• 4 minutes China 2019 - Orwell was 35 years out
  • 7 minutes Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 11 minutes Trump will capitulate on the trade war
  • 14 minutes Glory to Hong Kong
  • 34 mins China's Blueprint For Global Power
  • 3 hours Boring! See Ya Clowns, And Have Fun In Germany
  • 3 mins Bloomberg: shale slowing. Third wave of shale coming.
  • 22 mins ABC of Brexit, economy wise, where to find sites, links to articles ?
  • 8 hours Crazy Stories From Round The World
  • 2 hours Yesterday Angela Merkel stopped Trump technology war on China – the moral of the story is do not eavesdrop on ladies with high ethical standards
  • 3 hours 5 Tweets That Change The World?
  • 6 hours the future
  • 2 hours USA Carried Out Secret Cyber Strike On Iran In Wake Of Saudi Oil Attack
  • 8 hours Climate Protesters Blocking Roads etc...
  • 2 hours Spain Is On The Edge...Clashes Between Catalonia And "Madrid"
  • 3 hours Leftists crying to make oil patch illegal friendly: 'Broken system' starves U.S. oil boom of immigrant workers: CONGRESS DO YOUR JOBS INSTEAD OF PANDERING!
Alt Text

Investors Return To Plowing Money Into Commodities

Commodities are trending once again…

Alt Text

Chinese Rare Earth Exports Tumble As Trade War Accelerates

China, the world’s largest producer…

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
Download on the App Store Get it on Google Play