RE:RE:RE:RE:RE:Bigger Politics May Be Working in Our FavourStar Searcher,
SA has a reasonably strong central government. They don't have hundreds of militias held in check by thousands of UN peacekeepers. Government authority is limited in Congo. Driving away investment from international miners will only act to erode that authority further.
I don't find most of the mining proposals all that onerous. Royalties go from 2% to 3.5%, and corporate taxes from 30 to 35%. These are not deal breakers. They want the free government share of all projects to rise from the current 5 to 10%. In the case of IVN they already own 32% of Kipushi and 20% of K-K. Cobalt strategic metal royalties go up to 10%. That does hurt, but IVN is not into cobalt. This would have more of a negative effect on companies like KAT, Glencore, and CMOC.
The proposed 50% supertax, starts at 125% feasibility base case scenario price. According to the most recent Company studies, it would be triggered at copper $3.75 lb , zinc $1.37 lb. Copper is way out of the money, and zinc is about 25 cents in the money. If feasibility base case scenarios are higher, that would push the supertax further out. There is sufficient vagueness that this could potentially cause problems down the road, depending on the accepted base case scenario price model.
The real bone of contention is the decision to unilaterally declare all prior 10 year Stability Pacts null and void. This breaks international law, and is a red line for international miners. The Minister of Mines has stated the government is prepared to go to independent arbitration. If so, they will lose the decision, since there are already signed agreements. Those decisions can be enforced by seizure of bank accounts and shipping assets. So, by ignoring international law, the government risks not only losing revenue from the miners, but also face the unpleasant prospect of asset seizures. I don't see what they possibly have to gain. A reasonable settlement through dialogue is the only solution.
Like I said, RF has a good approach. I would avoid dog and tail analogies. No one willingly accepts being a dog's tail. Patience and goodwill, together with an insistence on respect for international law is the best course. The government needs this deal as much as international miners, perhaps even more so. The mines will still be there, if and when the current government passes the torch to a new administration.