ABSTRACT
Mining is a capital-intensive industry, much more so than most manufacturing industries, but it is also a high-risk industry. The lead time necessary to explore, develop and equip a mine for ore extraction varies from five to seven years or even more. For this reason, a mining company's operations cannot be regarded as successful unless a much higher return is provided than could be expected from an ordinary industrial investment, in order to provide margin for the higher risks involved as well as for partial return of capital. It is unfortunate that the general public mistakenly regard these special tax provisions as "loopholes" that should be blocked. In most developed countries, the trend is towards monopolistic control on one hand, and stagnation of mineral production on the other. There is a clear challenge for governments to encourage by appropriate fiscal measures investment of greater amounts of risk capital to maintain or increase the rate of extraction of domestic mineral resources.
