Global mining regulations usher in a new round of changes

Mining has become more and more influential in the global economy. According to the latest research results of the World Gold Council, the global gold industry's contribution to the world economy in 2012 exceeded 210 billion U.S. dollars, which is equivalent to the total GDP of the Czech Republic. Among them, gold mining has contributed more than US$78.4 billion to the economy in the world’s top fifteen gold-producing countries. Gold mining has a more significant economic impact on some developing countries, for example, it can account for 15% of the GDP of Papua New Guinea, and the GDP of Guyana. 8% of Tanzania's GDP is 6%. The fact that the global mining industry is thriving several times makes governments increasingly aware of the importance of developing mining. In order to obtain greater benefits from the mining industry, countries have been constantly updating laws and regulations related to the mining industry. In recent years, mining regulations in various countries have shown a new round of changes.

According to the analysis, the current changes in the mining regulations show two trends: First, the government wants to get more money from mining companies, thus changing the relevant taxation and rate standards; on the other hand, countries try to reduce the regulatory restrictions to attract More foreign capital invests in domestic mining.

The following are some examples of mining regulations updates in 2013:

In July 2013, the Ethiopian Parliament passed an amendment submitted by the Ministry of Mines, which reduced the company's corporate tax from 35% to 25% on the grounds that it needs to attract foreign capital to consolidate its own infrastructure.

In August 2013, the Ministry of Mines of Kenya passed new regulations to increase the use of mineral resources in the country, increase the total value of gold sales tax from 3% to 5%, and raise the total sales tax for rare earth, antimony and titanium ore to 10%. % The reason is that these minerals have recently become a hot mineral for exploration. In addition, it also proposed a new comprehensive regulation, which announced in October that the rate for mining permits was set at 10%.

Ecuador passed amendments to regulations in June last year, which will facilitate the start-up of small-scale mining companies. The new regulations stipulate that the excess profit tax should be implemented after the mine investment recovers costs. The resource utilization rate has always capped 8% for gold, copper, and silver exports, 3% for small mines, and 4% for medium-sized mines. Moreover, small and medium-sized mines can now have the right to choose mineral rights agreements, that is, the actual implementation is more flexible than the existing exploration contract regulations (the country had already raised the taxes of mining companies in 2009).

The revised mining law in Guyana has been to reduce the corporate tax from 35% to 30% and reduce the tax rate of its main mineral product, bauxite, from 0.55% of aluminum price to 0.15% to reduce the cost. More investment.

Bolivia stipulates that the mineral rights of companies that do not conduct exploration or development within a certain period of time will be revoked and no compensation will be given. The formulation of this policy is aimed at the status quo of any 150,000 hectare mineral rights certificates held by 2,454 private mining companies in the country. The newly proposed idea of ​​the mining law is to double the reduction of exploration costs in exchange for future profit tax, and the existing privately-owned mine tax rates and mineral resource usage rates will remain unchanged.

Mexico will approve a new corporate taxation system, set the corporate income tax rate to be reduced at a regular rate of 30%, and increase the use of mineral resources for the first time by 7.5% (calculated by interest, tax, depreciation, and profit before repayment); for precious metals The mining company charged a special fee and the signatures of the chief executives of 16 mining companies required the use of mineral resources at 4.5%.

Brazil proposed amendments to the mining law, setting the maximum mineral resources use fee at 4% annual revenue, and setting minimum investment requirements for mineral rights. However, the content of this proposal may change because 2014 is the country’s election year, and the bill is still uncertain.

Australia’s newly elected ruling party is likely to withdraw the country’s once-controversial Mineral Resources Lease Tax (MRRT) passed in 2012.

The governments of other countries are also actively considering changes in mining regulations. For example, the South African ruling party has established a special committee to discuss the possibility of changes in the country's mining-related tax rates; the Myanmar government has begun to discuss the revision of the mining law, the country's resources potential of gold, copper, tungsten, and nickel, but exploration activities are rarely conducted; The Haitian government is formulating a new mining law based on World Bank guidelines in order to better manage the country’s mining and tax revenues and make it a way out of foreign aid; Indonesia’s regulations on the ban on the export of unprocessed ore have been implemented. , and this regulation led to the ups and downs of nickel prices in early 2014; Quebec's amendment to the mining law in Quebec was not passed three times. The revision of mining regulations in the Yukon Territory of Canada mainly involves the issue of indigenous peoples being affected by small mineral exploration activities.

Recalling the past two years in sub-Saharan countries in Africa, namely the slang-speaking countries, in order to attract foreign investment, they are bringing their own mining laws closer to international standards, while also making the development of their mining industry an important way out of poverty. Mining has made more contributions to local economic development. The orientation of these countries to amend regulations is to increase state participation and local procurement, support local communities, and adjust taxation systems, including reducing tax stability and avoiding land freezes. Specific examples are:

Cameroon and Mali completed the revision of the mining law in 2011 and 2012, respectively. In addition, the coastal, Gabon, and Burkina Faso completed their respective revisions of the mining law in 1995, 2000, and 2003; the Republic of Congo announced its revision of the 2002 mining law. The main content of these country's revisions is to increase the participation of national or local governments in mining projects.

Mali’s 2012 regulations set the country’s right to retain 10% of incidental rights, and the country’s right to choose to hold another 10% of cash participation, or to require the company’s 5% stake to be held locally.

The new law in Guyana states that the state has the right to hold 15% of incidental rights and cash participation options up to 35% of the mineral rights, and the state does not have to consider the priorities of other shareholders when selling its cash participation rights.

** The coast also stipulates that the country can hold 10% of incidental rights, and the government has the right to choose an additional share at market price, but not more than 15% (according to the market price of the acquisition date).

The Republic of Congo proposes to increase the country’s participation rights from 5% to 15%, but it can increase by 5% each time the exploration certificate is updated.

The newly drafted proposal by Gabon was that the state’s interest in participation was 10%, and it had the right to choose to obtain additional cash equity, and the cash equity could reach 25%.

The current local economic and social development is becoming the core of the mining law reform. For example, in Guyana, the new mining law requires that local development funds be invested, bauxite and iron ore exploration certificates should be used for a 0.5% turnover, and other mineral exploration certificates should be used for a turnover of 1%; Burkina Faso stipulates that the contribution of mining production to local development ** is 1% of the pre-tax turnover; ** Coastal regulations stipulate that the mining industry contributes 0.7% of turnover to local development plans.

The most significant change in taxation is the increase in the capital acquisition tax, which requires that all transactions, transfers, and even indirect transfers of shares, rights and interests of mining companies must be taxed. The second is to reduce the stability of taxation, such as Guyana's tax rate can be stabilized up to 15 years, except for production and export taxes. The so-called stability also refers only to the stable tax rate, which does not include the stability of the tax base. What is more, the stability of the tax rate in the Republic of Congo is reduced from the original 10-year guarantee period to 3 years.

In order to prevent the land from being frozen, various countries have recently introduced laws and regulations to deal with it. Many countries have limited the number, area, and types of mineral exploration certificates. For example, the maximum exploration area for bauxite and iron ore in the Guyana Mining Law is 1050 square kilometers. The other largest mineral exploration area is 500 square kilometers. The Republic of Congo stipulates that the exploration period should be reduced from 15 years to 10 years. Each mining company, including its affiliates, has originally had a limit of 50 exploration licenses, which is now reduced to 10 in total. **The maximum exploration area regulated by the coast was reduced from 1,000 square kilometers to 400 square kilometers.

The reform of global mining regulations is a general trend. The success of reforms depends on whether the income from mining production can be distributed fairly by the shareholders, whether the mining industry can contribute to the growth of the local economy, and whether the local mining environment can satisfy foreign countries. Investors’ concerns; on the other hand, countries that are keen on policy reforms also need to avoid creating regulatory uncertainty and creating conditions that are detrimental to international investment. Mining investors in all countries must also fully understand these regulations in order to avoid Or reduce the various risks arising from mining production.