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Multiple Regression-Based Calculation of Iron Ore Resource Royalty Rate and Analytical Study of Its Influencing Factors: Example from Anhui Province of China

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Abstract

Mineral resource royalty is the economic manifestation of mineral resource ownership benefits. In the context of globalized mineral resource allocation, it is inevitable to research the royalty evaluation in order to improve the marketized allocation efficiency of mineral resources. Current studies mostly include theoretical discussions on connotations of royalty and discussions on royalty levy criteria from the macroeconomic perspective. Studies of royalty calculation and application from the microeconomic perspective are not very common. Based on defining the connotations of equity value, a theoretical royalty calculation formula is suggested first in this paper and then a royalty evaluation model is constructed from the perspective of mineral resource endowment conditions with the methods of multiple regression-based analysis and dummy variables. The feasibility and scientific justification of the evaluation model were verified through empirical analysis of iron mines in Anhui Province of China. Compared to previous studies, this paper better interprets the linear relationship between mineral resource endowment conditions and royalty through simulation analysis of their corresponding relation, making up for the inadequacy of macroeconomic royalty studies. Empirical results indicate the following. (1) Endowment conditions of mineral resources are the key influencing factors of royalty rate, and five of these factors (average geological grade, average mining depth, average ore body thickness, hydrogeological condition and beneficial and harmful elements) are important indices in royalty evaluation. (2) Royalty increases with the price rise in the market of mineral products, but the royalty rate will infinitely approach a constant (60.1%). Based on endowment conditions of mineral resources, the royalty evaluation model constructed in this paper can accurately and objectively evaluate mineral resource royalty in different endowment conditions and provide a convenient and practical evaluation method for establishing royalty levy criteria.

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Figure 1

Sources of data: (1) Data of mineral resources compensation fee and remunerations for exploration and mining rights come from the China Mining Industry Yearbook (2000–2016). (2) Data of resources tax come from the Taxation Yearbook of China (2000–2016). (3) Data of sales revenue comes from China Statistical Yearbook (2000–2016)

Figure 2

Sources of data: China Statistical Yearbook (1993–2015)

Figure 3

Sources of data: Anhui Statistical Yearbook (1998–2015)

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Acknowledgements

This research project was funded by a key project of China’s National Social Science Foundation: Compilation of State Land and Resources Balance Sheet & Research of Its Operating Mechanism (No. 15AGL007), a soft science research project of Ministry of Land and Resources of the People’s Republic of China: A Study of Mineral Resources Royalty System Reform (No. 201517) and Research on Value Composition and Distribution Model of Mineral Resources Rights and Interests (No. 2015-K-10), a land and resources technology project of Anhui Province, China.

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  1. School of Environmental Science and Spatial Informatics, China University of Mining and Technology, Xuzhou, 221116, China

    Jian-ming Jiang, Ying-hong Wang & Yang-guang Xie

  2. Anhui Province Public Geological Survey Management Center, Hefei, 230601, China

    Jian-ming Jiang

  3. iFlyTek Co., Ltd., Hangzhou, 310000, China

    Wei-jia Liu

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Jiang, Jm., Wang, Yh., Liu, Wj. et al. Multiple Regression-Based Calculation of Iron Ore Resource Royalty Rate and Analytical Study of Its Influencing Factors: Example from Anhui Province of China. Nat Resour Res 27, 379–404 (2018). https://doi.org/10.1007/s11053-017-9361-4

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