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Abstract

The extraction of mineral deposits is usually charged with additional taxes or royalty fees that go beyond the general income tax. As a rule, countries prefer stable sources of fiscal revenues based on the volume of raw material extraction, and investors prefer models based on profit tax, i.e. taking operating costs and risks lower than the expected profitability of the project into account. As a rule, too high a burden for the mining sector affects investors’ decisions regarding the introduction of new investments. There are a number of examples where excessive fiscal burdens force investors to move to countries with more favorable tax systems. An analysis of various forms of taxation of mining enterprises around the world has been presented and compared with the system implemented in Poland. Usually, the countries that apply the royalty fee in the mining sector at the same time introduce a number of adaptation mechanisms. This is crucial for new investments due to the fact that they may to some extent compensate for the high costs of transition from the investment to the operational phase. In most cases, several incentive mechanisms are used at the same time, e.g. the accelerated settlement of investment expenditures and the unlimited settlement of losses. The copper and silver mining tax introduced in Poland increased the discounted effective tax rate (ETR) from 38.5% to 89% for the entire investment period, which resulted in a 11-year return on investment, as well as a drop in the internal rate of return (IRR).There are currently no mechanisms in Poland which would balance the burden of this tax for a new investor. In order to balance the extraction tax for certain minerals in terms of the IRR and ETR key indicators, the introduction of several adaptation mechanisms has been proposed. For new investments the most essential mechanism is the preferential settlement of capital expenditures incurred in the pre-production phase of an investment. The others include accelerated amortization, the ability to deduct certain expenses for the exploration phase from the tax base, along with an extended tax loss settlement period, or a mechanism for deducting a certain percentage of investment expenses directly from the tax.
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Abstract

In 2011, the Miedzi Copper Corporation (MCC) initiated its exploration program involving deep Cu-Ag deposits in the Fore-Sudetic Monocline. A very vast study area was adopted, along with the use of a wide range of research instruments. In the years 2011–2013 the exploration of MCC involved 21 concession areas. The location of concessions for exploration as well as exploration and prospecting was based on the known prognostic and hypothetical areas with confirmed contact of the Rote Fäule facies with the reduced facies, placed in the proximity of the Zechstein elevations. In 2012 and 2013, historical boreholes drilled mainly by the petroleum industry were logged, and in cases where the preservation of rock material allowed, samples were collected for chemical analyses. Moreover, a wide range of specialized examinations was performed, involving organic chemistry, coal macerals, vitrinite reflectance and petrography, with a particular emphasis on the Rock Eval method. The latter allows the presence of the so-called strong Rote Fäule associated with the presence of the richest mineralized horizons to be established. It was equally important for the purpose of exploration to perform the reprocessing of geophysical data using the innovative method of effective reflection coefficients. This allows transforming a conventional seismic image into an impulse form of seismic records, meaning a temporal sequence of coefficients, whose sections can be correlated with the logs of historical boreholes in order to trace the course of lithological series. This method provides a much higher accuracy for determining structural elements crucial for exploration than before, suggesting the presence of various tectonic phenomena important for mineralization. As a result, a more detailed mineralization distribution model was obtained and the so-called sweet spots were pinpointed, becoming an object of further drilling exploration. The number of active concessions was reduced to 6, which resulted largely not just from the absence of ore, but also from economic premises. The drilling program initiated in 2013 and still continued today allowed the discovery and preliminary documentation of three copper and silver deposits in the Fore-Sudetic Monocline. These are the Mozów and Sulmierzyce deposits, where the presence of prospective areas was previously recorded, as well as the Nowa Sól deposit, discovered in the so-called green field, where no ore exploration was previously conducted. At the current stage of identification, each of these deposits contains resources exceeding 5 million tons of equivalent copper, and the performed economic analyses indicate the viability of their extraction using the modern methods of shaft sinking, air conditioning and waste management.
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