Those familiar with mining development in Canada are all too conversant with the tricky juggling act of resource extraction. The demand for social and environmental responsibility, government royalties, and maintaining global competitiveness can all pull in different directions. Government leaders across Canada often pride themselves in having fostered a mining sector that is one of “the most efficient, effective and competitive in the world,” backed by a “world-class environmental protection regime” (Natural Resources Canada, 2013).
But despite this optimistic picture, mining development in Canada is often a hotly contested policy arena. Look no further than the Federal government’s push for the rapid development of Ontario’s ‘Ring of Fire’, or the recently rejected coal mine in Comox, to get a flavour for the tug of war between vested interests.
Although Canada is a global leader in mining production, levels of investment are heavily dictated by outside pressures—guided by the ebb and flow of global commodity prices. Moreover, due to the plethora of mining opportunities across the world, including a growing number of emerging economies, capital is highly mobile and gravitates towards countries with high risk adjusted returns – valuing stable government regimes, low tax-rates, and good infrastructure in this comparative construct. Within Canada, the competition to attract new capital is then spread across provinces and territories, all with different tax structures, environmental rules and royalty requirements.
Given the highly competitive nature of the global mining industry, Quebec’s recently released mining plan, Le Nord Pour Tous (the North for Everyone), makes a bold push to take greater control of mining development. The “big picture” plan is a slightly altered version of former Premier Jean Charest’s Plan de Nord introduced two years ago, and the main highlights include:
Increasing royalty rates on a progressive scale, based on a mine’s profit margins
Introducing a minimum royalty payment, regardless of whether the mine is profitable
$868 million in infrastructure/social spending over five years, earmarked for roads, housing, skills training, and national parks
The creation of the Secretariat for Northern Development, responsible for planning investments in infrastructure, and social and economic development
$10 million over the next ten years for the Ministry of Sustainable Development, Environment, Wildlife and Parks to help reduce environmental assessment delays
Increasing financial guarantees for environmental reclamation from 70 to 100 percent of anticipated rehabilitation costs.
While these are relatively ambitious commitments, Le Nord Pour Tous has met with resistance from an array of mining companies, environmentalists, and First Nations.
The mining sector is upset with paying increased royalties in a province that already has perhaps the heaviest overall tax burden. Given these circumstances, there is widespread concern in the industry that the hike in royalties will deter investment. According to the Mining Association of Canada, mining exploration and production in Quebec has already slowed relative to other provinces: British Columbia, Saskatchewan and Newfoundland “have tripled, quadrupled and even sextupled the value of mineral production” over the past decade, whereas Quebec’s development has only doubled (Mining Association of Canada, 2013).
Environmental and First Nations groups have an entirely different set of complaints with the plan. Compared to Charest’s Plan Nord, the new plan sets aside a smaller share of Quebec’s land base for conservation (from 50 percent down to 12 percent), and does not include clear details on how First Nations will be involved with Northern development.
In response to the plan’s announcement, the Chief of the Assembly of First Nations of Quebec and Labrador, Ghislain Picard, complained that the Quebec government has “systematically bypassed” consultation with First Nations. Both of these concerns add more uncertainty to the government’s stance on environmental stewardship and First Nations consultation—critical components to mining development in Canada.
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