Mining Rent Research Articles

Гипотеза об абсолютной ценности ресурсов недр

Practical assessment of deposits and resources in the Kyrgyz Republic is based on the cost estimation, income and/ or cost methods. The aggregated economic indicators of reduced net cash flows and the internal rate of return, in the dominant sense, reflect the work of capital and premium on capital without legal and economic categories of the mining rent by types of payment for ownership of resources. Currently, the cost of a mining project is defined by the norms of imposed taxes and payments, and, to a large extent, by experimental innovations in the form of a share in the distribution of the net cash flows, bidding and auction payments. Based on the study of the Kumtor mining project for the period of 1996–2020, limits of the mining rent are defined by type, the influence of secondary factors of the economic return from mining and the factor of the project's influence on the macroeconomic indicators of the country. The integrated indicators of the three factors are combined into the category of resource value with the boundaries of revenue sharing for the subsoil owner and the investment capital.

Analysis of Mining Rent Sharing : Case of the Kamoa-Kakula Project

This article aims at analyzing the rent sharing within the framework of the Kamoa-Kakula project which consists of the exploitation of a copper mine, located in the DRC. Based on data from the Integrated Development Plan of this project, published in October 2020, we used the FARI model approach to analyze the tax regime of the 2018 mining code and estimate the share falling to the State and the investors. Analysis of the results of our estimates shows, on the one hand, that the tax burden is close to observed international trends. Expected state revenues are USD 7.3 billion, according to the base scenario, while the Average effective tax rate (AETR) would be between 40.6 and 53.1%. On the other hand, although the innovations introduced increase the AETR, the latter tends to increase with the profitability of the project. Which allows us to conclude that this tax regime remains progressive, despite the increase in tax rates. Although theoretically, this new code seems advantageous for the State, its implementation should be accompanied by measures aimed at strengthening tax administration and control techniques, with the aim of confronting tax optimization practices.

Influence of mining rent on the efficiency of using natural potential: the paradox of plenty and its Russian specifics

The most powerful potential of Russia's natural resources is only partially realized, and determining the reasons for the insufficient efficiency of its use is a current research topic. The exploitation of mineral resources that bring mining rent (primarily oil and gas) gives rise to the so-called “paradox of plenty” (PP), which in some cases manifests itself as a significant slowdown in economic development. The purpose of the article is to clarify the signs, degree and forms of PP manifestation and related problems (“resource curse”, “oil curse”, etc.) in the Russian economy. Since the causes of these phenomena are usually associated with rent extraction and peculiarities of the institutional structure of the economy, the works of leading economists who support the theories of “rent-oriented behavior” and the role of public institutions in the process of the PP emergence were critically analyzed. To determine the signs and degree of PP manifestation and related problems, an analysis of determining the shares of oil and gas in the structure of exports, revenues from their sale in the federal budget, and oil and gas products in the structure of GDP, was made. It is concluded that there are no sufficient grounds for ascertaining clear signs of a “rent-oriented” Russian economy and a “resource curse”; important counteracting factors that refute the unambiguous conclusions about the high degree of PP impact on the Russian economy were identified. The author's interpretation of the role of public institutions, the factors of formation and forms of PP manifestation, the specifics of differential mining rent and its role in the formation of PP are proposed; options for solving problems generated by PP – directions for improving the tax system in the field of oil and gas, etc.; substantiation of the need to develop a strategic state program for diversifying the sectoral structure of the Russian economy; directions for adjusting economic policy in the field of oil and gas industry development, etc.

Концепция рентного налогообложения добычи и извлечения твердых полезных ископаемых

The article considers the conceptual approaches to the taxation of natural resource use. The purpose of the article is to identify the governmental tax risks in the implementation of various scenarios of mining rent withdrawal and to substantiate the methodology of resource taxation in extraction and processing of solid minerals, based on the principle of tax justice. The authors reveal the factors of tax risks for the state in exercising its sovereign right to the mining rent. The article formulates the requirements to the tax system, the observance of which will allow to consider the factors of the state tax risks. Advantages and disadvantages of certain fiscal payments for extraction of mineral raw materials are determined. It is shown that the resource tax should be based on the present value, calculated as the net present value of the investor for the entire lifetime of the project. The authors propose a mining rent taxation mechanism, which would increase budget revenues while maintaining the incentives for mining companies to invest in exploration. The main forks in the design of such a rent income tax are shown

Determination of the dimensions of the differential mining rent in the oil industry of Azerbaijan to optimize the tax burden

In modern conditions, the definition of the amount of differential mountain rent on the macro level (the oilproducing company, the industry) should allow optimizing the tax system in oil production by determining the maximum limits of seizure. Оn the basis of a methodology based on the submissions of political economy, on a differential mining at the level of production facility as a difference between the closing costs, calculated on the production volume and its actual costs, a methodology was proposed by the method of differential mountain rent on the macro level as The amounts of the dimensions of the specified rental income on individual production facilities (well, deposit). On the basis of the proposed methodology, the work was calculated by differential mining rates on oil production of Azerbaijan in 2020 according to state statistics. The calculation and subsequent seizure of the amount of differential mountain rent in the state's income will allow further taxation of oil production can be carried out at unites rates or differentiated by the natural and transport component (Rent of location), as a tax on mineral mining (NPPI). Keywords: differential mountain rent; limit costs; actual costs; production facility; production volume; rent on macro levels.

Post-pandemic metal supercycle and effectiveness of fiscal instruments

The paper has two main objectives. On the one hand, to assess whether the recent rise in the international price of metals is of similar importance to that registered during the “super cycle” of the decade 2003-2012. On the other, analyze the effectiveness of fiscal instruments in capturing the rent related to extraordinary income from mining in Peru. Based on a statistical analysis it is found that the recent rise in the price of metals, being more intense and having started from a higher threshold compared to the past boom, translates into particularly hight extraordinary income for mining companies. It is also concluded that the new mining tax regime, implemented since 2012, has not been showing the same dynamism as the old tax regime in order to ensure optimal appropriation of mining rent by the State.

ПРОБЛЕМЫ СОВЕРШЕНСТВОВАНИЯ МЕХАНИЗМА ИЗЪЯТИЯ ПРИРОДНОЙ РЕНТЫ В ИНТЕРЕСАХ СОБСТВЕННИКА РЕСУРСА

Differential natural rent is a special type of income that reflects the favorable natural characteristics of the rent formation object that belongs to the owner of the resource and is subject to extraction in its favor. In oil production, such natural characteristics include the initial concentration of reserves (the ratio of the initial extracted reserves to the area of oil saturation); deposit size (the magnitude of the initial recoverable reserves); depth of reservoir formation; oil viscosity in reservoir conditions; stock generation; flooding of recoverable products; initial well flow; technological coefficient of oil extraction; economic and geographical factors. Based on this, with respect to mining rent, its tax extraction in favor of the owner of the subsoil - the state - is inappropriate as the tax cannot provide the full flow of differential mining rent to the federal and other regional budgets. Thus, the mineral mining tax, which, even taking into account the existing differentiation of its rates, does not depend on the specific conditions of production, and the differential mining rents are practically not extracted in modern conditions. To ensure a complete extraction of differential mining rent in the state’s income, it is proposed to employ the mechanism of calculated prices, which were used in some sectors of the mining industry in the conditions of the planned economy. When using calculated prices, oil-producing companies will receive as income a normal profit and the corresponding part of the quasirent in order to stimulate activities aimed at improving the technical level of production and increase its effectiveness. The amount of mining rent for this field will be determined as the difference between the production cost of this field in the market and calculated prices. Then the deposit will be paid at a calculated price, which is based on the cost price of this field based on standard costs plus normal profits. If there are deposits with similar natural conditions of rent formation and closest levels of regulatory costs for oil production, it seems appropriate to arrange them into groups for which a single price will be calculated based on the average specific regulatory costs for oil production plus normal profits. The use of the calculated price mechanism will significantly take into account the specific natural conditions of specific deposits or their groups, due to the use of the regulatory costs for oil production for calculations. Thus, the use of the calculated price mechanism will provide a nontax extraction of differential mining rent and increase the efficiency of the oil and gas production taxation system.

СУЩНОСТЬ ПРИРОДНОЙ РЕНТЫ И РЕАЛИЗАЦИЯ ПРИНЦИПОВ РЕНТНОГО НАЛОГООБЛОЖЕНИЯ В ИНТЕРЕСАХ ПОВЫШЕНИЯ СТИМУЛИРУЮЩЕГО ВОЗДЕЙСТВИЯ НАЛОГОВОГО МЕХАНИЗМА И УСИЛЕНИЯ ЭКОНОМИЧЕСКОЙ БЕЗОПАСНОСТИ ГОСУДАРСТВА

The article analyzes and develops the theoretical views on the category of natural rent in the works of Adam Smith (income exceeding all reasonable costs plus the average profit typical for a given area), David Ricardo (income from the initial and indestructible forces of the soil, the other part of it is paid for the use of capital that was used to improve the quality of the soil and for the construction of buildings), and other economists from land rent (income due to differences in the location and fertility of land) to differential rent II (rental income from additional capital investments) and quasi-rent (rent of machines and equipment), etc. David Ricardo formulated the conditions for the formation and receipt of land rent (lands differ in their location and in their fertility; the number and area of plots that are best in terms of these parameters are limited; lands are privately owned). In turn, Alfred Marshall noted that land rent does not appear as an exclusive phenomenon, but only as one of income sources, among similar ones. In modern conditions, the understanding of rental income is reduced to its interpretation as a profit above the average normal level, that is, excess profit. However, when considering rent as excess profit, the determination of its size is based on a comparison of indicators such as actual and normal profitability rather than land fertility or differences in the depth of occurrence and other natural mining conditions compared with the worst land plot or deposit, and also minerals. The location of land plots, as one of the factors of land productivity affecting land rent, laid the foundation for research in the field of the theory of the location of productive forces. Therefore, in relation to natural (mining) rent, it is necessary to be guided by the classical understanding of it, as income due to objective differences in natural or climatic conditions of agricultural production or subsoil use in comparison with the trailing land plot or deposit. In these conditions, receiving natural rent as income independent of the efforts of the subsoil user (excessive/unearned profit) in favor of the owner of the subsoil, the state, increases the stimulating effect of the tax mechanism in agriculture and the extractive sector of the economy, the efficiency of production and the economy as a whole, and strengthens the national and economic security of the state.

Development of Underwater Surface Measurement : Multibeam Sonar

This study was written in the title theme as a result of the cooperation between the staff of the departments of the two scientific institutions mentioned above. Its first author is also a PhD student of the IGGIS. This year the Bay Zoltán Applied Research Public Benefit Nonprofit Ltd. has purchased a Norbit-iWBMSe multibeam ultrasonic system. The primary purpose of this paper is to describe a multibeam ultrasonic system (Norbit- iWBMSe) and to examine its useful application for mine surveying purposes, particularly for measurements used in underwater mining situations, such as the official determination of the amount of the extracted mineral resources, which also serves as the basis for determining the payable annual mining rent. In our study, first, we will briefly review the new surveying technologies which have appeared in Hungarian mine surveying recently and are likely to be used more and more in the future. Then we will deal with the history of under-water topographic mapping. Afterwards the multibeam sonar survey device and its ad- vantages will be discussed, and two waterbed surveying examples from our own practice will be shown. Finally, the legal background of mining volume computation will be briefly described. Furthermore, it is important to highlight the role of multibeam sonar in mining exploitation process.

Методологические основы оценки минерально-сырьевого потенциала: международный и российский опыт

Тhe paper considers the main approaches to the valuation of mineral deposits. The valuation of mineral resources is widely used in countries with developed mining industry, such as the USA, Canada, Australia, etc. Monitoring the value of mineral assets allows you to track current changes in their structure and serves as a basis for the fair withdrawal of mining rent. The methods of financial and economic evaluation of mineral deposits are based on the standard methodology for investment projects assessment. The most widely used is the net present value method, which is used only for the estimation of commercial reserves. The resource assessment can be carried out using comparative methods and be used to improve the infor-mativeness of the assessment. The paper reviews the methods used to access the mineral resource potential of Russian regions, forms of statistical observation, and standards of the Russian Society of Appraisers. Contemporary Russian legislation in the field of mineral raw material valuation is based on international experience, where the main valuation method of mineral assets is the method of net present value. With the approval in 2017 of the statistical form "Information on the current market value of mineral reserves”, official annual data on the value of mineral raw materials in the subsurface appeared in Russia for the first time. The methodology for assessing the mineral resource potential of the region should include such stages as ranking mineral deposits according to their investment attractiveness, evaluating selected deposits with approved reserves using the net present value method with determining the budget efficiency of projects, and evaluating the gross potential value of resources of promising mineral resource objects.

МЕТОДОЛОГІЧНИЙ ПІДХІД ДО ВИЗНАЧЕННЯ РОЗМІРУ ДИФЕРЕНЦІАЛЬНОЇ ГІРНИЧОЇ РЕНТИ

МЕТОДОЛОГІЧНИЙ ПІДХІД ДО ВИЗНАЧЕННЯ РОЗМІРУ ДИФЕРЕНЦІАЛЬНОЇ ГІРНИЧОЇ РЕНТИ

Development of a Rental Mechanism for Reducing the Technogenic Risks in the Coal Industry

The article examines reducing the technogenic risks in the coal industry by differentiating the withdrawal of mountain rents from mining enterprises of different types (cuts and mines). It is shown that the general level of the technogenic risks when using the open method of extraction is not inferior to the underground one. Consequently, the increase in the specific gravity of this method in the coal mining structure increases technogenic risks and requires protection from them. The purpose of the article is to develop a technical and economic mechanism capable of removing mining differential rent for coal mines in order to improve the balance of the production structure. The methodology of the study is based on the of use correlation-regression, factor analysis, expert assessments. The value of the differential mining rent arising in the Russian coal industry is determined using an open mining method in comparison with an underground mine method. The ratio of man-made risks and the value of mountain rents are estimated using different mining methods. A mechanism has been developed for the withdrawal of differential rent cuts, supplementing the existing model of the tax on the extraction of minerals. The possibilities of using a collection or a target payment for the use of an open coal mining method are shown to protect against the corresponding technogenic risks, to compensate for the accumulated damage.

Fossil Fuels in Economic Theory- Back to the 19th century British Debates

The interest of economists in fossil fuel exhaustion dates back to the mid-19th century, when, in Great Britain, W. Stanley Jevons published his 1865 essay on coal. In the subsequent decades, fossil fuels were considered with ambivalence: sometimes as a new theoretical and practical priority, sometimes as a secondary issue to be studied in standard frameworks. This paper explores, through the example of the mining rent, how fossil fuels were (partially) incorporated into economic theory at the time. It also explains why the original British view was finally relegated to the background in the early 20th century, when American economists took part in the discussions.

NEOEXTRATIVISMO LIBERAL-CONSERVADOR: a Política Mineral e a Questão Agrária no Governo Temer

Avaliamos as mudanças ocorridas na política mineral brasileira durante o primeiro ano do governo Temer. Argumentamos que, assim como no período Dilma, este governo teve um posicionamento favorável à expansão mineral. Durante o governo do Partido dos Trabalhadores, associado a um “neoextrativismo progressista”, as ações buscaram aumentar o protagonismo do Estado e a captura da renda mineral destinada, majoritariamente, para políticas de redução da pobreza. Com a mudança de governo, no período “neoextrativismo liberal-conservador”, mantém-se a preocupação com a expansão da mineração, porém o governo deixa que ela ocorra sob as forças de mercado, e a renda mineral capturada pelo Estado é transferida para o setor financeiro. Ao longo do artigo, debatemos as relações entre a mineração e a questão agrária. Defendemos a importância da reflexão crítica sobre este setor extrativo e os impactos na organização do espaço rural brasileiro. Tratamos ainda das estratégias institucionais das mineradoras, avaliamos as iniciativas do governo Temer para abrir novas áreas de mineração e investigamos as mudanças feitas na legislação mineral. Por fim, sublinhamos o que parece ser falsas promessas relativas a tais ações e trazemos também alguns elementos referentes às respostas dos movimentos sociais quanto a essa tentativa de aprofundar o atual modelo mineral do Brasil e os conflitos e disputas territoriais a ele associados.

Legal Status of Payments for Subsoil Use and Securing Fiscal Interests of the Russian State

The paper features the current Russian Federation system of obligatory public law payments forusing subsoil represented by taxes, non-tax payments and agreements on production-sharingagreement. Production-sharing agreement is seen as a special tax regime specified in Chapter26.4 of the Russian Federation Tax Code as a taxation system to execute the production-sharingagreement. The system approach is seen in the aggregate payments made by the investor to carryout the production-sharing agreement. The author studies the systems of the legal regulation ofpayments for using subsoil, tax on the extraction of natural resources and annuity typical of all thetypes of relevant payments. The paper explores the balance of the concepts of natural resourceand mining rents, tax and other instruments to withdraw mining rent, profitability of the payments.It contains analysis of legal mechanisms of the taxation of extracting solid natural resources andhydrocarbon crude; interprets the concepts of severance tax, natural resource in terms of taxationand case practice. A special attention is given to the guidelines of licensing applied to confirm theright of the licensee to use the subsoil area, to specify its borders, aim and terms and conditionsof use. Author proposes his own classification of the coefficients to base tax rate for the naturalresource extraction tax and their incentives. It is presented classification of any type of differentiation;the various payments are grouped up by natural resource, their influence on the base tax rate, aimof application, on the association with the territory where natural resources are extracted. The paperalso studies the legal nature and characteristics of regular and one-time payments, the issues ofliability to evade the payments, the powers of the executive bodies regulating the payments forusing subsoil. It is provided author’s recommendations to limit the powers of the Russian FederationNatural Resource Ministry (Minprirody) and to broaden instead it, the rights of the Government of theRussian Federation to perform the legal regulation of the payments for using subsoil. It is identifiedoverall trends in the development of the Russian legislation on natural resource taxation.

Development of Methods for Determining Differentiated Rates of Mineral Extraction Tax in Recovery of Solid Commercial Components from Technogenic and Natural Fields

Background: The article presents differential methods to determine ad valorem Mineral Extraction Tax (MET) rates for commercial components extracted from technogenic raw materials and from secondary mineral resources. Methods: Proposed objectives include restrictions on the minimum level of MET rates. MET is calculated by reference to stock exchange prices for finished products in formulas 1 and 2. This tax is calculated relying on the estimated value of extracted minerals in formulas 4 and 5. The forecasted MET potential is estimated as present value of expected payments to the budgets of the RF budget system. Findings: Increasing the complexity of the use of mineral resources through the development of state regulation of economic measures aimed at stimulating subsoil usage involves determining the optimal ad valorem tax rates on mining operations, which provide cost-effectiveness of the investment project organization engaged in the development of technogenic deposits. For this purpose, the study has developed and scientifically validated methods in terms of mining rent, where mining-and-geological (mill head grade) and technological (the value of throughout recovery of the component to the finished product) criteria have been highlighted in its structure which are prerequisite to establish economically justified level of tax exemptions of mineral extraction tax. Frequency of revision of MET rates is still debatable, whether it will be a period of development of the deposit or another period of imposing the tax rate. Improvements: The presented methods can be used in working out the directions of Russian tax system development, as well as the implementation of regional investment projects aimed at developing, in the first place, technogenic deposits under a separate license.

Change in Sustainable Economies

Two important problems in models for a sustainable economy are (1) how to connect environmental models with societal models and (2) how to model the impact of societal changes upon an environment.For the first challenge, the Leontief economic model has been transformed from a vector to a tensor equation, as a model for integrating regional descriptions of an economy and its local environment. However, this is a static model of a steady-state (stasis) economy during a given period; and here we address the second challenge of modeling the impact of societal change upon an economy and its environment.We apply the modeling of societal change in the historical case of Australia’s Mining Rent Tax of 2012-2014.

‘Imperialist Rent’ in Practice and Theory

The article highlights that a notable characteristic of British capitalism is the concentration on oil and mining corporations alongside banks. The predominance of extractive industries needs to be explained historically and theoretically. Marx's concept of price of production is developed to include additional profits. The theme is explored through Marx's own analysis of Ireland exemplifying a distinct path of capitalist underdevelopment, drawing on the idea of labour super-exploitation pioneered by Marini, and Amin's ‘mining rent’. Imperialist rent is derived from extra surplus value. Low paid workers in the South are no less productive of value than their counterparts in the North, but the value they create is less rewarded. The conclusion is that effective solidarity requires a reorientation of workers in the North to support class struggles centred in the South fighting imperialist rent and all forms of exploitation.

Mining and Price Rent in the Modern Russian Economy

The article considers the economic essence and stages of formation of potential, tangible and real mining rent and price rent in the modern raw materials sector of the Russian economy. It determines the role of each participant in the multistage process of rent incoming into government revenues. Actual tax system is analyzed from the point of view of mining and price rent withdrawing issues, recommendations for its modernization are developed. It is demonstrated that a huge massive of mining rent in Russia is formed objectively, but distributed subjectively without taking into account interests of the civil society.

Primary sector of Russian economy: condition and development opportunities

The paper considers economy of raw materials as a specific type of operation and development of national economy. The author provides definitions of basic concepts: mineral complex, mineral resource wealth, national mineral wealth, mineral resource potential, mining rent. Basic peculiarities of the primary sector of economy are stated based on the analysis of the role of subsoil use in the economy of Russia and other countries. The authors offer a structure and a multisectoral scheme of functioning of the Russian economy, and prove territorial aspects of balanced development of the primary sector of economy.