2014 This year, the global mining industry remains in a period of adjustment. More than 30 countries are planning to, are in the process of, or have already adopted revisions to their mining laws, making new adjustments to their domestic investment environments for the mining sector. Many countries are also accelerating approval processes and boosting mining development through administrative reforms. While access for foreign investment has become relatively more liberal, environmental requirements have become even stricter, and the risks associated with resource nationalism still cannot be overlooked. Going forward, increasing domestic revenues from mineral resources will remain the primary goal of mining sector reforms.

2014 This year, the global economy has been struggling to recover, and the mining sector has been facing a sluggish outlook. Affected by falling prices of mineral products, many countries have made new adjustments to their mining policies, strengthening management across all stages—from license applications to mineral product exports. Overall, mining reforms are moving in the direction of expanding market access for mining operations, enhancing regulatory oversight, and adjusting the distribution of mining revenues.

Strengthen the rule-of-law reform in the mining industry.

According to incomplete statistics, in 2014 there were 30. Several countries are involved in mining law reforms, including Mongolia, Algeria, South Africa, Mozambique, Mexico, Papua New Guinea, Myanmar, Afghanistan, the Philippines, Kazakhstan, Ghana, Kenya, Cameroon, Sudan, Rwanda, Zimbabwe, Namibia, Burkina Faso, Zambia, Uganda, Brazil, Bolivia, Ecuador, Colombia, Guatemala, Haiti, Australia, Papua New Guinea, France, the United Kingdom, and Tonga. The adjustments cover all stages of the mineral resource exploration and development lifecycle. Particularly noteworthy is the enhanced emphasis on refined management of mineral resources and the introduction of reforms in mining rights administration—especially in the way mining rights are granted.

First, specialized legislation has been enacted for specific minerals. The “specific minerals” referred to here are those that share certain common characteristics, are concentrated in a particular geographic region, or hold special significance for a given country. The Parliament of Mongolia has adopted the “Law on Widely Distributed Mineral Resources,” thereby establishing specialized regulations for the extraction of widely distributed minerals such as limestone, gravel, and sand. Namibia is currently drafting a bill on the exploitation of strategic mineral resources. In collaboration with the European Union and the Secretariat of the Pacific Community, Tonga has developed the world’s first “Deep-Sea Mining Act,” which was enacted in August 2014. The law, approved by the country’s king, has served as a model for mining legislation in other Pacific island nations. The British House of Commons has passed a proposal for deep-sea mining legislation and plans to submit it to the House of Lords for further deliberation. At the global level, the Legal and Technical Commission under the International Seabed Authority’s Council is drafting a legal framework aimed at exploring polymetallic nodules in three designated areas, thereby promoting global exploration of the deep seabed. These legislative developments not only reflect a more refined approach to managing mineral resources but also signal that seabed mining is gradually moving toward a path of legalization and standardization.

Second, reform the management system for mining rights. To enhance extraction efficiency and prevent speculative trading in mineral resources, many countries have reformed their mining-rights granting procedures. Algeria has adopted a new mining law that explicitly stipulates that mining rights will be granted only to qualified mining companies. Rwanda plans to introduce a new mining law that will regulate the size of mining blocks applied for by mining companies—no longer allowing unlimited block sizes as previously permitted. The plan is to divide the country’s mining areas into individual mining blocks, each covering an area of 4 square kilometers, and award these blocks to newly established mining companies that meet the required qualifications. Uganda is currently amending its mining law and plans to replace the “first-come, first-served” approach with a competitive bidding system, thereby establishing a more rational method for granting mining rights. Bolivia’s new mining law has been approved by the Chamber of Deputies and is now under discussion in the Senate; this new law will also reform the current mining-rights granting system. Some countries have also introduced reforms regarding the transfer of mining rights. 2014 In August, Mozambique’s new mining law took effect. Compared to the previous law, all transfers of mining rights must now be approved by the Ministry of Mineral Resources. Bolivia’s new mining law stipulates that all future mining project contracts must be approved by the Chamber of Deputies.

Initiate reform of the management system for the mining industry.

A dysfunctional management system often leads to chaos in mining administration, thereby undermining mining investments. As global exploration and development activities for mineral resources gradually become more active, the existing mining management systems in many countries can no longer meet the new demands arising from the evolving mining sector. Consequently, numerous countries with inadequate or insufficient mining management functions have established specialized agencies or streamlined their cumbersome administrative approval procedures.

First, new institutions have been established. To strengthen the management of the mining sector and enhance the targetedness and effectiveness of mining governance, many countries—especially those in Latin America and the Caribbean—have set up new specialized agencies to oversee mining activities. Mongolia plans to establish a National Geological Survey Bureau and a Policy Commission, primarily responsible for reforming mining legislation. Algeria has created two major state-owned mining agencies—the Geological Services Bureau and the National Mining Agency—to help the government better manage the mining sector. Specifically, the Geological Services Bureau is tasked with managing geological infrastructure and compiling information on mineral resources, while the National Mining Agency is responsible for issuing and renewing exploration and mining licenses, collecting relevant fees and taxes, and auditing royalty declarations. The Dominican Republic has established a Ministry of Energy and Mineral Resources, which will be chiefly responsible for formulating policies governing oil and gas, as well as metallic and non-metallic mining. Bolivia will set up a new agency called the Mining Judicial Administration Authority to oversee the establishment, modification, and cancellation of all mining rights. Paraguay plans to separate mining and energy management functions from the Ministry of Public Works and Communications and establish a new Ministry of Energy, Mining, and Hydrocarbons. Brazil intends to set up a National Mining Policy Commission and a National Mining Agency to support the development of the mining industry.

Second, streamline administrative procedures and accelerate the approval process. In virtually every country, various types of permits are required prior to mining activities. Particularly as environmental awareness continues to rise, water and environmental permits have become a top priority for most nations. To promote the development of the mining industry and enhance its competitiveness, several countries have already introduced or plan to introduce policies aimed at simplifying approval processes and reducing approval times. The Philippine House of Representatives has already drafted a proposal to shorten the approval period for mining permits. Indonesia plans to simplify its mining licensing procedures by reducing the number of required steps to just 71. The amendment to South Africa’s Mineral and Petroleum Resources Development Act will expedite the approval process for water, environmental, and mining permits, and was enacted in 2014. Starting at the end of the year, Peru will launch its “Integrated Environmental System,” which will streamline the permitting processes for mining, environmental authorization, and water use, and establish clear timelines. Peru has introduced a series of measures aimed at reforming bureaucratic practices and accelerating the approval of investment projects. Large and medium-sized mining companies will be able to submit environmental impact assessment reports directly via the internet. Colombia plans to speed up the environmental permitting process by replacing all applications that previously required written submissions with oral statements, reducing the approval period to just five months. The Chilean government is considering improving environmental assessment procedures to accelerate the development of new projects, with the core idea being to simplify approval processes and avoid unnecessary delays and conflicts among agencies. France’s proposed revision of its mining law will also streamline administrative approval procedures. Western Australia in Australia plans to amend its mining laws to eliminate redundant steps in the approval process.

Enhance the state’s revenue from mineral resources

Even in a context of sluggish mining industry development, boosting mining revenues remains a key component and ultimate goal of reform for many mining countries. The approaches adopted include: acquiring equity stakes, directly levying taxes on a certain percentage of mineral products, establishing state-owned mining companies, raising tax rates, and enhancing the value-added content of mineral products.

First, these include acquiring non-voting shares, directly collecting mineral products, and establishing state-owned mining companies. The Kenyan Cabinet has approved a proposal for a Mining Act that recommends the establishment of a state-owned mining company to serve as the nation’s investment institution for mineral resources. Mozambique has completed revisions to its Mining Act, requiring resource project holders to own between 5% and 25% of the projects. ownership. The amended South African Mineral and Petroleum Resources Development Act stipulates that the government may acquire a 20% stake—without cash investment—in new energy enterprises and, under agreed terms, obtain equity holdings of any proportion. This could be seen as a compromise solution to the long-standing debate over nationalization in South Africa in recent years. Mozambique’s new Mining Law requires that new mining contracts must allow for state participation; the government will have the right to purchase minerals at market prices to ensure domestic supply. The revised Cameroon Mining Law will stipulate that, going forward, the “Cameroon Hand Mining Support and Promotion Agency” will be authorized to directly collect 15% of gold production from each artisanal gold-mining site.

Second, adjusting mining taxes and fees. Reallocating revenues through adjustments to tax and fee structures is a widely adopted approach. In 2014, the countries most affected were primarily those in Africa, where adjustments mainly targeted royalties on the country’s advantageous minerals or exported mineral products, land rental fees for mining sites, and import and export tariffs. The overall trend in tax and fee adjustments has been toward steadily increasing the levels of specialized taxes and fees directly related to mining activities. Among these adjustments, introducing or raising royalty rates has become the primary direction for royalty adjustments, with rate increases averaging 10%. The above—India’s Cabinet has approved increases in royalty rates for minerals such as iron ore, copper, and bauxite. The royalty rate for iron ore will rise to 15%, that for bauxite to 0.6%, and that for copper to 4.62%. Rwanda plans to introduce royalty rates, setting the rate for base metals at 4% and for precious metals and gemstones at 6%. Mozambique plans to raise its coal royalty rate. Currently, the country’s coal royalty rate stands at 3%, significantly lower than the 5% rate for base metals and the 10% rate for diamonds. The Democratic Republic of the Congo also plans to increase the royalty rates for copper-cobalt mines to 4% and for gold mines to 3.5%. An amendment to the mining law, which the Zambian government intends to submit to parliament, will raise the royalty tax rates. Mexico, which previously did not impose royalties, has begun levying a 7.5% royalty on mining companies based on their mining revenues, with an additional surcharge of 0.5% on precious metals. Brazil’s new mining law, submitted to Congress for review, raises the cap on financial compensation levied for mineral extraction to 4%. Guatemala is increasing its mining royalty rate to 10%. Russia plans to raise the tax on oil and mineral extraction by a factor of 1.7, and the tax on natural gas and condensate extraction by a factor of 6.5.

Changing tariffs and other taxes is also a relatively flexible adjustment tool. On the one hand, reducing or exempting tariffs and other taxes—or fixing tax rates—often serves as an important means of encouraging investment in the mining sector. Indonesia plans to lower the export tax on concentrates for mining companies that have plans to build smelters—for example, reducing the export tax on copper concentrates from the previously mandated 25% to no more than 10%. The Philippine Investment Commission has released the “2014 Investment Priority Plan,” under which the mining industry enjoys a preferential policy of tax exemption on imported fixed equipment, with an implementation period lasting up to three years. Algeria’s new mining law stipulates that capital equipment and materials used in exploration and mining activities will be exempt from both customs duties and value-added tax. Russia has announced plans to gradually reduce export tariffs on crude oil and petroleum products over a three-year period. Cuba’s new Foreign Investment Law lowers the income tax rate from 30% to 15%, and newly established foreign investors will enjoy an eight-year tax exemption. Peru plans to introduce fixed mineral tax contracts for mining projects with investment amounts exceeding US$500 million, maintaining the tax rate unchanged for 15 years. Australia has repealed its carbon tax legislation, becoming the first developed country to abolish carbon tax-related laws, and also plans to eliminate the controversial 30% mineral resource rental tax.

On the other hand, raising export tariffs and corporate income taxes, as well as abolishing tax stabilization clauses, have become major measures adopted by many countries to directly boost mining revenues. Iran plans to impose a 10% export tariff on iron ore and, in the next three years... The tax rate will be raised to 20% within the year. Zimbabwe imposes an export tax of 15% on unprocessed diamonds and platinum ore concentrates. Mozambique’s new mining law has come into effect, abolishing the tax stabilization clause. Chile plans to carry out tax reforms, significantly increasing corporate income tax. By 2017, the corporate income tax will be gradually raised from its current level of 20% to 25%. In addition, the tax reform also includes the repeal of the Foreign Investment Law, known as DL600. This law contained a provision guaranteeing stability in special mining taxes; however, this provision applied only to mining projects exceeding US$50 million.

Third, there is a growing emphasis on the deep processing of mineral products to enhance their added value. To significantly boost the direct economic contribution of the mining sector, an increasing number of developing countries are beginning to restrict the export of raw minerals and require mining companies to carry out deep processing of mineral products within their own borders. Indonesia, which has already implemented a ban on the export of raw minerals, serves as a prime example. Indonesia issued a decree explicitly prohibiting the export of raw minerals while granting a slightly longer grace period for concentrates that have undergone beneficiation or rough processing. Many mining companies have been greatly affected by this policy and have been compelled to build refining plants and other processing facilities. Influenced by the initial success of Indonesia’s ban, the Philippines has also proposed a ban on the export of raw minerals. The proposal has already been reviewed by the relevant committee in the House of Representatives and will soon be submitted to Congress for debate and voting. Under the revised “Mineral and Petroleum Resources Development Act” of South Africa, the Minister of Mining is authorized to compel mining companies to process their minerals and mandatorily sell a portion of these processed products to local manufacturing enterprises. The Ministry of Mining of the Democratic Republic of the Congo announced that it would begin phasing out the export of concentrates starting in 2015, forcing mining companies to process ores domestically. The Angolan government hopes that foreign investment will help strengthen the capacity for mineral processing and increase the added value of exports. Zimbabwe plans to require mining companies to process raw minerals domestically before exporting them. Uruguay plans to use the Alatiri iron ore mine as a pilot project to expand its industrial chain, aiming to process 15% of the iron ore from this mine domestically. Its output is supplied to the domestic market, thereby developing the country's steel industry.

Emphasize the social responsibility of mining enterprises.

Corporate social responsibility has become the dominant theme in the development of the mining industry in recent years. Generally speaking, corporate social responsibility in the mining sector encompasses economic, social, and environmental dimensions. Consequently, requiring mining companies to fulfill their environmental protection obligations and pay close attention to community development has become a consensus among most mineral-resource-rich countries.

First, there is growing emphasis on environmental protection. Due to concerns about the environmental damage caused by mining development, many countries are becoming increasingly aware of the importance of environmental conservation. Particularly in recent years, the development of unconventional oil and gas—whose extraction methods, such as hydraulic fracturing, could potentially harm the environment and water resources—has directly led some countries to ban fracking activities.

The proposed Kenyan Mining Act requires mining companies to fulfill environmental protection obligations and develop land-reclamation plans, among other measures. The new Chilean government plans to strengthen protection of the Andean glaciers, aiming to prevent damage to these glaciers caused by expansion efforts undertaken by Anglo-American companies and the state-owned copper mining corporation. Argentina intends to amend its 2012 law to regulate unconventional oil and gas exploration and development activities, mandating that all unconventional oil and gas wells must obtain environmental permits before drilling begins. Left-wing legislators in Mexico are calling for a ban on fracking activities to avoid environmental damage and water pollution. Although Mexico’s Ministry of Environment has not yet drafted specific regulations banning fracking to protect the country’s water resources, it has already begun studying the impacts of fracking activities and exploring ways to monitor their safety. Brazil’s new mining law emphasizes the gradual restoration of environmental damage caused by mining activities. The Brazilian Chamber of Deputies is currently debating a proposal temporarily banning unconventional oil and gas exploration. This proposal suggests that, over the next five years... This year, controversial unconventional oil and gas fracking operations have been banned. Due to concerns that gold mining development would damage the environment and villages, potentially triggering an ecological disaster, the Romanian Chamber of Deputies rejected a bill that would have allowed Canada’s Gabriel Resources Ltd. to develop Rosia Montana—the largest open-pit gold mine in Europe.

Second, benefits are being tilted toward local communities. Myanmar is in the process of revising its mining law, with one key component being to ensure that local communities reap greater benefits from mining development. The Cabinet of Burkina Faso has adopted amendments to the Mining Code, planning to achieve a more equitable distribution of mineral resource revenues between the national government and local communities. Sudan is currently revising its mining law to resolve disputes between the central government and local authorities over the sharing of mining profits.

Development trend

Judging from the ways and contents of adjustments in global mining policies, while mining investment policies in various countries are becoming increasingly regionally standardized, their restrictions on foreign investment have been relatively relaxed. Some countries that previously adopted a hostile stance toward foreign investment are now beginning to shift their approach—moving from controlling mining rights to exerting control over the entire mining industry value chain. This shift is largely achieved through domestic legislation aimed at maximizing benefits throughout the entire lifecycle of mineral resource exploration and development. At the same time, as efforts to promote mining development intensify, the constraints have become more diversified, the range of stakeholders involved in the policy-making process has expanded significantly, and environmental protection requirements have grown increasingly stringent. It is important not to overlook the fact that mining investment risks are also steadily rising, posing numerous challenges to the healthy development of the global mining sector. Resource nationalism is showing an escalating trend, with manifestations ranging from mandatory equity participation—as seen in countries like South Africa and Mozambique—to newer trends such as Indonesia’s outright ban on the export of raw minerals, which serves as a particularly prominent example.

Closing remarks

Overall, striking a balance—while both encouraging and attracting foreign investment in the mining sector to promote its development, and simultaneously boosting national revenues from mining and enhancing benefits for local communities—will remain the key direction that many countries, especially developing nations rich in mineral resources, need to pursue. This also sets the overarching tone for global adjustments in mining policies.