Different types of mineral royalties

Abstract

Mineral royalties are generally viewed as a compensation to the state for the acquisition of its non-renewable resources. Royalties may be applied on different bases, either volume, value at various points along the value chain or profit/rent, in different jurisdictions. While there is no correct or incorrect version of a royalty, each different royalty type will achieve different and at times incompatible government objectives and will have a different impact on both government revenue versus the income of mining companies and consequently influence their willingness to invest and the mode of mining development, operations and financial performance of projects.