• 4 minutes Why Trump Is Right to Re-Open the Economy
  • 7 minutes Did Trump start the oil price war?
  • 11 minutes Covid-19 logarithmic growth
  • 15 minutes Charts of COVID-19 Fatality Rate by Age and Sex
  • 18 minutes China Takes Axe To Alternative Energy Funding, Slashing Subsidies For Solar And Wind
  • 4 hours Dr. Fauci is over rated.
  • 15 hours Dept of Energy ditches plans to buy Crude Oil for SPR
  • 1 min China extracts record amount of natural gas from Gas Hydrates in South China Sea
  • 2 hours Western Canadian Select selling for $6.48 bbl. Enbridge charges between $7 to $9 bbl to ship to the GOM refineries.
  • 4 hours Where's the storage?
  • 18 mins TRUMP pushing Hydroxychloroquine + Zpak therapy forward despite FDA conservative approach. As he reasons, "What have we got to lose ?"
  • 54 mins Oxford Epidemiologist: Here’s Why That Covid-19 Doomsday Model Is Likely Way Off
  • 1 day Trump to New York - DROP DEAD!
  • 16 hours Wastewater Infrastructure Needs
  • 23 hours Analysis into the Iran Outbreak
  • 16 hours >>The falling of the Persian Gulf oil empires is near <<
Alt Text

This Key Battery Metal Is Set To Soar By 250%

Copper prices surged to a…

Alt Text

Chinese Rare Earth Exports Tumble As Trade War Accelerates

China, the world’s largest producer…

Alt Text

The End Of A Dark Decade For Energy Commodities

Commodities have suffered through a…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Bad News For Miners: Cash Strapped Governments Up Royalties

Governments in resource-rich nations worldwide are still scrambling to adjust to lower commodities prices. With officials in a number of countries making significant moves this week to fix their finances — one way or another.

The trend toward government sales of resource assets continued. With Russia publishing guidelines for a planned sale of a 19.5% stake in state-owned oil and gas firm Rosneft.

But not all governments have assets to sell to raise cash. And some countries are looking to fill their coffers by raising royalties on mining projects.

One of those is Indonesia. Which announced Sunday that it is going ahead with an across-the-board rise in royalty rates for all metals produced in the country.

A spokesman for Indonesia’s Energy Ministry told reporters that royalties on gold will rise most significantly — jumping to 3.75%, from a former 1%. Silver will rise to 3.25%, from 1%, and nickel will jump to 2%, from a former 0.9%.

The good news for miners is that royalties on copper — one of Indonesia’s key mining products — are only rising slightly. To 4%, from a former 3.75%.

At the same time, officials in the Philippines are looking to use a similar strategy to boost revenue. With that country’s senate introducing a bill Monday to raise mining royalties to 10% of gross revenues.

The measure would reportedly apply to all types of mines. With the bill also specifying that the government could take a 55% share of adjusted revenues — if such an amount was greater than the 10% off-the-top royalty. Related: Trump vs Clinton: How Will Energy Fare?

These rates look significantly more onerous than the Philippines’ current fiscal regime. Where the government receives 50% of mining profits, after expenses are deducted.

The news wasn’t completely bad for miners on the royalty front this week however. With the government of Saskatchewan, Canada saying it is “slowing” a review of potential royalty hikes for the potash sector.

The review had been announced last year as part of the provincial budget. With the aim of increasing the government’s take from the potash sector.

But officials acknowledged that with fertilizer prices falling (just this week it emerged that international suppliers are signing deals at 10-year low prices), this is a bad time to raise rates. With Economy Minister Bill Boyd saying, “We don’t think that any changes in the royalty structure would be a good idea given where we’re at in the marketplace.”

That’s a refreshing recognition of realities in the sector by officials. Watch to see which way other resource-intensive nations go for royalties and other taxes –up or down — as they try to fix their finances.

Here’s to the royal treatment.

By Dave Forest

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage






Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News