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Canadian miners rail against royalty plan

WARNING of “detrimental economic effects” and tarnished investment appeal, the Mining Association of Canada is lashing out at a plan by the Quebec government to significantly increase mining royalties and taxes.

Donna Schmidt
Canadian miners rail against royalty plan

MAC said that under the regime two levies would be imposed, a 5% tax on the gross value of annual production and a 30% royalty for what it called “superprofits”

Quebec, already a high tax jurisdiction, increased profit taxes in 2010 from 12% to 16%.

“The new regime would tarnish Quebec's reputation as a mining-friendly

jurisdiction for investment," MAC president and chief executive officer Pierre Gratton said.

“Moreover, from a global mining company standpoint looking to build its next project, I am concerned that there will be little distinction between Quebec and the rest of Canada, thus harming the country's reputation as a whole.”

The group noted the competitiveness of mining investment at this time, an issue that extends across the globe. Some of Canada’s direct mining competitors include Europe, Latin America and Africa.

“With so many other countries at play, a mining company will simply overlook Canada for another mining jurisdiction considered more competitive from an investment standpoint,” Gratton said.

“The ramifications would be vast, translating into a significant loss of royalties to the government, well-paying jobs for Canadians and the significant spin-off business opportunities that a mine gives to an entire community.”

The group believes the government’s approach demonstrates its limited knowledge of the sector and the global reality of today’s industry.

The Association Minière du Quebec has also been vocal on the negative consequences that would be realized if the royalty plan is put into effect.

According to the AMQ, taxation from mining already provides significant economic benefits to Quebec.

“The hikes are positioned as just penalizing the mining industry, whereas in reality they put into peril the livelihoods of thousands of families in the province who rely on the industry for employment – both direct and indirect jobs,” AMQ president Josee Methot said.

“The fact is, companies will simply find somewhere else to mine.”

MAC represents the Canadian mining industry, including coal, base and precious metals, uranium, diamonds, mined oil sands and industrial minerals.

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