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PNG mining tax review causes concern

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PNG mining tax review causes concern

Papua New Guinea's Government is trying to dampen miners' fears ahead of its mining tax review, with concerns it could look at greater nationalisation.

It came during the 12th PNG Mining and Investment conference in Sydney yesterday, according to PNG's National.

PNG prime minister Peter O'Neill used the conference to speak to miners before implementing any changes to the regulations, stating that they will not be left out of negotiations during the review, Australia Network News reports.

O'Neill explained that the changes are being made as landowners feel they are missing out on the resources boom.

However he added that "it is going to be done in a fair and equitable manner.

"It is not going to be out there to deprive the investors who are investing in these projects.

"We understand very well that they are there for a return for their shareholders," he said.

"But equally I am responsible for the return to my own people and my own country."

Swift changes to nation's mining laws, and the growing fear of nationalisation, is a rising concern for miners globally.

According to Grant Thornton: “Increasing and unpredictable government intervention across the globe is adding further complexity to a sector that is already heavily laden with risk.

“The shadow of higher taxes, restrictive regulation and indigenisation looms large of an industry already grappling with the risks normally associated with exploration and extraction,” the company states in its report Facing an uncertain future: Government intervention threatens the global mining sector.

Speaking to Scott Griffin, the national head of corporate finance industry leader – resources & energy at Grant Thornton, he told Australian Mining that a lot of governments are dissuading mining investment with taxes and nationalisation moves, essentially giving “too much stick and not enough carrot.

Earlier this year Ernst & Young listed resource nationalism as the number one fear for miners.

In its report entitled Business risks facing mining and metals 2012-2013, global mining and metals leader for Ernest & Young, Mike Elliot, said "resource nationalism retains the number one risk ranking as governments seek to transfer even more value from the mining and metals sector".

Elliot said that resource nationalism is now more a challenge than it was a year ago.

"Many governments around the world have now gone beyond taxation in seeking a great take from the sector, with a wave of requirements introduced such as mandated benefication, export levies, and limits on foreign ownerships."

This was stoked to a degree by Indonesia's shock implementation of mining regulations which required domestic ownership of projects to exceed 50% within the next decade, forcing many miners to relinquish their investments, as well as the imposition of bans on the export of certain metals.

However it has since done an about face on the issue, and may dramatically extend this deadline.

Resource nationalism is a growing issue in Africa, Asia, and South America.
 


 

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