• 3 minutes Will Iron-Air batteries REALLY change things?
  • 7 minutes Natural gas mobility for heavy duty trucks
  • 11 minutes NordStream2
  • 1 hour GREEN NEW DEAL = BLIZZARD OF LIES
  • 34 mins U.S. Presidential Elections Status - Electoral Votes
  • 1 day Evergrande is going Belly Up.
  • 1 day World’s Biggest Battery In California Overheats, Shuts Down
  • 4 hours Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 20 hours Poland Expands LNG Powered Trucking and Fueling Stations
  • 2 hours The unexpected loss of output from wind turbines compels UK to turn to an alternative; It's not what you think!
  • 3 days And now, hybrid electric locomotives...
  • 2 days Ozone layer destruction driving global warming
  • 2 days The coming Cyber Attack
  • 2 days Is the Republican Party going to perpetuate lies about the 2020 election and attempt to whitewash what happened on January 6th?
  • 2 days 'Get A Loan,' Commerce Chief Tells Unpaid Federal Workers
  • 3 days The Painful Death of Coal
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




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News