Latin Finance - July/August 2010 - 39

canadian miners

Safe Mining Haven
by Taina Rosa lobally, the mining industry is facing an increase in resource nationalism, with governments in various markets proposing or implementing mining tax rises. Those LatAm nations with stable tax regimes and mining-friendly governments are poised to benefit. Not only do such characteristics make miners more likely to do business in these markets, they also provide easier access to credit and insurance. Australia is a glaring example of a market where the government is jacking up the cost of mining. There, the government proposed May 2 imposing a 40% charge, dubbed the Resource Super Profits Tax. “To the extent that Australia becomes less attractive, then Chile, Peru and Argentina become more attractive,” Brad Mills, CEO of Mandalay Resources, tells LatinFinance. “One thing we like about Chile is that it has a very stable mining tax regime and a strong mining-oriented culture which makes it a very attractive place to do business,” adds the head of the Canada-based gold, silver and copper miner, which has operations in Chile and Australia. LatAm is the region where Canadian miners put most of their money. Investment in LatAm has jumped 613% to $57 billion in 2008 from $8 billion in 2002, according to the Mining Association of Canada. That rate of growth is only surpassed by Europe, where investment by Canadian miners jumped 700% to $8 billion in 2008 from $1 billion in 2002.

G

Governments around the world are repelling miners with expropriations, tax hikes and rising royalties. Canadian miners are flocking to LatAm, where they detect more stability.

Looking into LatAm: Canadian miners see relative advantage in the region increased the royalty on the oil sands in the Alberta province to 5% from 1%, $60 billion in proposed investments evaporated within two months. “Raising taxes is detrimental because it discourages investments and we are going into a world where countries need to attract investment,” says McEwen, a well-known Canadian businessman who has led many mining companies, including Goldcorp, which he founded. “Unfortunately, [governments raising taxes on the mining sector] are ignoring the fact that mining is a very capitalintensive business that employs a large number of people and has a big multiplier effect in the economy,” McEwen explains. “For every dollar invested in mining there is at least $2 going into the economy, whereas if you put your money in a service industry, for every dollar you get a benefit of about 70 cents,” he adds. Despite the negative effects of raising taxes, miners see it happening still, especially in economic downturns. “The tendency to raise taxes is spreading more and more,” says Christopher Ecclestone, mining equity analyst at Hallgarten. “If Australia, regarded as one of the mainstream mining locations, can do it, then so can everyone else.” “There appears to be around the world a move towards higher taxes for the mining industry. It just kills the industry and it takes a long time to come back,” says Bruce Turner, CEO of Apoquindo Minerals, a Canadian miner working in Peru and Chile.

Slaughtering Business

According to the mining industry, tax increases on extractive industries repel business. Rob McEwen, president and CEO of Toronto-based Minera Andes, which operates in Argentina, explains that when the government of Canada

July/August 2010

LatinFinance 39



Latin Finance - July/August 2010

Table of Contents for the Digital Edition of Latin Finance - July/August 2010

Latin Finance - July/August 2010
Contents
Equity/Debt Fund Performance
European Investors
Brazil Domestic Buyside
Mexican Domestic Buyside
Mexico Venture Capital
CEMEX CFO Interview
Panama Investment
Canadian Miners
Peru Investor Report
Peru is Making Strides to Develop Gas and Oil
Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - Latin Finance - July/August 2010
Latin Finance - July/August 2010 - Cover2
Latin Finance - July/August 2010 - Contents
Latin Finance - July/August 2010 - 2
Latin Finance - July/August 2010 - 3
Latin Finance - July/August 2010 - 4
Latin Finance - July/August 2010 - 5
Latin Finance - July/August 2010 - 6
Latin Finance - July/August 2010 - 7
Latin Finance - July/August 2010 - 8
Latin Finance - July/August 2010 - 9
Latin Finance - July/August 2010 - Equity/Debt Fund Performance
Latin Finance - July/August 2010 - 11
Latin Finance - July/August 2010 - 12
Latin Finance - July/August 2010 - 13
Latin Finance - July/August 2010 - 14
Latin Finance - July/August 2010 - 15
Latin Finance - July/August 2010 - 16
Latin Finance - July/August 2010 - European Investors
Latin Finance - July/August 2010 - 18
Latin Finance - July/August 2010 - Brazil Domestic Buyside
Latin Finance - July/August 2010 - 20
Latin Finance - July/August 2010 - 21
Latin Finance - July/August 2010 - 22
Latin Finance - July/August 2010 - 23
Latin Finance - July/August 2010 - 24
Latin Finance - July/August 2010 - 25
Latin Finance - July/August 2010 - Mexican Domestic Buyside
Latin Finance - July/August 2010 - 27
Latin Finance - July/August 2010 - 28
Latin Finance - July/August 2010 - Mexico Venture Capital
Latin Finance - July/August 2010 - 30
Latin Finance - July/August 2010 - CEMEX CFO Interview
Latin Finance - July/August 2010 - 32
Latin Finance - July/August 2010 - 33
Latin Finance - July/August 2010 - Panama Investment
Latin Finance - July/August 2010 - 35
Latin Finance - July/August 2010 - 36
Latin Finance - July/August 2010 - 37
Latin Finance - July/August 2010 - 38
Latin Finance - July/August 2010 - Canadian Miners
Latin Finance - July/August 2010 - 40
Latin Finance - July/August 2010 - 41
Latin Finance - July/August 2010 - Peru Investor Report
Latin Finance - July/August 2010 - 43
Latin Finance - July/August 2010 - 44
Latin Finance - July/August 2010 - Peru is Making Strides to Develop Gas and Oil
Latin Finance - July/August 2010 - Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - 47
Latin Finance - July/August 2010 - 48
Latin Finance - July/August 2010 - Cover3
Latin Finance - July/August 2010 - Cover4
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