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Tax Policy Critical to Sustainable Mining Investment

More investment in mining is needed for the energy transition and to optimise benefits to host citizens, the International Council on Mining and Metals (ICMM) has said. In a briefing paper, the council examined tax policy principles and design elements to support governments and mining companies in their collaboration on responsible mine development and to enhance impacts on local communities. The ICMM also disclosed the social and economic contributions made by its members to host countries during 2023. Collectively, members paid corporate income tax and royalties of US$54.2 billion, employed 561,800 people, paid US$39.1 billion in wages and related expenses, spent US$187.2 billion with suppliers, and contributed US$1.4 billion in community and social investments. “Contributions to host countries are made possible by investments in projects that are long-term, involve significant upfront capital investment, and often face several unforeseen risks,” said ICMM President and CEO Rohitesh Dhawan. “For these reasons, it is vital that governments design fiscal regimes that encourage responsible mining investments for the common good, and this paper provides important perspectives in that regard.” The council identified six design elements for tax systems to encourage sustainable mining investment, influence cashflows and levels of return, and provide a foundation for constructive dialogue between the mining industry and governments. These included royalty payments, corporate income tax, deductions and incentives, international competitiveness, fiscal stability, and administration and transparency. The principles were applied to scenarios across Latin America, Africa, Canada, the US and Australia. The ICMM estimated the required investment to meet demand for minerals and metals for the global energy transition by 2030 at US$360-450 billion. Investment in mineral-rich countries will be critical, it added – supported by stable tax environments helping countries unlock their economic potential and drive wider development.

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