TIRANA, July 29 – With international oil and base metal prices at a record low affecting the country’s exports, the Albanian government is also suffering a sharp cut in the mining royalty, the key tax Albania collects from oil and mining companies.
Data published by the country’s customs administration shows the mining royalty which is levied at a rate of 4 to 10 percent, was down by 50 percent to 1.85 billion lek (Euro 13 million) in the first half of this year compared to the same period last year, registering the lowest level for the first half of the year since 2011.
Mining royalty is currently the key tax the Albanian government collects from oil and mining companies operating in Albania, the majority of which haven’t started paying the 50 percent profit-tax yet because of being stripped of this tax until they recover their investment costs, a legal provision which has often sparked allegations of abuses.
Customs authorities say they collected 6.26 billion lek (around Euro 44 million) in mining royalties in 2014, down 30 percent compared to 2013, registering the first annual decline after several years of rapid growth.
Royalties, which range from 4 percent for non-metallic minerals, 6 percent on chromium and copper and 10 percent on oil and gas operations rose to a record 8.5 billion lek (Euro 60 million) in 2013, up 20 percent compared to 2012, having grown by more than five time since 2009, when huge investments were made both in the oil and mining sectors.
Around three-quarters of the royalty tax is collected by the customs administration and the remaining part by tax authorities which shows the majority of production is destined for export.
In case of exports, 25 percent of the royalty payments go to local government units where companies operate.
Albania’s oil exports in the past eight years increased by more than 30 times, emerging as the key exports, mainly due to huge investments by Canada-based Bankers Petroleum which since 2004 operates and has full rights to develop the Patos-Marinza and Kuçova heavy oilfields under a 25-year concession contract with the Albanian government.
Mining has also 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 taken over 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 tonnes 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.
