Digging deep to diversify

It will be less of a shock to know that one of the primary reasons mining companies are moving here is because of our low tax regime. Because they are not involved in financial services, mining companies will not pay corporate tax under zero-ten and the lack of capital gains tax is a major lure for those being paid in shares and options.

Jersey has long been an attractive home for companies with global influence, but many of them are simply registered here. Glencore Xtrata, the world’s largest commodities firm, is officially based in Hilgrove Street, but you won’t see any staff of the Swiss giant there.

This latest area of growth is different. The new wave of mining companies, such as Randgold Resources and Heritage Oil, are opening offices in St Helier staffed with senior executives who pay taxes, employ people, pay rents, buy houses and pick up their children from school.

Critics of Jersey’s ‘tax haven’ status might argue that these firms are simply here to avoid paying what they owe, but the counter argument is that it means taxes are paid where they should be paid – in the countries where mining is taking place, primarily in Africa and Asia.

Another concern could be the lack of regulation and financial probity in these poorer areas of the world. Jersey’s reputation would be damaged if a company based here was involved in an environmental disaster or corruption scandal. Again, this can be countered with assurances that the mining firms follow strict standards set down by both their industry and investors.

The States clearly seem satisfied that Jersey’s new family of mining firms is legitimate and members of the Economic Development department are actively seeking new business by attending major mining conferences.

International mining is a significant addition to the spread of business activities in Jersey and the emergence and growth of this new underground scene are welcome signs that at least some much-needed economic diversification is confidently under way.