Japan: METI to expand depletion deduction system to support resource development

Japan Metal Daily: The Ministry of Economy, Trade, and Industry (METI) is proposing to expand the depletion deduction system and extend its application deadline for three years. This is in response to the evolving global landscape, including increased geopolitical risks and the push for carbon neutrality. To support the development of critical resources like copper and rare metals, essential for digital and green transformations, the ministry will review application requirements and extend the deadline from the end of FY2024 to the end of FY2027.

To encourage overseas resource development, the ministry plans to relax the current requirements for qualifying as "equivalent to domestic miners." This will allow companies to include "important employees" at the executive officer and general manager levels, making it easier to meet the criteria.

This expansion aims to reduce the risk associated with overseas resource investments and encourage independent development by Japanese companies. Additionally, the government will extend the deadline for applying for the depletion deduction to provide more flexibility for companies.

The depletion deduction system is a financial incentive that allows mining companies to set aside a portion of their sales or income for future exploration. This reserve fund can be used to cover exploration expenses within five years, considering the diminishing amount of ore deposits due to mining. By reducing the financial burden on resource business, which need to invest in finding new deposits while recovering their initial investment, this system encourages continuous exploration activities and contributes to stable mine management.

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