Governments got $8.4B from miners in 2010 – by Peter Koven (National Post – August 4, 2011)

The National Post is Canada’s second largest national paper. Peter Koven is their mining reporter.

After a stunning drop-off in 2009, Canadian governments are once again swimming in mining-related revenues. And those revenues are expected to grow even more in the months and years ahead.

A study by the Mining Association of Canada (MAC), to be released Thursday, shows federal and provincial governments pocketed a whopping $8.4-billion from the mining sector in 2010, or $5.5-billion if oil sands is excluded. It is a dramatic 65% increase from 2009, though still below the record years of 2007 and 2008, when the total haul was more than $10-billion each year.

Those records could fall very soon, according to MAC president Pierre Gratton. His organization estimates that “well over $110-billion” could be invested in new and existing projects across the country over the next five years to expand production. If that happens, thousands of jobs will be created and the government revenue haul from mining will get much bigger.

“No matter how you slice it, it’s a pretty significant increase that we’re likely to see,” Mr. Gratton said in an interview.
Of course, the outlook for such a cyclical business can change on a dime, something the mining industry learned the hard way after the commodity meltdown in 2008 and 2009. In the fiscal year following the crash, mining royalty, tax and related revenue (excluding oil sands) plummeted an astonishing 73%, according to the study. A key factor behind the drop was Saskatchewan, where potash producers slashed output to try to maintain high prices (which didn’t work). Saskatchewan’s royalty and tax revenues dropped to just $86-million in 2009 from $1.9-billion in 2008.

The mining industry recovered almost as fast as it collapsed, and the MAC hopes this study demonstrates to governments how Canada’s resource sector helped the country escape the worst of the economic crisis, while positioning it for outsized growth in the years to come.

Mr. Gratton also acknowledged he hopes the study will help governments understand the value of the mining business and encourage them to enact and maintain policies that keep it healthy.

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