Africa is already a big player in the mining sector as it is a big supplier of raw materials, but its countries are looking for a bigger piece of the market. And while they try to take more of the mineral wealth the mining companies produce, the other sectors relying on the said firms for supply will have to make do with the possible changes.
Mining.com reports that the lack of returns from the soaring demand for commodities is causing a negative outlook on the sector from countries such as Mali, Tanzania, and Zambia. Now, these countries are looking to carry out hefty tax bills on some of the top mining companies under their respective jurisdictions to help regulate the sector.
According to the report, Zambia is the latest country to place a tax bill on First Quantum Minerals Ltd., one of the country’s top mining companies. After a thorough assessment, the country is now asking for $7.9 billion in taxes from the said firm and is going to audit other miners in the future. Tanzania follows suit by placing export bans and a $190 billion tax bill on its biggest gold miner, Acacia Mining Plc.
On the other hand, at the Democratic Republic of Congo, Glencore is tackling the issue with extra steps. It is now currently settling a dispute caused by a law that will implement substantial tax increases on mining companies in the said country. The report states that Mali may follow in the steps of Congo if it is successful.
More countries are starting to take notice of the capability Africa has in the mining sector. For the mining companies, this means they’ll have to revamp their business structures to meet the upcoming demands of the governing bodies. Now that leaders are looking to regulate the raw material industry, the countries could gain a boost in their economies—if they manage to surpass other issues though.
Africa’s wealth being stunted by several factors
Africa is rich in terms of natural resources and mining areas. Congo even has immense mining deposits of valuable materials such as diamonds and gold. Despite this, the continent isn’t able to put its natural wealth to good use, says CNN.
One of the reasons why Africa didn’t rise despite its bountiful sources of raw materials is that the mining sector is not regulated well enough. Leading companies are evading tax duties, and groups are fighting over mining areas. Because of its current state, the mining sector is benefitting only those who have enough power to create a strong operation for their own purposes. Another trouble that the land is facing is the rampant corruption among its top government officials.
The African countries executed these actions to get the most out of the natural resources. It will certainly take a toll on the businesses, but with it, Africa’s mining sector will become more regulated. It could even have great effects on the continent’s economy as a whole.
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