its international competitiveness for mineral investment. The information and analysis presented are derived from the work of a Canadian government-industry task force that was created in 1991, under the auspices of the Intergovernmental Working Group on the Mineral Industry (IGWG). Much of this work deals with mining taxation in several Canadian provinces. More importantly, an attempt is made to evaluate the total tax burden that the mining industry must bear, on a project basis, at all levels from exploration through refining operations in many important competitor countries. While the focus of the paper is on an international comparison of mining taxation, some non-tax issues relating to Canada's competitiveness for mineral investment are addressed .     

MINING AGREEMENTS IN DEVELOPING COUNTRIES-ISSUES OF FINANCE AND TAXATION

This article continues a Forum series on recent trends in mining contracts between host countries and foreign investors begun in the April 1977 issue. Based on intensive research carried out for the preparation of a book on Mining Ventures in Developing Countries , published recently in the Federal Republic of Germany, the authors discuss sources of finance, institutions, exchange controls and special accounts, royalties, income taxation, and equity participation. They conclude that taxation is most likely to remain the principal source of income; equity participation should be evaluated carefully as it does not automatically guarantee maximum benefits. The combination of taxes and royalties provide a steady flow of income. An increase of the total tax burden beyond a certain percentage may be counterproductive for the host country, as it encourages the investor to look for less controllable means of shifting profits or discourages investment for exploration and development.     

Mineral development,financing and cooperation: New forms of international participation?

Although relations between direct investors and host countries must steadily evolve to meet continually changing circumstances, this should be within a broadly stable framework. The basic technical and economic characteristics of mining should dictate the nature of that framework. In contemplating their experiences during the past decade many international mining companies might ruefully agree with Benjamin Franklin that: ‘in this world nothing can be said to be certain except death and taxes’. The aim of this paper is to highlight some of the important factors that must be taken into account by governments, international agencies and private investors contemplating large-scale mining projects. These inevitably dictate the forms of international participation in mining ventures.     

Modeling the impact of revegetation on regional water quality: A collective approach to manage the cumulative impacts of mining in the Bowen Basin,Australia

In this paper we quantify the additional water quality benefits that can be achieved through coordinated cumulative impact management. To do this we simulate coordinated and un-coordinated revegetation investments and compare their impact on achieving regional water quality goals. Our results show that coordination between multiple mining companies achieves additional benefits since prioritization is enabled across a broader range of investment opportunities. Additionally, when coordinated investment is permitted beyond the boundaries of coal mining leases, results show that additional benefits are greatly enhanced since these regions provide more rewarding investment opportunities. Results illustrate (a) how regional coordination may influence reputational benefits of investments, and (b) that coordination is beneficial when investment opportunities are unevenly distributed across the landscape. When additional benefits are achievable, we suggest that mining companies should develop collective investment projects with an understanding of how coordination influences project costs. Similarly, investment projects should be developed with an understanding of investment tradeoffs and how these may adversely impact on regional stakeholders and hence industry reputation. The mining industry has significant potential to contribute to regional wellbeing; however, land management policies must be flexible and promote incentives to enable companies to invest beyond compliance.     

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.     

Bolivia's strategy for restructuring the state's mining sector and promoting private investment in mining

Bolivia is a country of great mineral wealth with known reserves estimated to be worth over US$7 billion. Despite this great potential wealth, in the early 1980s the mining industry of Bolivia found itself in a crisis characterized by excessive state intervention in the industry, a financially troubled state mining company, large areas of the country off-limits to mineral development, an irrational tax system which discouraged mining and labour unrest. To deal with these problems, the government decided to restructure the mining industry so as to encourage private participation. This paper describes the policies introduced to revitalize the mining industry as well as projections of what the future benefits would be to the country if those policies are successful in achieving their objectives.     

What drives large South African corporations to invest in sub‐Saharan Africa? CEO's perspectives and implications for FDI policies

Foreign direct investment (FDI) flowing into Africa is highly diverse in terms of the origin of the investors, size of the firms, and the sectors of activity. The motivations and factors driving firms' decisions to invest in Africa are equally diverse. A direct survey of senior management in South African firms that are operating in sub-Saharan Africa reveals that the drivers of foreign investment as well as the risks and the strategies to overcome them differ markedly between sectors. A further finding is that there is a limited pool of FDI promotion policies and incentives that governments can institute that are effective in impacting South African corporations' investment decisions. As a consequence, broad-based FDI promotion policies aimed at attracting FDI across all investor groups are likely to have limited impact in attracting FDI from any particular investor group, or in attracting any FDI from multinational companies similar to the South African companies studied here. Such broad based policies probably need to be complemented with policies targeting those specific firms or sectors which countries hope to attract.     

Policies for tin exporters

The ‘restructuring’ of production and marketing is now an important part of less developed countries' (LDCs) policies to increase their gains from primary commodity exporting. Analysis of structural change in the tin industry shows that considerable increases in real income have been achieved by taxation and by equity restructuring. Specialist foreign tin companies have been replaced in part by major mining multinationals, however, whose bargaining power is stronger. Investment appraisals suggest that foreign companies in Asia have not been taxed excessively, but that more could be done to aid local, labour-intensive mining.     

Australian mining and the economy: A general equilibrium analysis

The impact on the Australian mining sector of a range of economic shocks is quantified in this study. These results are based on simulations with ORANI, a computable general equilibrium (CGE) model of the Australian economy. The following economic shocks are examined in detail: a change in the real wage rate as a cost to employers; an expansion in real absorption (ie, the sum of real household consumption, real private investment and real government spending); protection for manufacturing industries; a change in the tax mix in favour of indirect taxation; additional foreign exchange earnings from, say, an expansion in the agricultural sector or from new mining developments; and a movement in the exchange rate.     

The mining industry and the community: joining forces for sustainable social development

This article joins the continuing policy debate over the social responsibility of corporations, particularly in the mining industry. The author argues that the 'old school mining orthodoxy'—approaching the exploitation of mineral deposits solely from the technical and economic points of view—is long dead. Mining companies must also encompass the social dimension.
New policies for the mining industry are discussed in terms of recent worldwide trends and movements, e.g. globalization, economic interdependence and decentralization of governmental authority, and the rise of civil society as a political factor. These trends, together with the United Nations policies in quest of sustainable development and the consensus expressed at international conferences during the last decade, have deepened social awareness and set the stage for enhanced social responsiveness from the private sector. Socially responsible corporate policies include decentralization of decision-making to the field level, reaching out to stakeholders and shareholders, supporting governments which provide official development assistance for good governance and building broad partnerships to reduce social exposures.     

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.     

国际投资风险防范分析与策略

国际投风险的防范是国际投资中一个十分重要的问题。本文分析了国际投资风险的内涵，论述了国际投资风险分析的主要内容，指出了国际投资风险防范的基本策略和投资者风险自我防范策略。     

The small-scale water provider in Paraguay: bringing private sector efficiency to water resource use and the provision of drinking water to the poor

This article provides a case study of small-scale private sector provision of water supply in Paraguay, where the Government has sought sector policy reforms that would encourage private investment in drinking water supply. Ironically, while the Government has focused almost entirely on garnering the interest of large private international water companies, much smaller local firms have already made significant investments in drinking water services for the poor, all without any participation or encouragement from the Government. Outside Paraguay's two major cities, Asunción and Ciudad del Este, large numbers of aguateros currently provide piped potable water to lower-income people. Though the aguateros have little legal footing — they are in many respects informal and unregulated —they have constructed as much as one third of all the new drinking water connections in these two cities over the past 20 years. The small-scale water systems in Paraguay offer a model of financial, economic, and water-use efficiency. This article asserts that an abundance of groundwater resources, cheap access to electricity for pumping, and a spirit of informal investment, among other variables, has spawned widespread use of this approach. This article documents and analyzes the features of these independent small-scale water providers in Paraguay and the efficiency they bring to the use of water resources in meeting drinking water demands among the poor. It also cautions against policies that may trample on such entrepreneurial spirit in the name of State-managed privatization.     

Economics of Energy Conservation in Developing Countries and Analysis of Investment Incentives

This paper analyzes the economics of energy conservation in developing countries, compares the cost of energy conservation with the cost of enhancing domestic energy supply, and examines the effect of government investment incentive policies on the financial feasibility of energy conservation projects. A representative sample of 21 projects from six Indian industries shows that investing in energy conservation is more economical to a country than investing in domestic energy supply. Moreover, the nature of the conservation effort, i.e. housekeeping improvements, waste heat recovery or process change, is more important in determining the economics of energy conservation than is the type of industry. Analysis of government investment incentives shows that most of them are effective in making uneconomical energy conservation projects financially feasible and that the most effective incentive for the private investor to invest in energy conservation is the removal of fuel subsidies.     

Universal access to water and sanitation: Why the private sector must participate

Against the background of the current state of provision of drinking water and sanitation in the world — with one billion lacking safe water, and 2.2 billion not having adequate sanitation — this article argues that private participation is necessary. The most important issues for the management of water utilities in the 21^st century are identified as mobilizing investment for the highly capital intensive operation of water supply and sanitation infrastructure, and achieving efficiency in the delivery of services. The article highlights the issues that need to be raised if private investment is to be seriously considered as an alternative. Case studies, especially from Latin America (Argentina, Chile, Peru, Bolivia), illustrate different modes of private participation, and possible reasons for successes and failures are discussed. The article stresses that regardless of the modality of private sector involvement, on‐going government regulatory responsibility in the water sector is crucial. It suggests that regulatory policy must go beyond just setting tariffs, to develop standards for drinking water quality and waste treatment, as well as other standards. In conclusion, the article recognizes that numerous and increasingly difficult challenges face utilities in fulfilling their responsibility to deliver drinking water of adequate quality, in sufficient quantity, and at affordable prices, as well as safe and sustainable disposal of wastewaters for members of urban and rural communities.     

Norway's offshore petroleum industry

During the past decade, Norway has become an important oil and gas producer. Annual production is six times national consumption. Development policies of the national government have been cautious, and future policies will probably follow a similar pattern. The government recently opened offshore areas poleward of 62°N latitude, a decision likely to have a significant impact on Norway's future as an oil producer. Norway maintains a tight reign on foreign oil company participation, domestic downstream processing of crude, oil company taxation and oil revenue investment within the national economy. Norway's large inflow of oil-related capital investments and production revenues have contributed to significant inflation and to changes in local labour supplies. Norway has always used its petroleum industry to further the country's overall development goals, a policy that will continue in the years ahead.     

US nonfuels minerals policy

Nonfuels minerals policy in the USA flows from the differential and unique reactions of these industries to general economic policies in the areas of taxation, land use, environment, and international trade. To search for nonfuels minerals policy as direct statements by the US government on nonfuels minerals is futile. Nevertheless, the industries are unique in many characteristics, and the application of these general policies to the minerals industries creates unique situations. This uniqueness has been recognized by a virtually constant policy review over the past 10 years. The current effort is just beginning, and to prejudge now the outcome of this discussion is premature. However, it is not premature to argue that because of the uniqueness of these industries, it may be expected that their problems will be receiving public attention for many years to come.     

Solid Waste Management in Nigeria: Problems and Issues

/ This paper is a presentation of the problems of solid waste management in Nigeria and certain important issues that must be addressed in order to achieve success. At the core of the problems of solid waste management are the absence of adequate policies, enabling legislation, and an environmentally stimulated and enlightened public. Government policies on the environment are piecemeal where they exist and are poorly implemented. Public enlightenment programs lacked the needed coverage, intensity, and continuity to correct the apathetic public attitude towards the environment. Up to now the activities of the state environmental agencies have been hampered by poor funding, inadequate facilities and human resources, inappropriate technology, and an inequitable taxation system. Successful solid waste management in Nigeria will require a holistic program that will integrate all the technical, economic, social, cultural, and psychological factors that are often ignored in solid waste programs.KEY WORDS: Solid waste; Management; Problems; Solutions; Nigeria     

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.     

SUSTAINING LOCAL WATERSHED INITIATIVES: LESSONS FROM LANDCARE AND WATERSHED COUNCILS1

ABSTRACT: In the last decade, watershed groups (WG) established through government initiatives have become an important part of the natural resource management landscape in developed economies. In this paper, the authors reflect upon their research and experience with Landcare in Victoria, and to a lesser extent with Watershed Councils in Oregon, to identify the principles that appear fundamental to sustaining effective WG. In the first instance, these groups must be established at a local scale using social as well as biophysical boundaries. It is also critical that WG are embedded within a supportive institutional framework that identifies realistic roles for private landowners, local organizations such as WG, and regional planning bodies. Without broad stakeholder representation, the perceived benefits of participation are quickly forfeited. It is simply unrealistic to expect an effective network of WG to be sustained without substantial investment by government to provide for program management, group coordination, and cost sharing for on‐ground work. There must also be the commitment and skills within a program to establish processes that build trust and competency amongst citizens and agencies. These principles should also provide a foundation for the critical evaluation of WG programs.