Mining News

New Study on Quebec’s Mining Performance Released

Posted by Alana Wilson on 12/6/2013 11:36:03 AM

By Alana Wilson

Quebec has seen a significant decline in the attractiveness of its policy environment for mining investment over the last five years, dropping from the top-ranked jurisdiction in 2009/2010 to 11th place in 2012/2013. A new study released by the Fraser Institute explores the reasons for this decline.

The study, Quebec’s Mining Policy Performance: Greater Uncertainty and Lost Advantage, reviewed data from the last five survey of mining companies to highlight four key barriers to investment in Quebec and the potential impacts to the province. These four barriers were responsible for deterring nearly half (47%) of total exploration investment strongly in Quebec in the 2012/2013 Survey of Mining Companies.

“When a jurisdiction loses mining investment, it loses jobs for skilled workers, wealth that goes along with those jobs, and the subsequent government revenue. If Quebec wants to prevent further decline and recapture its status as a top global mining jurisdiction, its government needs to reconsider its mining policies,” said Dr. Kenneth P. Green, project director and senior director of natural resource studies at the Fraser Institute.

The primary deterrent for investment in Quebec was policy change and uncertainty involving protected areas such as wilderness zones, parks and archeological sites. Fourteen percent of respondents to the 2012/2013 Survey of Mining Companies reported being either strongly deterred or would not invest as a result and an additional 39 percent of respondents were mildly deterred. A number of policy changes were proposed through amendments to the mining act which may have added to this uncertainty including giving municipalities the ability to exclude areas that they deem incompatible with mining from mining and exploration activities. The ‘Nord Pour Tous’ plan for the economic development of Quebec’s Northern Territory (covering nearly 1.2 million square kilometers) also commits to protect 12% of the territory from industrial activity and mining by 2020 and Premier Marois has signalled her intentions to eventually protect up to 50%.

The second most prominent increase in investment deterred was for Quebec’s taxation regime, which has seen a steady increase in the percentage of respondents reporting that they are strongly deterred from investing as a result. There have been two major changes to the taxation regime introduced in recent years which likely contributed to this increase. In 2010, the mining duties were increased and calculation of mine profits was changed to a mine-by-mine basis rather than across operations. Last May, a new minimum royalty rate and three-tiered tax on profits were introduced which could dissuade investment further.

Quebec has also seen a notable increase in uncertainty concerning environmental regulations in recent years. A number of changes were proposed in the amendments to the Mining Act that may have increased this uncertainty including compressing the payment schedule for payment of the full anticipated costs of reclamation and restoration to the first years of mining operations, increasing the power of the Minister of Natural Resources to restrict mining, and making all projects regardless of size or scope undergo Environmental Impact Assessments and public consultations. Quebec has also introduced a temporary moratorium pending further study of uranium activities, casting further uncertainty for mining companies.

Regulatory duplication and overlap was the fourth key factor highlighted in the report as a major and increasing barrier to mining investment in Quebec. Survey respondents ‘strongly deterred’ or ‘not pursuing investment’ in Quebec as a result of regulatory overlap and duplication has increased from only 1 percent in 2008/2009 to 13 percent in 2012/2013, with an additional 24 percent of respondents mildly deterred. Proposed changes to Quebec’s Mining Act would have made it more difficult for claim holders to access claims, and would have required companies to submit a feasibility study for ore processing and possibly enter into an agreement with the province to maximize economic spinoffs.

Miners must have confidence in the stability, predictability, and transparency of the policy environment and Quebec has failed to provide this certainty in recent years with three failed attempts to amend the Mining Act and two overhauls of its mining tax regime in the last five years. On December 5th, Bill 70 – An Act to amend the Mining Act was introduced to the National Assembly and is currently under consideration. This represents the fourth attempt to amend the Mining Act in five years and many of the concern of miners from previous amendments, including Bill 43 which was defeated on October 30th, appear to have been retained.

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