Countries Push to Extract More Cash from Big Mining Companies – by Rhiannon Hoyle and Alexandra Wexler (Wall Street Journal – November 18, 2018)

https://www.wsj.com/

Jakarta/Kalumbila – From Congolese jungles to Indonesian highlands, a struggle is raging between governments and major mining companies over control of commodities vital to the production of everything from steel to electric cars to smartphones.

Developing-world leaders, spurred by rising mineral prices, are making their toughest demands on Western mining companies in years, squeezing them to pay higher royalties and taxes, process commodities locally and cede control of mines.

In Indonesia, Rio Tinto RIO 1.76% PLC and Freeport-McMoRan Inc. were pressed to sell majority control of the world’s second-largest copper mine, Grasberg, to a government that aims to transform its state-owned resources companies into industry behemoths.

Tanzania last year slapped a subsidiary of Canada’s Barrick Gold Corp. with a $190 billion tax bill—four times the country’s gross domestic product. In March, Zambia handed Canada’s First Quantum Minerals Ltd. FM -3.16% a tab for import duties and penalties totaling roughly $8 billion. The Democratic Republic of Congo signed into law a new mining code in June that will take a bigger slice of miners’ profits. Papua New Guinea, Mali, Sierra Leone and others have also put mining contracts and legislation under review.

“I will not hesitate to close down all the mines if companies don’t pay what they owe us,” Tanzanian President John Magufuli told a cheering crowd last year. “I have launched an economic war.”

Governments say the countries deserve more of the profits from the extraction of their resources. Demands for bigger stakes in resource wealth have risen before—often when prices go up—but people in the industry say fiscal and political pressures now are hardening governments’ resolve to extract more wealth from mining conglomerates.

For the rest of this article: https://www.wsj.com/articles/countries-push-to-extract-more-cash-from-big-mining-companies-1542568635

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