'Sweden's mineral wealth is sold too cheaply'
Published: 12 Jan 2014 09:13 GMT+01:00
Updated: 12 Jan 2014 09:13 GMT+01:00
Critics argue that Sweden is selling its vast mineral resources far too cheap, raising the idea that the country should follow neighbouring Norway and establish a wealth fund to invest for future generations.
While concession fees are kept deliberately low in order to attract miners, critics say all nine million Swedes could and should benefit the same way that their Norwegian neighbours all profit from their national oil wealth.
"This is something we own together," said Jesper Roine, associate professor at the Stockholm School of Economics. Besides, he added, minerals have an intrinsic value even before they are dug out of the earth, and they should be priced accordingly, the way all other raw materials are priced.
As it is now, the Swedish state earned only a little over €30,000 ($41,000) in concession fees in 2012, the last year for which figures were available.
Why this tiny number? Because fees are a mere 0.2 percent of total output value, of which three quarters go to the landowner and only one quarter ends up in the state treasury.
By comparison, Canadian provinces typically charge 10 to 15 percent, and Australia implemented a 30 percent mining tax in 2012.
Some economists and environmentalists suggest increased mining fees in order to safeguard the natural environment of Sweden's mineral-rich north, while also saving up for a huge nest egg to help future generations.
Behind the debate is a fact that may surprise: Sweden is known for its slick design and ingenuous high-tech, but it also produces more iron than any other European nation and boasts the world's two largest underground ore mines.
Its mineral resources are attracting the attention of business heavyweights from across the globe.
Avalon Minerals and Dragon Mining, both Australian companies, have prospecting and concession licences in Sweden. Canadian company Eurasian Minerals has exploration projects in Sweden, one of them in cooperation with Chile's Antofagasta.
The low concession fees do not mean that Sweden is getting no revenue from mining.
The Swedish government earns 12 billion kronor (€1.3 billion, $1.8 billion) from mining operations via dividends from state-owned mining company LKAB and via regular taxes.
But to observers, such as Roine, this is not enough.
He is the co-author of a recent report on Swedish earnings from mineral extraction that proposes new tariffs to compensate for the gradual depletion of resources and a state owned fund similar to Norway's oil fund, which invests the billions the country earns to last for future generations once the resources are gone.
"It's not the same as saying that the companies... shouldn't be compensated for their costs and the risks they are shouldering. They should absolutely be paid for that," he said.
"But nevertheless it's the case that the business doesn't materialise out of thin air. Some of the value of the mineral wealth already exists from the outset, and this makes it a very special industry compared with others."
Sweden has been ranked in the top ten of attractive mining nations three years in a row by the independent research organisation Fraser Institute, this year only topped by neighbouring Finland. Low fees, low corruption, good infrastructure and a stable society are some of the attractive factors.
But analysts and the government say the fees must be low to keep miners coming and investing in Sweden, thus playing an important role in creating jobs and economic development.
"The government is currently not prepared to increase the mineral fees," said state secretary Haakan Ekengren, at the Ministry of Enterprise, Energy and Communications.
He gets backing from accounting company PwC's mining and metal analyst Carl-Wilhelm Levert, who supported the low fees.
"The Swedish mining industry is an important engine for Swedish economy," he said. "Swedish fees compete on a global market and we already have high extracting fees due to low ore levels and high safety- and environmental requirements."
"It is also important for the employment in rural areas and an increased mineral fee doesn't create better conditions - rather, it is important that we continue to support exploration because it is not until they become operative mines that we see large positive effects like new jobs and investments."