Crosspost from Th!nk3: Developing World 'Mining Windfalls A Taxing Problem'
Two of Australia's richest people, Andrew Forrest and Gina Rinehart, led a protest demonstration on Wednesday against Prime Minister Kevin Rudd. The big end of town took to the streets in Perth.
There is a major political battle raging between the government and the Mining companies over a proposed Resources Rent Tax, popularly known as the Resources Super Profits Tax.
Meanwhile in Mongolia:
The decision by the government of Mongolia to allow Rio Tinto and Ivanhoe Mines Ltd to develop the Oyu Tolgoi mine has caused civil unrest in the country because of a number of claimed legal irregularities in the agreement (not least the lack of a full Environmental Impact Assessment and a detailed water study).Rio Tino issued a response to criticism:
Update on Rio Tinto at Oyu Tolgoi
Similarly at Oyu Tolgoi there has been a high level of consistent, genuine engagement with local communities, herders and the government. Projects of this nature will attract objections, and we expect them as a sign of a healthy civil society.The full text is available here. Their promotional video from 2009 shows what's at stake.
Locals were concerned not only about environmental issues. They also claim that the agreement between their government and Rio Tinto/Ivanhoe Mines will not provide a fair return to the Mongolian people:
On 4 April 2010 NGOs and 200 representatives from 18 'aimags' (provinces) gathered in Sukhbaatar Square, the main square in Ulaanbaatar, Mongolia's capital, calling on the Government to respect its election promises and accusing it of selling out the country to foreign mining interests.It seems that a windfall tax was sticking point last year:
... The NGOs are also asking Professor Ruggie to review the fairness of the benefit sharing arrangements of the Investment Agreement so as to ensure that the project helps eradicate poverty in Mongolia.
Mongolian NGOs appeal to UN over Oyu Tolgoi
An investment agreement for the first major mining project in the country is expected to act as a blueprint for billions of dollars worth of future investments in other resources projects.These days everything seems connected. Must be galloping globalisation. There has been a lot of talk about resource taxes creating a sovereign risk. That's the risk that government actions pose for mining ventures. The real risk may well be to sovereign States and their ability to stand up for their long-term national interests.
... the parliament agreed to scrap the windfall profits tax on copper and gold, setting the stage for an agreement, miners Rio Tinto and Ivanhoe said in separate statements.
The windfall tax, introduced in 2006, and a demand for greater government ownership in strategic projects, have been key sticking points between the government and investors, delaying the progress of several investment proposals despite a mining boom in recent years.
Mongolia clears way for Oyu Tolgoi mine