Finland economy: Mining regulation is likely to

be tightened
Información de publicación: EIU ViewsWire ; New York [New York]13 Feb 2019.

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Finland economy: Mining regulation is likely to be tightened
Recent cases of environmental damage related to activities in Finland's mining sector have led to broad public and
political support for mitigating the impact of operations in this sector.
Mining operations and their impact are likely to be a significant topic of debate in the run-up to the parliamentary
election on April 14th, as the political parties seek to position themselves on the correct side of public opinion on
the issue.
As a result, there is broad political support for tighter mining regulation and a new mining tax. Many parties have
outlined such proposals in their election manifestos.
This means that Finland's next government, regardless of its composition, is likely to undertake reforms in the
mining sector during the next legislative term.
Finland's 2011 Mining Act aims to promote both domestic and foreign investment in the country's mining sector,
and consequently causes companies to face relatively weak regulation. In areas where mineral exploration is
conducted, firms are expected to pay the landowners only EUR20-50 per hectare annually for land access and just
0.15% of the extracted ore's worth. No additional tax is levied at the municipal or state levels for these operations.
Moreover, the Mining Act allows foreign companies to stake a claim on the natural resources that they find. This is
in contrast with most other countries, where the state automatically claims ownership of natural resources and
mining companies are required to pay the state in lieu of extraction activities.
The weak regulatory regime has made the Finnish mining sector extremely competitive on a global scale; Finland
was named as one of the most attractive countries for mining investment in 2017 by the Fraser Institute, a
Canada-based research organisation. Mining production in Finland has roughly doubled in the past decade and
currently employs about 13,000 people.
Rising environmental concerns
In recent years the success of the mining sector has been accompanied by several scandals related to the adverse
environmental impact of mining. In late 2015 Belvedere Mining, a Canadian mining company with operations in the
Nivala region of Finland, initiated bankruptcy proceedings. The company faced only weak legal obligations to close
its mine sustainably, resulting in the government spending more than EUR20m during 2017-18 in order to
"rehabilitate" the mine, which involves restoring the surrounding area to its former state. The use of taxpayers'
money to foot the bill in order to mitigate the environmental impact of a foreign company's mining operations was
heavily criticised by the public and media.
The issue of lax mining regulations received renewed public interest in December 2018 when Dragon Mining, an
Australian mining company, assured the Hong Kong Stock Exchange that-despite legal complaints issued against
the company in Finland-it would be able to continue its extraction operations. The complaints against Dragon
Mining involved the close proximity of the mine to residential areas and concerns about improper waste disposal.
Controversially, however, the company assured the stock exchange that it would be able to successfully complete
its operations before the Finnish government investigates these complaints, owing to the country's slow redressal
process.

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Broad political support for tighter regulation and a mining tax
Dragon Mining's comments sparked a public backlash and prompted strong criticism from almost all political
parties, leading to a renewed debate on changing the Mining Act. There have been calls to change the legislation
to increase the payments made by mining companies in order to mitigate potential environmental risks associated
with their operations. Surveys conducted by news agencies, Yle News, and Helsingin Sanomat, reveal that nearly
all the main political parties-with the exception of the far-right The Finns (PS) party-support the introduction of a
mining tax, and several parties have included this in their election manifestos ahead of the parliamentary election,
scheduled for April 14th.
The broad political support to strengthen environmental regulations for the mining sector would enhance the legal
responsibility of companies to protect and rehabilitate the land that they are using. Many of Finland's political
parties also want to levy a new tax on mining operations. In its party manifesto, the Social Democratic Party (SDP)
has promised to introduce a 2% royalty tax on extracted ore, and the Green League (VIHR) advocates levying a tax
based on the mass, rather than value, of extracted ore. The National Coalition Party (KOK) and the Swedish
People's Party (SFP) support the idea of a tax that would mitigate the environmental cost of mining operations, but
are waiting for further analysis on tax proposals from Finland's economics and environment ministries. Meanwhile,
the prime minister's Centre Party (KESK) has suggested introducing an additional fee to the property tax paid by
mining companies.
We expect mining regulation to remain a central topic of debate leading up to the election. Given the public
attention to this issue and the strong support for addressing it across the political spectrum, the incoming
government, regardless of its composition, is likely to tighten mining sector regulations during the next legislative
term.

DETALLES

Materia: Economic conditions; Economic indicators

Lugar: Finland Western Europe

Título: Finland economy: Mining regulation is likely to be tightened

Título de publicación: EIU ViewsWire; New York

Año de publicación: 2019

Fecha de publicación: Feb 13, 2019

Editorial: The Economist Intelligence Unit N.A., Incorporated

Lugar de publicación: New York

País de publicación: United Kingdom, New York

Materia de publicación: Business And Economics, Political Science--International Relations

Tipo de fuente: Wire Feeds

Idioma de la publicación: English

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 Tipo de documento: News

ID del documento de 2183396111

ProQuest:

URL del documento: https://search.proquest.com/docview/2183396111?accountid=28890

Copyright: (c) 2019 The Economist Intelligence Unit Ltd. All rights reserved. Reproduced with
permission of the copyright owner. No further reproduction is permitted.

Última actualización: 2019-03-04

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