Perseus Mining Tries a New Approach to Resource Nationalism

If you can’t beat ’em, join ’em.

When it comes to resource nationalism in Africa, that appears to be the strategy of some mining companies such as the Australian-owned gold producer Perseus Mining, as they take their corporate social responsibility programme to a new level by recommending and endorsing their own tax increases to address what are seen as urgent social concerns in Ghana.

It might just be a strategy that works, especially as the company moves to bid on new licenses in markets such as Ivory Coast.  Take note of this trend.

From the Australian:

“I think it’s important that governments have got to have a reasonable take, otherwise socially it just doesn’t work anywhere (including outside Africa) for that matter,” Mr Calderwood said.

“But more so in those countries that are undeveloped.

“They will get less international funding. They have to because Europe are not going to give them so much anymore or the US.”

A reasonable overall tax rate was between 45 to 55 cents in the dollar with figures above 55 per cent unreasonable and below 40 per cent unpalatable on the other side, he said.

Although the figures sounded high and there was no doubt West African governments did well out of mining, Mr Calderwood said high costs and royalties in Australia added on to existing taxes made the two regions competitive for mining costs.

West Africa’s notoriously risky reputation was unfair Mr Calderwood said.

He said he did not know of a single case there of a company losing its mining licence that didn’t deserve to lose – with the exception of Guinea.

Guinea infamously ordered Rio Tinto to relinquish part of the Simandou project in 2008, which is intended to become the largest iron ore mine and infrastructure project yet developed in Africa.

Mr Calderwood said he hoped to resolve issues with the Ivory Coast government by the end of this year, which other foreign mining companies also were dealing with.

“We want to build the thing,” he said of the miner.

He said the negotiations over profit sharing related to the government assuming that cash costs were far lower than they would be.