Quebec’s mining royalty regime is fine, study says – by Lynn Moore (Montreal Gazette – July 31, 2012)

Regime based on profits, not value of minerals is better for Quebec: report chief

MONTREAL – Quebec’s mining royalty regime offers the “competitive structure” best suited to the province, according to a study likely to fuel provincial election debates.
The consulting firm KPMG LLP and the law office of Fraser Milner Casgrain LLP unveiled Tuesday “an analytical framework” they say permits an objective evaluation of mining royalty regimes around the globe. “There is no ideal regime,” Renault-François Lortie, KPMG partner and director of the study, told reporters.
But, all things considered, “the structure of the current regime is the right one” for Quebec. “We think that a regime that is based on profits compared to one based on the value of the minerals is better suited to the mineral characteristics and level of production costs in Quebec,” Lortie said.
Quebec’s current royalty scheme of 16 per cent royalty on the profits of each mine is relatively high, said Lortie, noting that the study does not address whether the rate of 16 per cent is ideal for Quebec.
Mining rights and royalties have spawned widespread controversy in Quebec, particularly after the Liberal government launched its ambitious 25-year Plan Nord to harvest the natural resources of northern Quebec.
Opposition parties have loudly contested the current royalty regime and each has proposed alternatives that would see more of the miners’ revenues going to the government coffers.
Lortie — who told a reporter that he personally does not support the Liberal Party — acknowledged that the study he headed will surely be championed by the Liberal campaign team.
“I would have preferred that this study was published four months ago,” he said, adding that the analysis took several months and its authors worked overtime as it became clear an election call was coming.
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