Saturday, April 28, 2012

mining the rich but not for the poor

John Paul Getty, once quipped that the meek may  inherit the earth but not the mining rights.

This years' list of the who's who of world mining, metal and minerals billionaires recently published by the popular mining web site tells a story. Not unsurprisingly, not one of  the mining super rich is an African. The richest of all the mining plutocrats is Eike Batista, son of the former CEO of Vale, Brazil's largest mining company. Young Eike is  now worth USD 33billion and is the richest man in Brazil and the 10th richest in the world. As ever, being born rich, really helps if your aim is to make the super-rich list.

It is estimated that the net worth of the 40 richest mining billionaires is in the vicinity of USD 300 billion in 2011, roughly equivalent to about of 40 percent of Sub-Saharan Africa's GD (excluding South Africa). The theory has been that the state gets the mineral wealth and then shares it among the citizenry. The reality is more dismal  In the countries dominated by mining they have the most unequal distribution of income in the world. The three most unequal countries in the world are Namibia, South Africa and Botswana. The increasingly divided world of a few very rich individuals dominating the mining and metal sector and the host countries calling for greater equity in the distribution of benefits, unable to lift their own citizens out of poverty, is set to continue

A new "resource nationalism", as it has come to be called, has been spawned by this relentless accumulation of wealth. These new nationalist mining policies include local ownership eg Zimbabwe.  Zambia is about to cut new deals with its copper mining companies. Additional profits taxes are proposed in South Africa. These new taxes which are supposed to capture high profits when prices rise are becoming de rigeur. Yet the experience from countries like Papua New Guinea which have long had these taxes is that mining companies and their accountants will find clever ways to avoid them. In addition, governments challenged when it comes to implementing inclusive policies that lift the bulk of the population out of poverty.

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