WINNIPEG, Manitoba, March 22 (Reuters) – The Western Canadian province of Saskatchewan is cutting its tax on uranium mining in hopes of spurring construction of more mines and boosting its revenues, a top government official said on Friday.
The provincial government is proposing the first changes in 12 years to its system of charging royalties to uranium miners, calling the old formula a barrier to investment. Low uranium prices in the two years since the Fukushima meltdown in Japan have led to delays in some mine projects, but miners see a brighter outlook as new reactors are built.
The adjustments would save the two uranium miners in the province, Cameco Corp and Areva SA, only a combined C$15 million ($14.7 million) in Saskatchewan’s fiscal year 2013-14.
But those savings are set to grow as the formula will reflect the miners’ actual costs in future years, and remove some of their risk from unforeseen events, said Kent Campbell, deputy minister of Saskatchewan’s Ministry of the Economy. “The biggest thing is it helps to de-risk projects,” Campbell said in an interview.
“It was very clear that (miners) felt the economics of future greenfield projects would not work if the system was not changed.”
Mining for uranium in Saskatchewan’s northern Athabasca basin comes with high costs, including scarce labor and potential flooding, Campbell said.
Rio Tinto PLC and a host of junior mining companies own deposits in the basin, along with Cameco and Areva.
Saskatchewan’s proposed changes are contained in its 2013/14 budget, which was unveiled this week. The new royalty regulations may take two to three months to become official, but will be retroactive to Jan. 1, 2013, Campbell said.
For the rest of this article, please go to the Reuters U.S. website: http://www.reuters.com/article/2013/03/22/uranium-saskatchewan-idUSL1N0CE4U720130322?feedType=RSS&feedName=financialsSector