For Rita Celli’s Ontario Today program on mining, click here: http://podcast.cbc.ca/mp3/podcasts/ontariotoday_20150511_48892.mp3
When federal law requires reporting of all payments to government, it will shine light on royalties
Canadian-owned oil, gas and mining companies must begin reporting next year all payments of more than $100,000 for government services, including port fees and royalties, beginning a new era of transparency in the mining sector.
The federal government’s new Extractive Measures Transparency Act will give Canada similar legislation to what exists in the U.K. and the U.S. “There is opacity,” says Pierre Gratton, president and CEO of the Mining Association of Canada.
Details are still being finalized, but the legislation is designed largely as a way to cut down on corruption in Third World countries. The industry likes the new disclosure rules because it puts all companies on the same playing field, Gratton says.
“Our view was that more disclosure is better. We’re going in with eyes wide open,” says Gratton, acknowledging that the revelation of new financial details will likely spark a different kind of debate in Canada, about whether mining companies pay enough taxes.
“You are exposing yourself, and you’re always nervous when you do that, because you worry people will think you’re ugly,” says Gratton. “But what we’ve found is that people will say ‘You look just like the rest of us.'”
Secrecy has a long history in the mining industry, says Ugo Lapointe of Mining Watch Canada.
“If you go back to the early days of mining. The gold rushes in California. Secrecy was really important. That idea of finding a treasure and keeping it a secret has lasted more than a century in mining in North America.”
CBC News contacted all the mining companies that were active in Ontario last year, asking if they would openly disclose mining taxes and royalties, in the spirit of the upcoming transparency legislation. Not one company agreed to offer those details.
Many groups such as Canadians for Fair Taxation and Mining Watch Canada say they welcome the promised transparency from the new legislation. But they say they remain cautious until seeing the fine print.
Gratton says a focus on royalties distorts the big picture.
“If you look at royalty payments alone in mining, that doesn’t tell the most compelling story from a financial standpoint because it’s very dependent on commodity cycles. If we’re not making money, royalty payments don’t tend to be very high. But that’s just one piece of the types of financial payments the industry makes,” he says.
For the original source of this article, click here: http://www.cbc.ca/news/business/mining-companies-to-face-more-transparency-1.3065519