For example, earlier this year, the Democratic Republic of Congo's Mining Industry Coordinating Council approved the proposed revenue split which could impose 10% tax on revenue, or a 55% tax on adjusted net mining revenue. The point is that the government will obtain a certain percentage of profit, whichever would result in higher revenues for the government.
Many countries, from the DRC to Zambia and South Africa, are seeking a greater share of mineral wealth, which creates new risks for mining companies. To address this risk, mining and metals companies need to continue to engage with government on the impact on business decisions of increasing levels of resource nationalism, whether we are talking about taxes, use-it-or-lose it licenses, or in-country processing requirements.
"Companies need to demonstrate that they add value to the community," said Amre Youness. "This is about more than extraction and production - you have to keep your workers safe, and provide benefits to the communities, from roads to schools to other basic infrastructure like water and healthcare."
Balancing competing demands from multiple stakeholders is a challenge for all mining and metals companies. Firms that fail to do so face the risks of damaging their corporate reputation, encountering project approval delays and protests or violent opposition. Companies need to ensure that these stakeholders have a common understanding of the challenges their projects face. While there is no perfect approach that will appease all stakeholders, increased transparency helps generate trust with stakeholders. Transparency through reportorial requirements, such as the Social Development and Management Program progress reports, and participation of local governments in the Extractive Industries Transparency Initiative is a way to communicate how value is shared across all relevant stakeholders.
