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Poor countries left trailing as companies exploit high commodity prices and
lax tax regimes, says report /24.01.07
Poor people in mineral-rich developing countries are missing out on the benefits of higher
commodity prices while large transnational oil and mining corporations make record profits.
£
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A new report from Christian Aid reveals that a spate of privatisation of national government assets
and low levels of taxation for international firms has meant poor countries are not reaping the
rewards from owning most of the world’s valuable mineral and oil and gas deposits.
A Rich Seam shows how poor countries like Zambia, Bolivia and the Philippines have entered into
one-sided, often secret, deals that allow corporations to dig for oil, gas, copper, nickel and other
precious resources without having to give much back to the country in taxes or royalty payments.
The relatively weak position of many poor countries to make money out of their own resources is
highlighted by the recent surge in world commodity prices to an all-time high. Between 2002 and
2006, the price of copper rose almost five-fold while gold, nickel and oil all increased significantly in
price.
While mining companies have done extremely well out of the deal, boasting a profit level eight times
higher in 2006 than in 2002, poor countries have not been able to cash in.
'It is a terrible indictment of the power of transnational companies that they can continue to make
vast profits while the countries that actually own the goods in the ground make absurdly little out of
the deal,' said Claire McGuigan, Christian Aid’s senior economic policy adviser. 'This glaring
imbalance shows that there is an urgent need for poor countries to renegotiate their tax and royalty
deals.'
The report reveals:
Secret deals in Zambia have tied the government into contracts with copper companies for 20 years
that mean mining companies investing in newly privatised copper mines pay next to no taxes or
royalties. Zambia only receives around 0.1 per cent of the value of its copper resources.
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It actually cost Bolivia more to attract and host companies to run the newly privatised oil and gas
industries than they got back in taxes, royalties and other benefits.
In the Philippines mining companies paid less than 15 per cent of their profits in taxes and royalties
to the government.
For press enquiries please call:
John McGhie or Katy Migiro on 0207 523 2058
Claire McGuigan, co-author of the report, on mobile 07904 542 042
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A Rich Seam: Who benefits from rising commodity prices?
/24.01.07
As world leaders meet in Davos, to discuss ‘The shifting power equation’,
Christian Aid's latest report, A Rich Seam: Who benefits from rising
commodity prices? shows that despite spectacular rises in the prices of
commodity prices in oil, copper and gold, the ‘equation’ is still weighted
very much in favour of the rich, with developing countries scarcely
benefiting at all.
The report reveals that while mining company profits have risen eight times from
2002- 2005, many of the developing countries from which the commodities are
exported receive very little in either tax or royalties. There are often heavy costs,
including environmental costs, involved with attracting foreign investment in
natural resources.
This report shows that in Bolivia, the benefits of oil and gas following
privatisation were outweighed by costs borne by the economy. It also showed
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that government revenue from the oil and gas sector, after privatization of its oil
and gas resources, dropped by over 30% even though production levels and
prices increased dramatically.
In Zambia the government is locked into contracts with copper companies which
see the country receiving almost no tax and royalties and in the Philippines
where anti-mining demonstrations are widespread, companies paid less than
15% of profits to the government between 2001-2005.
• Read our report (419kb PDF)
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