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    Mining RoyaltiesMining Royalties

    MINING AND SUSTAINABLE DEVELOPMENT SERIES

    Who benefits frommining?

    The communities mustsee the results

    Compensatory fee for anon-renewable resource

    Contributors: Jaime Consiglieri ., Joan Kuyek and Rodrigo Pizarro 2P u b l i s h e d b y t h e M i n i n g P o l i c y R e s e a r c h I n i t i a t i v e ( M P R I )

    I n t e r n a t i o n a l D e v e l o p m e n t R e s e a r c h C e n t r e ( I D R C )

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    2 Mining and Sustainable Development Series

    Content

    Presentation / 3

    by Patricia Gonzlez

    Perspectives / 4

    nMining Royalty as Compensation NotTax, by Jaime Consiglieri .

    nMyth and Reality: UnderstandingMining Taxation in Canada, by Joan

    Kuyek

    nThe Establishment of Royalty in Chile,by Rodrigo Pizarro

    Experiences / 9

    nMining Royalties in Colombia

    Resources / 10

    nBooks

    nArticles and Documents

    nWebsites

    Copyright InternationalDevelopment Research Centre(IDRC) 2004

    International DevelopmentResearch Centre (IDRC)

    Avenida Brasil 2655, 11300Montevideo, UruguayPhone (598-2) 709 00 42,.ax (598-2) 708 67 76

    Mining Policy ResearchInitiative (MPRI)E-mail: mpri@idrcorguyWebsite: wwwiipm-mpriorg

    Cristina Echavarra,Director

    Patricia Gonzlez,Research Officer

    Carolina Quintana,Program Assistant

    MINING AND SUSTAINABLEDEVELOPMENT SERIES Ner 2Mining Royalties

    ISBN9974-7867-0-3, Spanish edition9974-7867-1-1, English edition

    Printed in PRINTERMilln 2621 - Phone 209 49 34Dep Legal 334039/04

    2ND INSTALMENT PUBLICATION(Spanish, English and Portugueseversions)

    Directed on behalf ofMPRI/IDRC by:Patricia Gonzlez

    Editing and co-ordination:Vctor L Bacchetta

    Contributors:Jaime Consiglier i .,Joan Kuyek andRodrigo Pizarro

    Translators:Liliana Battipede,David Reed andMara Isabel Sanz

    Internet research:Nicols Caitn

    Design and layout:Doble clic Editoras

    MPRI/IDRC icons:Alejo Santa Mara

    Cover photos:Woman looking amine shaft; Yanacocha's miningfacility; San Marcos villagers(Source: CONACAMI)

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    Mining Royalties 3

    ho benefits from mining? Thisquestion is increasingly being

    raised particularly in Latin Americawhere the exploitation of mineral re-sources constitutes a significant ele-ment in many national economies

    The nature of the challenge isclear It is to create a situation inwhich the countries, regions and lo-calities where mining activity takesplace have a direct share in thewealth produced by exploitation oftheir mineral riches in a way thattranslates into an improvement in theirinhabitants' quality of life and levelof well-being This is an appropriatereciprocity for the reduction in natu-ral capital resulting from exploitation

    of non-renewable resources, an ex-ploitation that can generate signifi-cant negative impacts

    In the questioning of how thiswealth should be shared heated de-bates have been generated in themain mining countries of the region,focussing on the benefits and limita-tions of tax and royalty systems appli-cable to mining

    Intense debate is now takingplace in Chile and Peru Neither ofthese countries had contemplated the

    imposition of mining royalties untilthe middle of 2004 The debate in Peruled to the approval in June 2004 ofnew legislation providing for a royaltycharge based on gross concentratesales In Chile the debate is still go-ing on although the initiative suffereda legislative setback in August whena proposal presented by the govern-ment did not obtain the necessarymajority in favour of establishing aroyalty

    Distributing Mining Wealththrough Royalties

    by Patricia Gonzlez

    W

    MPRI Objectives

    The Mining Policy Research Initiative - MPRI was created in 1998 by the Interna-tional Development Research Centre - IDRC/CRDI of Canada It was conceived fromthe start as a multi-stakeholder initiative which would associate stakeholders and

    respond to demands for research identified by the mining stakeholder communityIts general objectives are three-fold:

    1 to support applied and participatory research on issues related to mining andsustainable development in mining regions and communities of Latin Americaand the Caribbean;

    2 to foster collaboration among different stakeholders in the sector, both withinthe region and with ones in other regions;

    3 and to improve the generation, accessibility and use of relevant information onthe subject in the region

    More information available on www.iipm-mpri.org

    A great variety of positions havearisen for and against these royaltysystems, supported to a greater orlesser degree by theories originatingin the North that have been modifiedto fit the realities of our countriesHowever, what emerges as indisput-able is the principle that it is just andnecessary for the State, as owner ofthe minerals, to impose a charge orcompensatory fee for the exploitationof these non-renewable and scarceresources

    In countries where a compensa-tory fee of this type is still not chargedthere is an urgent need to address thisdeficiency that is generating distor-tions and inequalities In most coun-

    tries the method employed to imple-ment that compensatory charge is theimposition of royalties

    With regard to the challenge cur-rently faced by the mining industry to

    contribute to local development in acontext of progressive decentralisa-tion, the implementation of miningroyalty systems that provide for anequitable distribution of resultant rev-enue between the national level andmining regions and localities can bean effective tool in overcoming theparadox of wealth producing mineralexploitation living side by side withextreme poverty and social inequity,a state of affairs evident today in manydifferent zones where the economydepends on extractive industries suchas mining and hydrocarbons

    In this instalment we have en-deavoured to gather together authori-tative sources representing different

    perspectives involved in the debateWe also include brief descriptions ofsystems already operating in countriessuch as Colombia and Canada, fromwhich lessons may be learntn

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    oyalty applied to mining activ-ity is the charge incurred by

    companies for exploiting a resourcethat is the property of the State Thischarge is supported not only by arti-cle 66 of our Political Constitution butalso by many laws currently in force,as well as by various resolutions andreports of organisations such as theUN and the World Bank, according towhich the Peruvian State, under theprinciple of sovereignty, can chargefor the use of a non-renewable andfinite natural resource

    Also, as the State is the owner ofresources in the ground, the conces-sionaire (in this case the mining com-pany) uses them in lieu of the State

    So the State, as owner, has the rightto a payment called royalty, usufructor rent, which must be paid by theconcessionaire 2

    Taking into account current tech-nological advances in the mining in-dustry, it is probable that in less than15 years mineral ore reserves cur-rently being exploited will be almostexhausted and what remains will havea lower mineral content, which inview of high production costs willmake extraction uncompetitive or un-

    profitable When a mine closes, inaddition to the environmental im-pacts, another direct consequence forthe population of the area is a substan-tial loss of income and indirect serv-ices due principally to the fact thatmining does not generate other endur-ing local activities or initiatives

    The proposed legislation for theapplication of mining royalties stipu-lates that revenues generated will beallocated to the financing or co-fi-

    nancing of investment in productionprojects that articulate mining with theeconomic development of each regionin order to ensure the sustainable de-velopment of urban and rural areas 3

    Realising the basis, nature andimplications of the proposal and thedestination of revenues generated byit, it is possible to understand the align-

    ment of different stakeholders regard-ing this issue: members of parliament,regional and local governments, com-munities and mining companies

    The law, apart from specifying thatroyalty is a compensatory payment tothe State for the extraction of non-re-newable natural resources, also setsout the rates at which royalty is to becharged to mining companies as; 1%on concentrate sales value up to 60million US dollars, 2% on sales be-tween 60 and 120 million US dollars

    and 3% on sales above 120 million USdollars It also stipulates that all rev-enues raised will be distributedamong regions and municipalitiesexclusively for the purpose of financ-ing investment in projects

    Currently, the Council of Minis-ters is considering two possible alter-natives for the application of royaltiesto mining activity with a view to mini-mising its impact in terms of the com-panies' competitiveness: a) to take

    Mining Royalty asCompensation Not Tax

    by Jaime Consiglieri . *

    R

    into account the level of internationalmetal prices as well as the level ofsales; or b) to only take into accountprice levels (which was the Govern-ment's initial proposal) According tothe Minister of Energy and Mines,

    Jaime Quijandra, an attempt is beingmade to establish a historical aver-age price below which no royalty

    would be charged ie when theprice of a mineral falls below thatprice At the same time, an additionalclause is being proposed stipulatingthat the higher value royalty will bepayable in cases where there is analready agreed royalty

    The impact of mining royalty im-plementation will not immediately besignificant, bearing in mind for exam-ple the 28 contracts of tax stabilitycurrently in force, but we should notforget that these contracts are not

    eternal and that the scenario willgradually change 4

    We should also remember that noteverything is finalised The Executive

    In view of the approval of Peru's Royalties Law on miningactivity and the debate that it has generated, the author

    invites readers to consider the essential nature of royaltyand the arguments for and against its application in Peru. 1

    * Economist, member of the Mining andCommunities Program team of the Peru-vian NGO Cooperacin: AccinSolidaria para el Desarrollo (Co-opera-tion: Solidarity Action for Development).

    follows in p. 6

    The State has the right to charge for the use of a non-renewable and finite natural resource.

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    Mining Royalties 5

    Myth and Reality:Understanding Mining Taxation

    in Canadaby Joan Kuyek*

    * National coordinator of MiningWatchCanada. See more information inwww.miningwatch.ca

    ining enjoys power in thiscountry and others well in

    excess of its actual economic contri-bution

    The Canadian tax system hasevolved over time in response to thedemands of industry lobbies, so thatdespite millions in perverse subsi-dies mining companies pay almostnothing in taxes They manage toachieve this through tax planningtechniques and deductions that resultin accounting losses even in yearswhen commodity prices are high, andthrough ensuring that most taxes arebased on net profits rather thansales

    According to their 2003 annual

    financial statements, four of the larg-est mining companies in Canada paidor were owed by governments thefollowing totals in taxation The fig-ures include their subsidiaries andtaxes paid to governments elsewherein the world

    Even in Canada, the return on in-vestment from the mining industry tofederal and provincial governments isshrinking in terms of cash revenues,contribution to GDP and employment,

    Sales Taxes - 2003 Taxes - 2002(US$ million)

    Barrick Gold 2035 5 (16)

    Placer Dome 1763 44 (34)

    Inco 2474 (49) (639)

    Noranda 4657 24 (168)

    Note: Numbers in brackets indicate tax refunds.

    while the environmental and socialcosts are rising At the same time, orereserves are being depleted

    The industry promotes data statingthat there are 386,000 people directlyemployed in mining In fact, there arecurrently less than 25,000 peopleemployed in mining and milling inCanada: the others work in smelting,refining, and manufacturing all workthat could still be there if we recycledmetals instead of mining them

    Investment in mining would bebetter spent on innovative communityeconomic development strategies formining dependent communities andsupport to recycling and conservation

    Missing data

    In December 2002, the PembinaInstitute and MiningWatch Canadareleased a study assessing the valueof government support for the metalmining industry in Canada entitledLooking Beneath the Surface Theinvestigation was hampered by thelack of data available from govern-ment Governments generally wereunable to provide estimates of the

    value of a number of important taxmeasures introduced to support theindustry Other information was con-sidered confidential for commercialor privacy reasons

    It is extremely difficult to sort outthe tax and royalty benefits of themining and concentrating industry fora number of reasons Many figures areconfidential Mining data is frequentlyaggregated with data from down-stream industries like smelting, refin-ing and metals manufacturing indus-tries which do not necessarily dependon mining new materials Mining datais also often aggregated with tarsands, oil and gas and quarrying

    Looking Beneath the Surface did

    find that the total value of the subsi-dies to the metal mining industryalone was staggering: over $5802million in the 2000/2001 fiscal yearThis figure did not include the costsfor reclaiming abandoned mines (es-timated by the Mining Association ofCanada as over $6 billion), unfundedliability for mine closures, nor coststhe figures we were unable to track(such as provincial processing allow-ances)

    According to the federal Depart-

    ment of .inance, the last year forwhich detailed tax data on mining wasavailable was 1997 We have beenable to determine that in 1997, min-ing only contributed $251 million indirect federal taxes, and $147 millionin provincial income taxes (from allprovinces) for a total of $398 million

    M

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    Layers of mining taxationin Canada

    The federal government imposes:

    Corporate income taxes under theIncome Tax Act - currently 28%,

    to be reduced to 21% by 2007,based on net income;

    Capital tax (a tax on assets andinventory) - applies only to com-panies with assets over $50 mil-lion, to be phased out totally by2008;

    GST (7% of purchases; export salesare zero rated - GST does not ap-ply and producers are entitled toa refund for tax paid on inputs);

    Payroll levees;

    Excise taxes and customs duties

    Provincial governments and territorialgovernments impose:

    Income taxes varying from 94%to 15% based on value of produc-tion;

    Mining Tax varying from 5 to 14% on defined mining profits;

    Capital tax of less than 1% Sixprovinces have a capital tax; On-

    tario is phasing it out

    Allowable deductions

    Income tax

    A number of expenses and deduc-tions are allowed in the computationof income for tax purposes The Re-source Allowance ensures that only75% of resource profits are subject totax Loss carry-overs, acceleratedcapital cost allowances, and invest-ment tax credits further reduce in-come Canadian Exploration andDevelopment Expenses and .oreignResource Expenses can be held in taxpools and carried forward and back-ward almost indefinitely The tax pollscan be transferred to subsidiaries orsold as an asset

    Capital tax

    Is based on company assets Since2003, the federal capital tax appliesonly to companies with more than$50 million in assets, and will bephased out altogether by 2008 Mostprovinces charge capital tax rangingfrom 225 to 6 % on assets Ontariois phasing it out

    Provincial taxes

    There are two to three levels oftaxation on mines provincially: cor-

    porate income tax, Mining Tax and

    itself has already sent an alternativeproject to Congress and the compa-nies have classified the law as popu-list, anti-constitutional, confiscatoryand discriminatory .or their part in-volved members of parliament haveannounced the creation of a techni-

    cal committee to formulate a regula-tory proposal for preventing abuse ofthe law

    It is in the interest of mining re-gions that a proposal which clearlylinks mining activity with the coun-try's development is not discardedUp to now the evolution of stakehold-ers' positions in the debate on royal-ties has produced little progress in de-termining how the mining sectorcould make a real and significant con-

    comes from p. 4

    tribution to the development of thecountry, what the State should do andwhat is expected from communities,local authorities and, of course, min-ing companies In all these aspectsthere is still much to be donen

    1. This article has been extracted fromActualidad Minera del Per (Miningin Peru, Current Affairs) Bulletin N 62,

    June 2004, a periodical published byCooperacin. The complete bulletin canbe found on: http://www.iipm-mpri.org/biblioteca/index.cfm?action=ficha&lang=esp&cod=218

    2. My understanding is that the crux of thediscussion, and of the misunderstandings,lies in the peculiar interpretation that has

    been made of the concept of 'royalty',which almost all participants see as a tax.An intriguing conclusion to which I do notunderstand how one could arrive solightly. Judging the question by economictheory it is instead a quota or right, ormore technically, a 'rent' in the classiceconomic sense of the word Mining

    Royalties and Ricardian Rents, an articleby Jurgen Schuldt.

    3. Article 9 of the bill Mining Royalty Lawpassed in session on the 3rd June 2004.

    4. Of the 182 companies that have signedtax stability contracts, 22 are miningcompanies; of these in five cases the con-tract has already expired, in NovemberBHP Billiton Tintaya's contract will ex-pire, next year another five contracts willexpire and during the following five yearsall the rest (see above mentioned articleby Jurgen Schuldt).

    capital tax Some provinces calcu-late mine revenues after the deduc-tion of a Resource Allowance (25%)The provincial income tax calculationis similar to the federal calculationThere is also a capital tax on assetsin some provinces for large mines

    Mining Tax

    Is Canada's equivalent of a roy-alty Most provinces tax mineralwealth at mine mouth; ie they taxthe unrefined product and deduct es-timated costs for processing it Therate varies from a low of 8% (noprocessing - Quebec, New Bruns-wick, Newfoundland) to the maxi-mum (65% - smelter/refinery in theprovince)

    .or the purposes of the Mining Tax,

    companies can also deduct Miningand Processing Asset Depreciation,Pre-production Development Ex-pense, Exploration Expenses andMine Reclamation .und contribu-tions Ontario exempts the first$500,000 of mining income annually

    Mining Tax holidays for newmines are available in many prov-inces Ontario provides a $10 mil-lion tax exemption for new mines aswell as a three year tax holiday, and10 years for mines in remote loca-

    tionsn

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    Mining Royalties 7

    The Establishment ofRoyalty in Chile by Rodrigo Pizarro*

    * Executive Director of the Terram oun-dation, Santiago, 20th May 2004.

    n Chile a pivotal public debate hasdeveloped over the last year con-

    cerning the mining sector's tax con-tribution and especially the applica-tion of royalty to copper exploitationChile is the world's principal copperproducer and its exports constitutealmost 40% of global copper supply.or many, however, the sector's con-tribution to the development of thecountry is too low

    During the period 1990-2001 thestate owned company Codelco paidaround 10,659 million US dollars tothe Treasury, while private miningcompanies only contributed 1,638million US dollars, in spite of theirproduction being 25% greater In ad-dition, taxes paid by Codelco permetric ton of copper produced repre-sented 287% of the final price whiletaxes paid by private mining

    amounted to only 53% It is thereforeestimated that the total of lost taxrevenue during that period amounts tomore than 10,000 million US dollars

    The state of private mining com-pany tax contribution was patheti-cally demonstrated in 2002 by the saleof Disputada de Las Condes, a min-ing company belonging to the multi-national Exxon .or 22 years the com-pany paid no taxes at all to the Chil-ean state, declaring losses every year

    Apart from the ridiculously low

    taxes imposed on mineral exploitationin Chile, the explanation for the mea-gre tax contribution is that multina-tional companies use any legal sub-terfuge to evade paying taxes

    Although initially the debate wascentred on taxation, later the notionof introducing a royalty on miningentered the discussion as a means of

    ensuring a just contribution in returnfor exploitation rights

    Mining uses a non-renewable re-source which means that there is aneconomic rent that belongs to allChileans and which at present is ap-propriated by the industry It is this factthat justifies the royalty In econom-ics there are many theoretical debatesbut also in some cases a strong con-

    sensus, one of which is to charge the

    economic rent corresponding to re-sources

    In the beginning the proposal of aroyalty was isolated: business associa-tions and the Government, who wereallies in the debate, tried by all meansto close the subject, claiming that roy-alties would be a brake on investmentBut the evident injustice of the min-ing sector's level of contribution, and

    above all common sense, inspired

    Efficient Mineral Resource Pricing and RentCollection in Chile, International

    Environment program. Harvard Institute forInternational Development, 1999

    This work by Professor Theodore Panayotou, Director of Harvard University Envi-ronment and Sustainable Development Program, concludes that in the case of min-

    ing in Chile the State, by constitutional provision, has a dual role as tax collectorand owner of resources As owner of the resource, the Chilean State must charge aprice or fee when authorizing a third party to make use of it In short, for Panayotounatural resources are part of the capital of society and the State has a responsibilityto collect a competitive return on that natural capital, in a different way than withother tax collections

    Contact: Theodore Panayotou, Director of the Environment and Sustainable DevelopmentProgram, Center for International Development, Harvard University.

    E-mail: [email protected]

    Taxes paid byCodelco represented

    28.7% of the finalprice while taxes

    paid by privatemining amounted to

    only 5.3%.

    I

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    many citizens to organize around thisdemand Others, just by expressingtheir opinion, contributed to breakingthe wall that had been built to blockdiscussion of this subject

    .inally, in the face of civic opin-ion and parliamentary pressure, theChilean government decided to putforward legislation providing for aroyalty on mining By this decisionthe existence of company obligationand the legitimate right of Chile to

    demand payment were acknowl-edgedWith this government announce-

    ment there are two reasons to cel-ebrate .irstly, that it is the beginningof the end of a regulatory and taxframework for mining that clearlybenefits large scale mining to thedetriment of the country, and sec-ondly, that citizens were able to im-pose their views on a political class

    increasingly distant from the conceptof great politics in which the publictask involves strategic vision

    Chile's development has been in-trinsically connected with miningThe institutional and regulatory modelthat arose after the military coup re-

    sulted in the arrival of significant for-eign capital and an expansion of pro-duction However, this has happenedat the cost of ceding to multination-als practically all of the income fromthis resource that belongs to the coun-try Now is the moment to revise thesepolicies Chile needs the income fromits copper for development and to pro-tect its citizens The country cannotwait any longern

    Useful data

    What is mining royalty?It is an economic compensation paid to the State, as ownerof the minerals, for the exploitation of a non-renewable resource

    n/a: non-applicable

    nsr: net smelter return

    Sources: Global Mining Taxation Comparative Study C.S.M., March 2000, James Otto; Cochilco Database; and A Primer on MineralTaxation-Thomas Baunsgaard. Adapted from Minera Chilena magazine N 264, June 2003. http://www.editec.cl/mchilena/junio2003/Articulo/debemos.htm Updated and complemented for this publication with data from the MMSD Brazil project, Law 28258 Peru.

    GENERAL APPLICATION O. ROYALTY SYSTEMS TO MINING IN DI..ERENT COUNTRIES

    Countries

    Argentina

    Australia

    Bolivia

    BrazilCanada

    Chile

    China P R

    Colombia

    United States (all states)

    Indonesia

    Kazakhstan

    Mexico

    Papua New Guinea

    Peru

    Poland

    South Africa

    Zambia

    Rate

    3%

    varies by state

    1 a 7%

    02 a 3%varies by province

    n/a

    2%

    1 a 12%

    n/a

    (45 o 55)

    2%

    n/a

    2%

    1 a 3%

    3%

    n/a

    2%

    Chile needs the income from its copper fordevelopment and to protect its citizens.

    Basis

    mine mouth value

    variable rate

    gross sales

    net salesvaries by province

    n/a

    gross sales

    mine mouth value

    n/a

    US$ per ton production

    gross sales

    n/a

    gross sales

    gross sales

    gross sales

    n/a

    nsr

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    Mining Royalties 9

    he recent history of royalties inColombia begins with the Politi-

    cal Constitution of 1991, in whichArticle 360 provides for an eco-nomic compensation by way of roy-alty for the exploitation of a non-renewable natural resource It alsoestablishes the right to a share inthese royalties for the departmentsand municipalities where the exploi-tation takes place, as well as for theports through which the resource, orproducts derived from it, are trans-ported

    .or royalty revenues that are notallocated to departments and munici-palities directly involved, article 361provides for the creation of a nationalfund with the function of distributingthem to other territorial entities foruse in the promotion of mining, en-vironmental protection and the fi-nancing of investment in regional de-velopment projects In application ofthe above, the Royalties Law N 141of 1994, created the National Royal-ties .und (NR.) and regulated the

    right of the State to receive royaltiesand the administration and distribu-tion of them

    Until the enactment of law N 141exploitation of most minerals wasexempt from royalties .or those thatwere not exempt the royalties had aspecific tax characteristic (the ori-gin of which went back to Spanishand Roman legislation) and this lawsuperseded them .rom a private com-pany perspective, royalties now rep-

    T

    Mining Royalties inColombia

    Extract from the article by Mario Jaramillo Arbelez, Director of Minesin the Colombian Ministry of Mines and Energy, published on theMPRI website: http://www.iipm-mpri.org/biblioteca/index.cfm?action=listar&by=tipo&cod=2&lang=esp

    Royalty Administration

    In Colombia the debate has moved on from the concept of apayment to be made by mining companies and its level to theissue of how those revenues are administered by the municipal anddepartmental governments that receive them.

    The Community Development Activities by Mining and other Natural ResourceExploiting Companies in Latin America and the Caribbean Research Project 1 foundthat in Colombian communities there are two different views on the use of royalties.or some the revenues arrive but are not invested simply because they vanishOthers, still not seeing any visible result from the investments, think that the prob-lem lies in the fact that administrations ignore the communities and do not pro-vide them with information about royalty management on their behalfIn this context, some communities demand that mining companies should be theones in charge of administering the investment of royalty revenues, under State

    supervisionThe project recommends that follow up, control and complaint mechanisms forthe investment and administration of mining royalty revenues should be strength-ened at all levels and suggests that the proposals to involve companies in the in-vestment and administration of royalty revenues should be studiedOne of these proposals is to widen incentives that allow for a reduction in theroyalties that companies must pay in return for significant investment in localdevelopment processes

    1. See complete documentation of the project on: http://www.iipm-mpri.org/proyectos/index.cfm?action=proyecto&cod=9&lang=esp

    Royalties must become visible benefitsfor communities in the neighborhood

    of mining operations.

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    Books

    nRoyalty, Regala o Renta Minera(lo que slo Chile no cobra)(Royalty or Mining Rent - that only Chile does not charge)

    Jorge Lavandero Illanes, December 2003http://wwwfenprusscl/nacional/datos/ftpresumencobrepdf

    nActualizacin de la compilacin de leyes mineras decatorce pases de Amrica Latina y el Caribe Vol I(Update of the mining laws compilation for fourteen countriesin Latin America and the Caribbean Vol I)Eduardo Chaparro A, CEPALhttp://wwwcepalcl/cgi-bin/getProdasp?xml=/publicaciones/xml/6/10756/P10756xml&xsl=/drni/tpl/p9fxsl&base=/tpl/top-

    bottomxslt

    Articles and Documents

    nMMSD Project: Managing Mineral Wealth Workshop,London, United Kingdom, 15th to 17th August 2001:

    The Revenue Dimension: New Issues and PracticesPresentation by Kathryn McPhail, World Bankhttp://wwwiiedorg/mmsd/mmsd_pdfs/mmw_mcphail_15_augpdfManagement and Distribution of Mineral Revenue: CapacityBuilding

    Presentation by Olle stensson, UNCTADhttp://wwwiiedorg/mmsd/mmsd_pdfs/mmw_ostensson_15_augpdf

    n3rd World Mining Ministries .orum Toronto, Canada, 2004:Panel: Mining: Who benefits?http://wwwwmmforg/2004/2004shtml

    nDeclaracin Conjunta Chileno-Peruana de Apoyo alRoyalty Minero - 4th August 2004

    (Joint Chilean-Peruvian Declaration in Support of Mining Royalty)http://2003715914/Sicr/Prensa/heraldonsf/0/d5023159b0ebe07305256ee600801427/?OpenDocument

    nRegalas mineras: Anlisis de un discutido impuesto(Mining Royalties: Analysis of a controversial tax)SNMPE, Peru, March 2004http://wwwsnmpeorgpe/pdfs/RegaliasMineraspdf

    nEl royalty es necesario: dos propuestaspara la discusin pblica

    (Royalty is necessary: two proposals for public debate)by Rodrigo Pizarro, .undacin Terram (Terram .oundation)http://wwwterramcl/indexphp?option=content&task=news_cat&idcat=4#

    resent an unavoidable fiscal levy aris-ing from the inherent nature of theirindustrial activity

    Local and regional governmentsmust use the revenue from royaltiesfor investment programs and regularongoing programs, in accordance

    with the priorities and developmentplans of each territorial entity Cen-tral distribution of royalties must fol-low criteria of social justice on a na-tional scale, with particular focus onelectrification and road networkprojects

    The law does not establish crite-ria for fixing royalties but it does de-termine specific rates, that range from3 to 12 %, for different minerals orgroups of minerals Revenues raisedare distributed in different proportionsamong producer departments andmunicipalities, port municipalitiesand the NR.

    The allocation of revenue to boththe territorial entities directly ben-efiting, and to the NR. is specifi-cally provided for by the law If re-source exploitation takes placewithin 5km of an indigenous settle-ment, 5% of the royalties allocatedto the department and 20% of thosecorresponding to the municipalitymust go to investment projects inthat settlement

    In order to have access to NR.funds, governors and mayors shouldpresent investment projects the fea-sibility of which must be previouslyendorsed by the Ministry of Minesand Energy, with the National Plan-ning Department determining theirpriority

    The choice of projects must takeinto account: regional balance,compatibility with the National De-velopment Plan, percentages stipu-lated by the law, the project's envi-

    ronmental, social and economicimpacts, etcn

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    R e s o u r c e s

    n.undacin Terram(Terram .oundation)

    A civil organisation created in1997 to formulate a proposal forsustainable development in ChileIts Natural Resource Program hasproduced several documents onmining royalty, addressed to thepublic and to members ofparliament, that contribute relevantinformation to the legislativedebate on the subjecthttp://wwwterramcl

    nLibertad y Desarrollo

    (.reedom and Development)A private study and researchcentre dedicated to the analysisof public issues One of thesections contains several docu-ments in support of the caseagainst the imposition of miningroyalty in Chilehttp://wwwlydorg/programas/economico/mineria/mineriahtml

    nComit de Defensa yRecuperacin del Cobre, Chile

    (Committee for the Defence andRecovery of Copper, Chile)wwwdefensadelcobrecl

    nMining taxation andregulations in Canada NRCan

    Includes a section of analysis anddiscussion on issues relevant tomining investment in Canadaregarding mining taxationhttp://wwwnrcangcca/miningtax/inv_2htm

    nMineral Resources .orum(MR.)

    The section on Corporate SocialResponsibility (CSR) contains adatabase on CSR evolution, withspecial emphasis on the miningsector There is section on miningtaxation and royaltyhttp://wwwnatural-resourcesorg/minerals/csr/legislationhtm

    nUnderstanding Mining Taxation in CanadaBy Joan Kuyek, August 2004

    http://wwwminingwatchca/documentsMining_taxationpdf

    nComparative Mining tax regimes: A summary ofobjectives, types and best practices

    PricewaterhouseCoppers, 1998http://wwwpwccom/extweb/ncsurvresnsf/docid/4619567C60336.E9852567430018157D

    n.iscal federalism and taxation of non-renewableresources: Some simple economic (an political) insights

    By Kenneth McKenzie, Calgary Universityhttp://wwwworldbankorg/wbi/publicfinance/documents/

    fiscalfederalism_Russia/McKenzie_enpdf

    nMining taxation in developing countriesBy James Otto, UNCTAD, 2000http://r0unctadorg/infocomm/diversification/cape/pdf/ottopdf

    nAnnual Survey of Mining CompaniesThe .raser Institute, Canada, January 2004http://wwwfraserinstituteca/shared/readmoreasp?sNav=nr&id=580

    nEl proyecto de royalty a la minera:

    Varios documentos(The Royalty on Mining Proposal: Various Documents)National Congress Library, Chilehttp://wwwbcncl/pags/home_page/ver_articulo_en_profundidadphp?id_destaca=97

    Websites

    nComisin Nacional de Regalas de Colombia(Colombian National Commission on Royalties)

    http://wwwcnrgovco/contenidohtm

    nMinisterio de Energa y Minas de Per DireccinGeneral de Minera

    (Peruvian Ministry of Energy and Mines Mining GeneralDepartment)Including several documents and presentations establishingthe Ministry's position in the debate on legislation formining royalties in Peruhttp://wwwminemgobpe/mineria/

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    Canada

    The nature of the challenge is clear. It is to create

    a situation in which the countries, regions and

    localities where mining activity takes place have a

    direct share in the wealth produced by exploitationof their mineral riches in a way that translates into

    an improvement in their inhabitants quality of life

    and level of well-being. This is an appropriate

    reciprocity for the reduction in natural capital

    resulting from exploitation of non-renewable

    resources, an exploitation that can generate

    significant negative impacts.

    Patricia Gonzlez

    MPRI/IDRC

    International DevelopmentResearch Centre (IDRC, Canada)

    Mining Policy Research

    Initiative (MPRI/IDRC)

    9974-7867-1-1