Resource nationalism and coal

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Resource nationalism refers to moves by governments to increase their share of the returns from natural resources produced for export. Mechanisms may include taxes, export quotas, ownership shares, leasing fees, or seizure.[1] In 2011, resource nationalism was identified by Ernst & Young as the leading risk for mining companies internationally, rising from the fourth spot in 2010.[2][3]

Australia

In February 2008, in response to a growing wave of coal and iron ore mining proposals by state-owned Chinese comapnies, the Australian government adopted a new policy of screening investments on the basis of national concerns. The new policy replaced foreign direct investment (FDI) policies that had been in place since 1992, when the Keating Goverment removed special rules under its "One Nation" liberalization program.[4]

Minerals Resource Rent Tax

The Minerals Resource Rent Tax (MRRT) is a proposed tax on profits generated from the exploitation of non-renewable resources in Australia.[5] It is the replacement for the proposed Resource Super Profit Tax (RSPT).

The tax, levied on 30% of the "super profits" from the mining of iron ore and coal in Australia, is proposed to be introduced from July 1, 2012.[5] The RSPT was initially announced as part of the initial response to the Australia's Future Tax System review, known as the Henry Tax Review, by theTreasurer of Australia, Wayne Swan and the then Prime Minister, Kevin Rudd. The tax is similar in concept, although different in operation, to the existing Petroleum Resource Rent Tax levied on off-shore petroleum extraction activities.

The RSPT was to be levied at 40% and applied to all extractive industry including gold, nickel and uranium mining as well as sand and quarrying activities. The tax was replaced by the MRRT following the appointment of Julia Gillard as Prime Minister of Australia in late June 2010.[6]

The controversy regarding the RSPT was such that an "ad war" between the government and mining interests began in May 2010[7] and continued until the downfall of Prime Minister Kevin Rudd in June 2010.[8] The Australian Electoral Commission released figures indicating mining interests had spent $22m in campaigning and advertisements in the six weeks prior to the end of the Rudd prime ministership.[9] Mining interests re-introduced the advertisments arguing against the proposed revised changes during the 2010 federal election campaign.[10]

On the November 23, 2011, the tax passed through the lower house with the support of the Greens.[11] The bill is scheduled to be debated at the Senate in 2012.[12]

Indonesia

A 2008 U.S. diplomatic cable released by WikiLeaks described plans by the government of Indonesia to tighten controls over coal exports. The plans were a response to rapidly increasing thermal coal exports and concerns over lost revenues from illegals exports. According to the cable:[13]

"Several of our expatriate mining contacts expressed mixed reviews of the new policy, but tempered their remarks given the limited amount of information the GOI released on their plans. They noted Indonesia has a long history of announcing export taxes and other types of controls only to let them lapse or withdraw them in the face of public criticism. In general, our mining company contacts welcome higher prices but worry that continued strong increases on global markets may lower world growth, which will eventually cause the minerals boom to bust. They also expressed concerns about GOI backsliding on investment climate issues. They see a danger of complacency stemming from the higher revenues and fear it will prompt GOI officials to continue pursuing policies that suppress even further the already anemic levels of minerals exploration investment."

Zimbabwe

In 2006, the government of Zimbabwe called for the transfer of 51% of all foreign-owned mining properties to the Zimbabwean government, which would then select development partners.[14]

Guinea

In September 2011, the government of Guinea passed new legislation providing Guinea with a "free carry" of 15% on all new mining projects, and the right to buy an additional 20%.[15]

Resources

References

  1. "Resource Nationalism in Peru," Corporate Foreign Policy, October 24, 2011
  2. Sarah-Jane Tasker, "Resource nationalism 'top risk' facing miners," The Australian, August 8, 2011
  3. "Business risks facing mining and metals 2011-2012: 1. Resource nationalism," Erst & Young, accessed November 22, 2011
  4. Jeffrey D. Wilson, "Resource nationalism or resource liberalism? Explaining the Australian approach to Chinese investment in its minerals sector," Paper for OCIS IV Refereeing Process, March 31, 2010
  5. 5.0 5.1 "Full statement and detail of new mining tax" (2 July 2010). Retrieved on 2 July 2010. 
  6. "RSPT v MRRT - the differences" (2 July 2010). Retrieved on 2 July 2010. 
  7. Kevin Rudd defends mining ads: News.com.au 29 May 2010. News.com.au (29 May 2010). Retrieved on 2010-08-29.
  8. AAP. Mining stocks soar as RSPT ads axed: NineMSN 24 June 2010. Money.ninemsn.com.au. Retrieved on 2010-08-29.
  9. A snip at $22m to get rid of PM: SMH 2 February 2011
  10. 24 July 2010 12:00AM (24 July 2010). Miners launch new war on Julia Gillard's tax: The Australian 24 July 2010. Theaustralian.com.au. Retrieved on 2010-08-29.
  11. Hudson, Phillip (23 November 2011). Mining tax passes lower house after Julia Gillard, Greens strike deal. Herald Sun. Retrieved on 23 November 2011.
  12. The Minerals Resource Rent Tax bill passed parliament just before 3am. The Australian (23 November 2011). Retrieved on 23 November 2011.
  13. "Resource Nationalism - Indonesia Tightens Minerals Exports," Embassy Jakarta, created May 9, 2008, released by WikiLeaks August 30, 2011
  14. "Miners helpless to stem resource nationalism," Miningmx, September 13, 2011
  15. "Miners helpless to stem resource nationalism," Miningmx, September 13, 2011

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