AMQ, AEMQ see Quebec gov’t targeting miners’ wallets

The following is a joint statement from the Mining Association of Quebec and the Association for Mineral Exploration in Quebec, translated into English by The Northern Miner, concerning the Quebec provincial budget, which was tabled on March 31.

The Mining Association of Quebec (AMQ) and the Association for Mineral Exploration in Quebec (AEMQ) are concerned about certain measures contained in the provincial budget tabled by Finance Minister Raymond Bachand.

For the AMQ , the consequences of the cumulative effect of these measures, in addition to other measures that the government has put forth, greatly affect the competitiveness of mining companies.

Most notably, the mineral rights paid by mining companies to the government will increase from $327 million to $570 million over five years. This is a marked increase of 74% to be paid by mining companies, notes AMQ chairman and CEO Dan Tolgyesi, who points out that, including the mineral rights, the mining industry will overall contribute more than $1 billion to government revenues in Quebec over the next five years.

Moreover, the approach proposed by the government for the calculation of mineral rights will now be carried out mine by mine. This means that losses incurred at one mine can no longer be applied against profits gained by another mine in the same company. In addition to being an administrative burden for a mining company, such an approach may impact the viability of certain divisions of a company.

Finally, the industry must assess the financial impact of measures contained in the budget affecting the mining sector (including increasing the tax rate from 12% to 16% of mineral rights, water charges, the mine-by-mine approach for the calculation of mineral rights, a revision to the allowable level of exploration spending, etc.) in addition to other obligations and future regulations that the government is proposing.

“Added together, all have important implications for the competitiveness of (mining) companies,” says Tolgyesi.

“Sometimes we wonder how much the government recognizes mining’s overall economic contribution as a major structural element for Quebec and its regions,” adds Jean-Pierre Thomassin, AEMQ’s director general.

With mining companies increasingly involved in communities, the tax regime should also take into account the various agreements between companies and communities, and the existing requirements imposed on the mining sector in these situations.