In recent years Jersey has emerged as an attractive centre for the headquarters of a growing number of exploration and mining companies. Thanks to a number of relocations and business launches, at the end of 2014 there were 19 mining, natural resources and associated businesses located in Jersey.
This represents considerable growth in this sector for Jersey. Since the first mining company was established here in the mid-1990s, a number of mining firms and companies involved in the exploration and development of a range of minerals and natural resource sites have followed suit. Jersey has also witnessed recent diversification. The oil and gas sectors have expanded, as has the range of firms offering ancillary services to mining companies, including advisors, brokers and consultants. The result is a landscape that features a diverse range of companies in the mining sector.
There is good reason for this success. For mining executives, the easy access Jersey can offer to business support and high quality financial expertise, within a stable jurisdiction, is hugely valuable for protecting global assets and ensuring that international business strategies can be rolled out effectively.
African mining firms in Jersey
The growth Jersey has seen in the mining and natural resources sector is particularly pertinent as far as its relationship with Africa is concerned. A rising number of mining firms from Africa, or with strong African connections, are selecting Jersey for their European headquarters.
Over the past ten years, Africa’s economy has grown by an average of 5.2% a year and, whilst there are numerous reasons for this growth, the expansion of Africa’s lucrative natural resources industries has undoubtedly played a key role. As a result, Jersey has focused increasingly on building positive relationships with Africa’s mining community. This year, for instance, saw the biggest ever delegation from Jersey attend the major Mining Indaba conference in South Africa, including a cross-section of professionals from trust companies and law firms.
The recent Capital Economics report estimated that extractive industry firms with some presence in Jersey are responsible for around £50 billion of investment into Africa in the form of the construction of mines, equipment and related infrastructure. The growth that Jersey is seeing in the sector means that this figure is likely to rise even further.
Mining firms in Africa are attracted to Jersey for a variety of reasons, including its corporate and personal tax regime, regulatory and legislative frameworks, no-nonsense approach to business, financial services expertise, safe business environment and stable pro-business government.
Having built a globally recognised finance industry of the highest repute, Jersey is well placed to deliver the kind of services that mining firms demand, whilst the high regulatory standards demonstrated here, as acknowledged by bodies including the World Bank, the OECD and the IMF, also offer mining executives and investors peace of mind.
The business model for mining or drilling is typified by large up-front capital expenditure and sizeable operational risks. Jersey’s tax neutrality means investments can be pooled from all over the world to finance mining projects in Africa efficiently and cost-effectively, whilst its robust legal framework and sound judiciary offer protection to investors.
In addition, through its strong links with London, Jersey offers the access to capital markets needed by companies in the mining industry. A total of 110 Jersey companies are now listed on major exchanges worldwide, with a combined market capitalisation of £269bn, reflecting Jersey’s position as a centre for listings work. From a time-zone point of view, Jersey is conveniently positioned for the major investment markets and operating regions in Africa too.
Jersey can also boast one of the most attractive tax regimes in Europe. Under its corporate tax regime, mining companies pay no corporate tax in the jurisdiction while, with there being no capital gains tax, the kind of shares and options payments model that mining companies often employ works well. The personal tax rate of 20% is extremely appealing too.
Of course, because the relocation of a firm’s headquarters inevitably involves executives and their families moving too, Jersey’s attractive lifestyle is also a major draw. As well as Jersey offering a low rate of personal income tax, mining executives also appreciate its excellent work-life balance, diverse range of properties, and first class health and education systems.
With a commitment to building positive lasting relationships with Africa, and further mining and natural resources companies looking to Jersey to support their strategic growth plans in the coming months, Jersey’s position as a European centre of substance for African mining companies looks strong.
“Jersey’s tax neutrality means investments can be pooled from all over the world to finance mining projects in Africa efficiently and cost-effectively, whilst its robust legal framework and sound judiciary offer protection to investors”
Digby Wells Environmental provides environmental and social services focusing on the mining, natural resources and energy sectors. Its client base includes the largest multi-national, mid-tier and junior companies. Digby Wells has offices in South Africa (Johannesburg, Pretoria and Lephalale), Mali (Bamako), UK (London) and Jersey. The company also has a presence in Ghana, the Democratic Republic of Congo and Senegal.
Graham Trusler, CEO of Digby Wells Environmental in South Africa, explained that the company’s expansion plans have taken a major step forward with the establishment of its new office in Jersey:
“Together with the London office, our new office in Jersey will bring us closer to our current, and prospective clients in Europe and Africa, including those in the financial and commercial centres. The new office has been established in response to demand as we undertake more projects across Africa, Europe and elsewhere.”