The news that Savannah Resources Plc (SRP) has satisfied the requirements of the environmental regulator APA and thus passed to the final stage of concession for the Barroso project was celebrated on the London Stock Exchange by an increase in share value over six months from 2.25 to 4.90 GBX.
This was not unexpected. As may be appreciated from a reading of the annual report dated April 4, 2023, SRP has conducted over the past six years a professional, carefully researched campaign to obtain this exclusivity. What was essentially a pilot project has been carefully monitored by other major mining companies which have been waiting in line to commence their exploitation of Portugal’s mineral resources and will now have a template of regulatory practice to follow.
Modifications conceded by SRP to APA include (1) a reduction of intrusive, noisy activity (including the use of explosives) which will be confined to weekdays during daylight hours, (2) the building of new access roads to reroute heavy vehicle traffic away from village centres, (3) the reduction of air pollution arising from the use of the latest Euclid-Hitachi-style heavy machinery and trucks and (4) the suppression of artesian water leaks and the use of ground water exclusive of the public supply for site maintenance.
But there still remains the prospect of cacophony, and organized chaos over the forecast 15 years of production within a radius of at least 10 km. To this end, SRP has suggested the establishment of a regional community fund to which it will donate a maximum of €500,000 annually as compensation for the installation costs of sound proofing, air conditioning and cleansing equipment in both public and private property.
There remain three highly important questions to be resolved: 1. How will Portugal be compensated for this despoliation, 2. What concrete regulations will be enforced to ensure the progressive restoration of the landscape to high environmental specification 3. What political precautions should be undertaken to prevent the concession falling into undesirable hands.
In this, it is useful to remember the parallel situation of 80 years ago when the government was forced to intervene in the strife between Germany and Britain concerning the production and export of wolfram by imposing regulations for mining safety and the rationing of this strategic war material.
At that time, export licenses were restricted and the production of ore was taxed at a rate of 45% paid in gold or by GBP credit. Is the working of the Barroso concession to be charged conventionally at a variable annual license fee or is there to be a percentage taxation on the value of production? Alternatively, could there be a profit-sharing scheme, such as has recently been introduced by Chile, by the government buying shares in the concessionaire to hopefully produce a better national return?
As to the restoration process, there is a forewarning globally by literally hundreds of abandoned mining projects where the contractors have moved on without compliance of their contractual obligations. For example, in Britain, the vast surface coal mines of Merthyr in Wales remain open to the skies while an escrow account established decades ago remains with only a credit of £15,000,000 to cover costs now estimated at six times this value. The recovery of money from fugitive international corporations, often cloaked in off-shore subsidiaries, is highly complicated and expensive in legal costs. Therefore, restoration should be progressive and not deferred until the end of operations.
Once a concessionaire commences work, it is very difficult to determine the extent of both its ownership by shareholding and its administration which may be based in a foreign country. Global requirements for lithium, copper, and many other metals, including rare earths, are beginning to be shaped as part of a new cold economic war.
Exacerbated by the Ukrainian and other conflicts, the manufacture of weapons and machines will soon be a priority over civil needs. At best, the forecast production of electric vehicles and electronic equipment may need to be reduced by at least 50% of burgeoning demand depending on who controls what and for how long.
The mining industry is presently valued by Research and Markets at USD 2.145 billion, but this may well be an underestimate due to the myriad of off-shore companies and secretive military stake-holdings. Its predators are powerful and often use the security and protection services of organizations such as the Wagner Group which is active internationally but especially ruthless in Africa and the Middle East where it also owns mines.
The U.S. has just targeted, by the imposition of sanctions, various companies suspected of illicit trading in gold and rare metals to provide revenue for the funding of such mafia-like activities.
Therefore, the final terms of the contracted mining concessions in Portugal should include the choice of pre-emption by the government to prevent any transfer to a third party which may be considered as hostile/unacceptable by the EU.
By Roberto Cavaleiro
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Roberto Cavaleiro first came to Portugal in 1982, acting as advisor to international investors. Current interests include animal welfare and writing opinion articles, especially with reference to environmental issues.