TIRANA, Jan. 18 – The Albanian government says it is considering incentives to the country’s key mining industry which has been severely affected by the drastic cut in international base metal prices, closing down hundreds of jobs.
In a meeting with Energy Minister Damian Gjiknuri this week, representatives of the mining industry appealed for a review of reference prices on chrome and copper, the two key minerals Albania produces and exports.
Mining royalty in Albania currently ranges from 4 to 10 percent of sale prices compared to 2 percent in November 2007. The royalty levied on chrome and copper stands at 6 percent, but producers claim they suffer extra costs due to humidity of the mineral which is not taken into consideration. They also claim the 6 percent royalty on domestic sales is collected after the 20 percent value added tax which increases their costs.
Energy Minister Gjiknuri said the critical situation the mining industry is facing, is a result of a 30 percent cut in international base metals in the past couple of years and a slowdown in the Chinese economy, which has been the main destination of Albanian chromium.
“The goal is to open up a dialogue with you so that the government considers what it can do without damaging state interests. One of the topics we can discuss is addressing the way of the mining royalty calculation,” Gjiknuri told mining sector representatives.
The mining industry had a volume of $175 million in 2014 with a key contribution to the country’s economy and employment in some remote areas.
Starting this year, the application of the mining royalty on minerals such as coal, bitumen, and construction materials will be made at fixed rates based on their quantity in tons and cubic meters to compensate for lower revenue from the sharp cut in base metal prices. The changes are expected to bring an extra 400 million lek (€2.85 mln) in income to government, according to the 2016 budget.
The rates on the main metallic minerals and oil and gas have been left unchanged from 4 to 10 percent of the sale prices.
Last September, a Turkish-Chinese consortium operating a copper plant in the northern Albanian district of Puka announced the suspension of its activity for one year due to a sharp decline in international prices, leaving hundreds of workers jobless.
Mining has attracted a series of foreign investments to Albania including Canadian, Austrian, Turkish, and most recently Chinese ones.
Since 2013, the country’s biggest chromium mine of Bulqiza has been operated by Albanian-owned Balfin Group. The Bulqiza mine employs 660 people and currently has an annual output of 82,000 tonnes of the lumpy ore and fines.
Since 1994, when a new mining law was approved, soon after the communist system collapsed, Albanian mines have been explored by private companies under mining permits and concessions.
Albania has around 390 million tonnes of unexplored oil reserves, some 3 billion m3 of natural gas, 740 million tonnes of coals, 32 million tonnes of chrome, and hundreds of tones of other iron-ore and copper reserves, proving the country’s rich mineral reserves despite the small territory it occupies. The findings are revealed in the latest mineral resources map of Albania, an updated version of 1971 and 1989 publications during the country’s communist regime.
