While soaring mining taxation will pluck a few more feathers off the mining golden goose, the Québec government plans to shoulder some risk in exchange for higher fiscal rewards.
RENO (MINEWEB) – As Minister of Finance Raymond Bachand presented his budget Tuesday, he observed, “Like all peoples who possess such [abundant natural] resources, Québecers want to maximum their benefits,” partially by collecting more than Cdn$4 billion in mining royalties over the next decade.
A new mining regime will help accomplish these goals through gross royalties collected on mining, forestry and water-power than will reach $1.2 billion in 2011-2012.
“During the 10 years that preceded the reform of the royalties regime, mining companies paid a total of $289 million in royalties to Québec. Over the next 10 years they will pay more than $4 billion. That is 14 times more,” Banchard observed.
To encourage more ore processing in the province, the provincial government will apply an investment tax credit to assets used to smelt or refine metals, and for hydrometallurgy, the minister announced.
The minister also revealed a four-pronged equity participation strategy that would allow the government to take an equity interest in mining projects, as well as the oil and gas industry.
The first component allocates $500 million in the provincial budget 2011-2012 for equity participation in projects in the Plan Nord region, covering all of Québec’s territory north of the 49th parallel and north of the St. Lawrence River and the Gulf of St. Lawrence. The Plan Nord sustainable development proposal covers nearly 1.2 million square kilometers and accounts for 72% of Québec’s geographic area. It produces all of Québec’s nickel, cobalt, PLG, zinc, iron ore and ilmenite and accounts for a significant portion of gold production, Lithium, vanadium and rare earth metals are also present.
Twenty-seven percent of the population in the region is Inuit and First Nations members.
C$80 billion in government and company investments are planned by Plan Nord by 2036 to develop mining and energy resources.
“The envelope available for investment in mining and hydrocarbon development projects is being raised from $500 million to $1 billion over five years,” the minister said. “However, the additional $500 million may be invested in projects throughout Québec.
“The excitement created by the Plan Nord, coupled with the worldwide demand for Québec’s natural resources, is leading to a growing number of potential projects,” Bachard observed. “Mining companies are seizing every opportunity available to them. The government must have the means necessary to ensure that all Québecers benefit from the development of Québec’s resources.”
The government hopes to extend the power transmission grid to Nunivak to supply mining operations in the territory.
The second component allows the government to negotiate early equity options in all mining projects for which government support for infrastructure and the establishment of electricity rates is requested.
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