Government Involvement In The Bauxite Sector: Government Objectives And Industry Problems With Special Reference To The Application Of A Resource Rent Tax

The views expressed in this paper are those of the author and do no necessarily reflect those of CRU. The Extent of Government Involvement In 1982 national governments in the Non-Socialist world owned at least some equity share in an estimated 49 percent of the bauxite mining capacity located in their own countries.* By comparison, as Figure 1 shows, in the same year governments owned at least part of an estimated 33 per cent of primary aluminium smelting capacity. In other industries, national, or state governments in 1982 held at least part ownership of mining capacity in 42 per cent in the copper industry, 34 per cent in the tin industry, 23 per cent of the zinc industry, 15 per cent of the lead industry and 11 per cent in the nickel industry. Thus while within the aluminium industry attention has focussed on the share of government ownership in the primary aluminium sector, national government involvement through ownership is larger in the bauxite sector. Moreover, ownership by government is more widespread in the mining of bauxite than in the mining of all other principal non-ferrous base metals. Yet while the equity participation of governments in the bauxite sector is widespread, it is but one of many forms of government involvement. In addition to direct ownership or equity participation domestic government involvement has taken the form of legislation to protect the environment, controls on the level of production, insistence on the export of ore, pressure to maintain levels of employment, controls on the type of fuel used, foreign exchange *Capacity which is owned in whole or in part is included within the state sector, but capacity in one country which is owned by a wholly or partly owned government company in another company is not included in the state sector; e.g. the capacity of the Trombetas mine is included in the state sector but the capacity of Delphi bauxite would not be included.