Mining taxes and social policy

"Exploration and development of mineral resources in developing countries by Canadian-based multinational mining companies is becoming increasingly common. One problem being encountered is that the objectives of the governments of developing countries can differ from those of developed countries. These objectives are not always consistent with maximizing returns from the projects, which can create conflicts between the mining company's responsibility to its shareholders and the desire to be a good corporate citizen. This article discusses how a mining tax regime can be designed to make the social goals of a government consistent with the economic goals of the company.IntroductionAt the recent International Seminar on Mining Taxation organized by CIM and the United Nations there was considerable discussion about the role of international mining companies operating in developing countries. Not surprisingly, given the diversity of backgrounds of individuals attending the Seminar, there were different opinions about what this role should be.Government PositionRepresentatives of governments pointed out the strong desires of their countries for technology, high-level technical training of their workforce, increased employment, and development of social infrastructure. They pointed out that, to a large extent, these objectives could be more efficiently met by mining companies operating in the country than by the governments themselves. For example, a multinational mining company (""MMC"") would have extensive knowledge of the various technologies available, and would have performed a detailed evaluation of the mineral resources before choosing the most cost-efficient technology for that project. They would, therefore be in an ideal position to assist the country in importing and developing such technology. Similarly, the company could provide opportunities for hands-on training, both at the technical and managerial levels, which would otherwise be unavailable to the government."