Tax Considerations for Critical Minerals Value Addition
With global demand for critical minerals increasing amid the energy and digital transitions, this report explores how resource-rich countries can capture greater domestic value from their minerals. It examines how fiscal strategies, supported by legal, regulatory, and infrastructure enablers, can help foster local processing, refining, and manufacturing.
Key Messages
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Rising demand for critical minerals has revived interest of mineral-rich countries in processing activities that capture value further down the mining value chain. Countries have used various fiscal and non-fiscal measures to encourage value addition, with mixed results.
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Primary enablers essential for successful mineral value addition include stable legal, regulatory, and institutional frameworks, reliable infrastructure, and a domestic market capable of absorbing processed products.
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Secondary enablers include production- and cost-based fiscal incentives, complementing primary conditions. Royalty adjustments and cost-based measures can impact upfront capital costs and support downstream processing, but they need to be carefully calibrated.
This report examines the opportunities and challenges for resource-rich developing countries to develop downstream processing and manufacturing in the mining value chain. Focusing on a selection of critical minerals vital for the energy transition, it examines two central questions:
- What specific fiscal and non-fiscal conditions enable countries to optimize the balance between revenues from producing the mineral and benefits from processing and refining the mineral further down the value chain in-country?
- What tax and other related measures have countries adopted to increase in-country value across the mining value chain?
The analysis considers factors that have helped or hindered previous attempts to increase domestic value lock-in in resource-rich countries and emphasizes practical approaches to designing fiscal policies that support sustainable value addition.
Participating experts
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