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Beyond all of the headlines regarding tapering, interest rates, debt, balance sheets, etc., one of most under appreciated medium-term drivers of the metals complex will be resource nationalization. Not only do miners have to contend with rising costs of production and shrinking revenue, but much of their production comes from politically unstable countries that increasingly meddle in their affairs. Over the past six years this theme has continued to develop, and shows no sign of abating even though prices have fallen. Eventually the geographic risk of where the world’s mines are located will undermine attempts at greater production, leading to a much higher metal prices. The list below, which is far from comprehensive, shows examples of resource nationalization in the mining sector since 2007:
- 12/5/13 – Zambia – Glencore Xstrata – Mopani Copper Mines has granted its workers an 8% pay rise to stall potential strikes at the major cobalt and copper producer, according to the Wall Street Journal
- 2/4/13 – Zimbabwe – A deadlock in salary negotiations between Zimbabwe’s leading mining firms and workers unions has raised fears of a crippling strike at a time the country is banking its hopes for economic recovery on the sector.
- 11/29/13 – Tanzania – African Barrick Gold – The proliferation of small arms in the Great Lake region has negatively affected operations of the Tulawaka Gold Mine in Biharamulo District, forcing African Barrick Gold to close the gold mine. Tulawaka General Manager, Philbert Rweyemamu, said in an interview recently that frequent armed robberies at the gold mine caused the firm to suffer huge financial losses.
- 11/27/13 – Kyrgyzstan – Protestors threatened to continue the action that has been ongoing across Kyrgyzstan for the best part of a week in support of a nationalist politician arrested on corruption charges.
- 11/19/13 – Ghana – Ghana plans to present a mining windfall tax bill to parliament, Finance Minister Seth Terkper said on Tuesday, in a move likely to set up a clash between a hard-pressed industry and government’s need for increased revenue. Ghana is Africa’s number two gold producer and the commodity accounted for 27 percent of the country’s foreign exchange in 2012 and contributed more than $700 million to state coffers, according to data from Ghana Chamber of Mines.
- 11/3/13 – South Africa – 7,000 workers walked off the job on November 3 after months of negotiations failed to reach an acceptable agreement for both sides. South Africa remains the largest known source of platinum in the world.
- 10/21/13 – Peru – Compania de Minas Buenaventura – Labor unions go on strike at the Orcopampa gold mine.
- 9/15/13 – Romania – Gabriel Resources – Thousands marched through Bucharest to protest a controversial plan by a Canadian company to build Europe’s biggest gold mine in Romania. Protesters on Sunday criticized the use of cyanide in the extraction process and accused authorities of trying to sell off Romania’s assets too cheaply.
- 9/9/13 – South Africa – South Africa’s gold mines could be hit by another strike, just as the mine industry body said Monday operations are back to normal following last week’s strike by one of the country’s biggest unions.
- 7/25/13 – Mauritania – Kinross Gold – The Tasiast gold mine, approximately 300 kilometres north of the capital Nouakchott, is the third largest in the world, produces 200,000 ounces of gold per year, and declared a profit of US$ 153.8 million in 2012. Over 90% of the approximately 1400 direct employees of Tasiast Mauritania are taking industrial action in protest at their employers’ failure to respect the commitments made in 2011 with regards to pay, medical cover, and more decent treatment of mining staff. The workers are also protesting against various positions taken by the management, such as moves to cut bonus pay or the refusal to transfer seriously ill employees to the capital Nouakchott. Responding to the employer’s failure to honour its commitments, the workers’ representatives presented a list of demands and a strike notice on 25 July.
- 6/5/13 – Indonesia – Freeport McMorRan Copper and Gold – Grasberg, the world’s second largest mine, is shut down for up to three months as the government investigates safety conditions.
- 6/3/13 – Mexico – Minera Frisco – Operations at three gold and silver mines were closed following labor conflicts including at El Coronel – Mexico’s largest gold and silver mine.
- 5/15/13 – South Africa – Amid fresh strikes and labor violence, South African union leaders made the case that government ownership of mines would help narrow the country’s income gap. As companies and unions head into another round of labor talks, the revived debate poses a threat to a pillar of the South African economy, two decades after Nelson Mandela ruled out nationalization.
- 4/24/13 – Kyrgyzstan – Hundreds of supporters of the opposition El Unu (People’s Voice) movement have held a demonstration in Bishkek to demand the nationalization of Kyrgyzstan’s Kumtor gold mine.
- 4/19/13 – Mexico – Lawmakers from Mexican President Enrique Peña Nieto’s PRI Party made good on his pledge for mining sector reform, as a new Mexican 4% mining royalty tax was approved by the Economics Committee in the Chamber of Deputies.
- 11/30/12 – Finland – Finnish Minister for International Development Heidi Hautala said Wednesday a mining boom in northern Finland that has attracted dozens of companies seeking gold, nickel, uranium and other minerals has shown the need for “transparency and accountability” from mainly foreign operators. She has also called for looking at new taxes on the foreign-owned mining companies flocking to Lapland which would allow local residents to share in the financial rewards of the boom.
- 8/18/12 – Mongolia – Mongolia has confirmed resource nationalist Davaajav Ganhuyag as the minister of mining, a move that has sparked speculation over whether the new government intends to review existing mining investment deals for its massive mineral resources. In 2011, Ganhuyag was one of several lawmakers to sign a letter urging Rio Tinto and Turquoise Hill Resources to renegotiate a 2009 agreement for the $13 billion Oyu Tolgoi copper and gold mine and increase the government stake to 50 percent from 34 percent.
- 8/14/12 – South Africa – Lonmin – Violence at the Marikana mine erupted from a dispute over pay left 44 people dead, 70 injured and led to about 250 arrests. President Jacob Zuma later appointed a commission of inquiry to investigate events at the mine. The mine never fully came back online and there were several more murders and suicides as recently as May 2013.
- 7/7/12 – Bolivia – The Bolivian police launched a rescue operation to recover hostages that were being detained by some indigenous community members opposed to South American Silver’s exploration operations in their territories. Preceding the violent intervention, the Bolivian government emerged expressing their willingness to cancel the contract with South American Silver, and revert the concession rights to the state.
- 7/3/2012 – Peru – Newmont Mining – Three people were killed and 21 injured on Tuesday when Peruvian police clashed with protesters opposed to a $5 billion gold mine planned by Newmont Mining. The government responded by suspending freedom of assembly to quell clashes between police, soldiers and protesters.
- 5/30/12 – Kyrgyz Republic – Centerra Gold – The company said that the national grid power supply to its Kumtor mine in the Kyrgyz Republic has been disrupted by local protestors, along with road access, suspending operations at the mine, which it says could lead to a “material negative impact” without a prompt resolution.
- 4/28/12 – Zambia – Zambia plans to force companies to repatriate foreign currency earned from exports back to the southern African nation as part of an effort to crack down on tax avoidance by mining companies.
- 4/24/12 – Zimbabwe – The Zimbabwe government released a draft amendment to its indigenization policy, confirming that the government will not provide compensation for the 51% share it will hold in foreign-owned mining companies.
- 4/10/12 – Zambia – The country doubled its royalties on copper production.
- 4/1/12 – Kenya – International companies operating in Kenya could pay up to three times the current rates as the government moves to increase its earnings from the mining sector with higher royalty fees.
- 3/11/12 – Peru – Newmont Mining – Anti-mining activists filed a complaint with the Inter-American Commission on Human Rights accusing Peru’s government of rights abuses during protests against one of Latin America’s biggest mining projects. The legal move will further stall efforts to revive U.S.-based Newmont Mining Corp’s $5 billion Minas Conga project, which President Ollanta Humala’s administration put on hold last August following months of protests in the northern highland region of Cajamarca.
- 3/28/12 – Poland – Europe’s biggest copper miner, KGHM, started paying royalties in its native Poland, where the government hopes mining taxation will put 2.2 billion zloty ($705 million) per year into the country’s coffers.
- 2/11/12 – Ghana – Ghana, Africa’s second-biggest gold producer, announced a review and possible renegotiation of all mining contracts to ensure that mining profits are “maximized… [For] the good of the country”. It plans to raise taxes on mining companies, from 25% to 35%, and a windfall tax of 10% on “super profits” in addition to existing royalties on output of 5%.
- 1/23/12 – Mali – Mali is seeking to raise the state share in mining projects to 25% from 20% in a proposed revision to the West African gold producer’s mining law.
- 1/1/12 – Australia – The Australian government introduces a “Mineral Resource Rent Tax” on mining-based profits.
- 12/31/11 – South Africa – Impala Platinum – Impala’s Rustenburg lease area faced serious operational challenges during 2011. Operations were badly disrupted by Section 54 safety stoppages, particularly in the last four months of the year, when over half a million tons of ore production were lost.
- 12/28/11 – Romania – The Romanian Government recently approved the increase in royalties for all mineral resources covered by the Mining Law. The royalties for gold, platinum and silver doubled from 4 percent to 8 percent, while the fee for non-metallic substances increased to 0.8 percent.
- 12/9/11 – Tanzania – African Barrick Gold – African Barrick Gold said it will fall short of its 2011 production target because of escalating power disruptions to national grid electricity supply in Tanzania.
- 10/24/11 – Peru – The election of leftist nationalist and former army rebel Ollanta Humala as president in June 2011, shook the confidence of investors due to expectations that he would shift business-friendly policies toward ones of greater government control. Things began falling apart immediately, when Bear Creek Mining saw its Santa Ana silver project, halted by the outgoing President Alan Garcia, after violent protests by locals in June 2011. The government also recently implemented a new tax on mining profits that was expected to bring in $1.1bn a year in revenue.
- 9/7/11 – Zimbabwe – The government said it will soon start the process of cancelling platinum giant Zimplats’ operating license after efforts to persuade the firm to comply with indigenization requirements failed to yield desired results.
- 9/6/11 – Brazil – Brazil overhauled its mining code which doubled average royalty rates for minerals from 4% to 2%.6/1/11 – Guinea – BHP – BHP departs Guinea after the country adopted new mining codes.
- 5/5/11 – Namibia – Namibia’s announced plans to hand mining and exploration rights to a state-owned firm that would only be applied to future mineral discoveries, not existing ones.
- 10/8/10 – Kazakhstan – Kazakhaltyn, a production subsidiary of state-owned KazakhGold, announced it may suspend operations if the government does not unfreeze its accounts to pay for production expenses.
- 9/17/10 – South Africa – Julius Malema, the outspoken leader of the African National Congress’ Youth League, argues that mines in the world’s biggest producer of platinum and the fourth-largest producer of gold should belong to the state to benefit the country and its people rather than foreign companies or a selected few.
- 9/1/10 – Democratic Republic of the Congo – The DRC government banned mining in the east of the country, attempting to crack down on illegal organizations and corruption.
- 6/18/10 – Mexico – Gammon Gold – Gammon Gold announced the shutdown of its El Cubo operations due to what Gammon called “continued illegal labor disruptions” as well as “the untenable financial demands made by the union workforce.”
- 4/26/10 – Tanzania – The government of Tanzania passed a new mining law that increases the rate of royalties paid on minerals like gold from 3% to 4%, and requires the government to own a stake in future mining projects.
- 1/1/10 – Indonesia – The Indonesian government established rules capping foreign mine ownership at 49%.
- 1/1/10 – Canada – The Quebec government raised the tax rate of its mining duties to miners and the recently elected PQ government indicated that they plan to further increase this and impose a 5% mining royalty.
- 8/6/09 – Scotland – Climate protesters disrupted the flow of coal from one of Scotland’s largest opencast mines to the Drax power station in north Yorkshire by sabotaging a major coal conveyor belt.
- 5/15/08 – Venezuela – Gold Reserve – Environment Minister Yuviri Ortega said the South American country will not give permits for any open-pit mines and will not allow companies to look for gold in its vast Imataca Forest Reserve. The ban on mining in the 9 million acre (3.8 million hectare) Imataca reserve and the end to permits for open pits was a blow to Crystallex and Gold Reserve. The Canadian companies have long been seeking environmental permits to exploit their concessions in the reserve.
- 5/20/08 – Brazil – Agriculture Minister Reinhold Stephanes said Brazil may nationalize privately held mineral deposits. The government would decide on whether to repossess mineral deposits and give them to state-run companies or others in the private sector.
- 4/16/08 – Chile – Codelco – The El Salvador mine was originally owned by Anaconda Copper and opened in 1959. In the 1970s, with the nationalization of the copper industry in Chile, control of the mine was turned over to state-owned Codelco. In 2008 the contractor workers at the El Salvador mine and four other Codelco mines went on strike, suspending production on 16 April, demanding that Codelco fulfill agreements reached the year before regarding increases in pay and improvement of working conditions. The mine was the victim of sabotage of equipment and machinery. Important electrical equipment and water supply equipment was set on fire, resulting in a delay in operations.
- 11/27/07 – South Africa – The South African National Union of Mineworkers, which represents the nation’s mineworkers, engaged in a series of talks with the Chamber of Mines, an industry group. The meetings also saw the participation of the Commission for Conciliation, Mediation and Arbitration, a body with mediation authority over the dispute. On 27 November 2007, the National Union of Mineworkers announced that South African mineworkers would go on strike to protest at unsafe working conditions. The strike took place on 4 December, and impacted over 240,000 workers at 60 sites across the country, including mines devoted to the production of gold, platinum, and coal.
- 1/11/07 – Bolivia – Bolivian President Evo Morales renewed his pledge to nationalize his country’s mining industry.
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