Consultant: Tax and Non-Tax Incentives for Mining Downstream Viability Projects: A three-country comparative analysis

The International Institute for Sustainable Development is a globally recognized think tank with more than 30 years of experience working to solve today's greatest sustainable development challenges. We combine deep expertise across critical policy areas with a collaborative approach to research, advice, and hands-on support that delivers real-world results. Headquartered in Winnipeg, Manitoba, we are a diverse team of over 300 experts working from offices in Canada and Switzerland as well as other locations around the world.  IISD hosts the Secretariat of the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF). The IGF's Global Mining Tax Initiative (GMTI) helps countries to increase mining revenues for sustainable development. Drawing on broad experience working with IGF member governments, the Secretariat offers this specialized and comprehensive program covering fiscal policy for the entire mining value chain, from exploration and development to mining, processing, mineral sales, and mine closure. The GMTI focuses on all aspects of fiscal policy, including taxes, royalties, and financial modelling, and has developed particular expertise on the fiscal treatment of mineral beneficiation and downstream processing. The Challenge As demand for critical minerals accelerates with the energy transition, a growing number of resource-rich countries are moving to capture more of the value chain domestically and attract investment. Whilst a variety of fiscal and non-fiscal tools are available, many resource-rich countries offer tax and non-tax incentives to attract investment into downstream mineral processing, from smelting and refining to further stages of value addition. These incentives can include corporate income tax holidays, accelerated depreciation, royalty relief, value-added tax and import duty exemptions, energy subsidies, infrastructure provision, export restrictions or differentiated export taxes on unprocessed ore, and guaranteed offtake arrangements. Governments introduce these measures with the aim of capturing more value domestically, creating jobs, and building industrial capacity. However, the fiscal and non-fiscal cost of these incentives is rarely tracked systematically, and there is limited evidence on whether they actually influence investment decisions or simply reward projects that would have gone ahead regardless. Downstream processing economics are also heavily shaped by global market conditions, such as smelting overcapacity and depressed treatment and refining charges, that incentives alone cannot offset. Governments are often left weighing significant revenue foregone against uncertain and long-dated returns in jobs, value addition, and industrial development. Our Response To help governments make better-informed decisions on this trade-off, the IGF is developing a practice note assessing the short-, medium-, and long-term impact of tax incentives for mining downstream…