Rio Tinto chief Tom Albanese has stepped into the African mining nationalisation debate, saying royalties are better for countries than direct ownership.
The comments come as South Africa’s African National Congress party considers a new policy to allow the country to own more than half of all mining operations in the state, according to the Sydney Morning Herald.
Albanese said the debate varies on whether it is best for governments to achieve returns via taxation and royalties, through partial ownership, or a combination.
In countries such as Tanzania, the IMF has actually told the government to tax mining operations to meet its spending commitments, according to Grant Thornton.
Its National Assembly will consider proposals for a super profits tax on mining as part of the nation’s five year development plan.
"One size doesn’t fit all, but I would add … if you speak with a finance minister, someone from the treasury side of the country, they will recognise that the appropriate taxation royalty regime actually pays economic rent to the country in good times and bad," Albanese said at the Commonwealth Business forum in Perth.
"We’re not saying how to run a country – obviously we can’t – but again, we do recognise that it’s a constructive debate to have."
Speaking to Grant Thornton, they told Australian Mining that nationalisation – where the state takes control, and indigenisation – where the people or native people are ceded control, are the largest issues affecting Africa’s mining industry.
"With the ruling ANC part debating state participation, analysts agree that reform of some sort is needed, but most argue that full-blown nationalisation will be detrimental," they say.
Recently Zimbabwe enforced new laws in the country which will see it take a minimum of half of all mining operations; if miners refused to comply it said it would force them out of the country and take control of their operations.
Rio Tinto ceded control of its Murowa Diamonds operation earlier this month.
"Murowa Diamonds wrote to us saying they have given up 51 per cent [of] shares and these would be given to our people,” indigenisation minister Saviour Kasukuwere stated at the time.
While the take over is supported by incumbent president Robert Mugabe, it has been slammed by Zimbabwe’s prime minister Morgan Tsvangirai who says it will discourage investment.
Tsvangirai went on to call the new law "looting and plunder by a greedy elite".