Black clouds over Plan Nord – by Alain Castonguay (CIM Magazine – November 2012)

http://www.cim.org/en.aspx

PQ calls for revision of mining royalty regime

When Quebec’s Legislative Assembly was dissolved on August 1, the Charest government was unable to pass two significant legislative acts regarding resources, namely Bill-14 that would create a foundation for an innovative mining development model, and Bill 27, a bill to establish the corporation La Société du Plan Nord. Even the budget bill, which notably sought to modify the royalty regime for land-based oil extraction, failed to pass.

This year’s election saw Martine Ouellet, current minister of natural resources, re-elected on the Parti Québecois (PQ) ticket in Vachon. Ouellet actively worked to block Bills 14 and 27. PQ candidates Lorraine Richard (René-Lévesque) and Luc Ferland (Ungava) were also re-elected. These two members of the national assembly used the time allotted to them to delay the detailed study of bills in a parliamentary committee. Richard and Ferland, who have been very critical of Plan Nord, beat out the incumbent Quebec Liberal Party (PLQ) candidates in Fermont and Lebel-sur-Quévillon.

On August 23, in Montreal, the Fédération des chambres de commerce du Québec used the election campaign as a chance to hold a debate on natural resources. Participants included Martine Ouellet, Raymond Bachand (PLQ, re-elected in Outremont) and Gérard Deltell (Coalition Avenir Québec, re-elected in Chauveau). On this occasion, Ouellet emphasized her party’s platform, which she had been hawking on the campaign trail:

• The PQ wants to establish royalties of five per cent on the gross value of ore output, while increasing mining companies’ taxes on “supra-competitive profits.” Ouellet hammered home the oft-repeated argument that “only 10 out of 19 mining companies paid royalties in 2011.” She cited the example of the Lac Bloom iron mine operated by Cliffs Natural Resources in Côte-Nord, “which produced three million tonnes of iron ore without paying a single penny to the government.” The PQ royalties system would be based on a “hybrid model” like the one used in Australia. She added that 25 countries have already begun revising their royalty regimes on the heels of increases in metal prices in 2009.

• Before granting any new mining leases, the PQ will ask operators for firm commitments on primary and secondary processing of extracted ore or metals in the province. Ouellet harshly criticized Stornoway’s decision not to process diamonds from the Renard mine in Quebec.

• At the same time, Premier Pauline Marois has been floating the idea of tax credits for miners that transform their products in the province.

• Operators will have to pick up the tab for all infrastructure projects (roads, harbour facilities, railways, energy) related to Plan Nord mines. New mines will not automatically benefit from Rate L, the preferential rate that Hydro-Québec offers major customers in the industrial sector.

• The Charest government recently granted municipalities and regional county municipalities the right to exclude urban zones and holiday destination lands from exploration for 20 years to curb exploration or development. The PQ will not make changes in this regard.

For the rest of this article, please go to the CIM Magazine website: http://www.cim.org/en/Publications-and-Technical-Resources/Publications/CIM-Magazine/November-2012/news/Black-clouds-over-Plan-Nord.aspx

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