Marois Sees New Quebec Mining Royalty Regime After March
Quebec Premier Pauline Marois said her government will meet mining companies in the next three months to gather input as it seeks to raise royalty taxes on mining to help Canada’s most indebted province generate revenue.
“We will have a discussion probably in February or March” with mining companies, Marois said yesterday in an interview at Bloomberg’s headquarters in New York. “We want to raise more revenues from royalties, but we don’t want to kill the industry.”
Marois led the Parti Quebecois to a win in the Sept. 4 election with a minority mandate after telling voters the government would boost mining levies because the province doesn’t earn enough from resource extraction. Finance Minister Nicolas Marceau backtracked from the campaign pledge last month, agreeing to “consult” with companies before changing the system in his Nov. 20 budget.
“We will change the royalties policy,” Marois said. “What is unacceptable is that we have nine mining companies out of 20 that are not paying anything in royalties during the last years,” she said, without naming the companies.
According to its election platform, the Parti Quebecois planned a 5 percent minimal royalty on the gross value of all mining output, in addition to a 30 percent tax on “super profits” from the extraction of non-renewable resources -- a royalty regime similar to that of Australia.
Starting in 2015-16, Quebec plans to put all mining royalties -- an estimated C$325 million a year ($330 million) -- toward reducing debt, which is the highest as a share of output in Canada. Debt in the current fiscal year equals about 62 percent of Quebec’s gross domestic product, according to a report released last month by Toronto-based credit-rating company DBRS Ltd.
Marois’s predecessor, Jean Charest, unveiled the so-called Plan Nord in May 2011, promising C$80 billion of government and company investments by 2036 to tap mining and energy resources in an area twice the size of France and 10 times the size of New York state.
Marois, who repeatedly criticized the Plan Nord during the election campaign for failing to involve aboriginal populations, yesterday pledged to continue to seek new mining investments.
“We are committed to the Plan Nord, but we will do the thing differently,” she said. “We will respect the First Nations, and we will protect the environment because it’s important for us.”
Marois’ Parti Quebecois won 54 of 125 seats in the Quebec legislature in the elections, meaning her government needs support from opposition parties to pass laws.
Some miners have been scaling back investments in the province. Cliffs Natural Resources Inc. (CLF) said Nov. 19 it would delay part of its Bloom Lake mine expansion, citing volatility in iron ore prices and declining use of the mineral by North American steelmakers.
Agnico-Eagle Mines Ltd. (AEM), Canada’s fifth-largest gold producer by sales, operates two gold mines in Quebec and suspended output at a third, Goldex, last year because of ground instability and flooding. Xstrata Plc (XTA) owns the Raglan nickel mine in northern Quebec.
“From our perspective, we understand the government of Quebec’s need to look at all areas where they can generate additional revenues to manage their public policy programs,” Dale Coffin, a spokesman for Agnico-Eagle, said yesterday in an e-mailed message. “We certainly hope that the government also takes the necessary time to consult with industry to fully understand the impacts any new royalties would have.”
Marois said yesterday she understands the miners’ concern and would wait until the consultations are complete before committing to any specific increase. She also said her government may introduce measures aimed at enticing companies to conduct more resource processing in the province.
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