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MONTREAL – Miners often say there only two kinds of mines — the ones that you can finance and the ones you dream about.
Natural Resources Minister Martine Ouellet had a difficult task in trying to convince about 500 people at the Quebec government’s forum on mining royalties Friday that the planned changes to mining taxes won’t hit the industry’s competitive power.
Ouellet said the Parti Québécois government wants to increase royalties “particularly where returns are truly exceptional” to ensure there is “always compensation to be paid to extract a resource that belongs to all Quebecers.”
The forum, held at the Hautes Études Commerciales, was the last step in the Marois government’s resource industry consultation process before tabling a new mining law in the National Assembly, possibly next week. Legislation to set a 5 per cent tax on minerals extracted from the ground plus a 30-per-cent royalty on profits will follow. These moves come after the Liberal government already raised the tax on profits to 16 per cent from 12 per cent in 2010.
Industry speaker after speaker told the forum the immediate effect of the tax increases would be to hamper project financing and hit new exploration even further, reduce the lifespan of existing mines and jobs, and spell lower income for the province.
Goldcorp has warned there will not be another Éléonore, the big gold mine being developed in the James Bay area, if the government persists with its planned tax moves.
Sean Roosen, CEO of Osisko Mining, builder of the $1.2-billion Malartic gold mine near Val d’Or, said Quebec’s tax increases, together with rising energy, transportation and material costs, have already boosted Malartic’s cash cost of production from $900 U.S. per ounce to $1,300 and now the province plans further tax increases.
“Financial markets outside Canada ask what has happened to the province that led the Fraser Institute’s ‘best place to do mining’ list five years ago and has now dropped to 11th,” he said outside the forum. “Exploration has dropped partly because of global mineral price volatility and there are no known major prospective successors to Éléonore. The royalty regime proposed is compounded by a tax move by the Liberals whereby the untaxed profits from one mine cannot be used to develop another. This leads to huge writedowns, as in the case of Agnico-Eagle’s Goldex mine.”
For the rest of this article, please go to the Montreal Gazette website: http://www.montrealgazette.com/business/Industry+decries+mining+royalties+plan/8106531/story.html