‹ Minerals

Quebec juggles royalty rates

March 13, 2013

The PQ government in Quebec wants to dialog with the mining industry about its already high royalty rates. Meanwhile, mining investment is down by $700 M this year compared to last year.

The Quebec government proposes to change its current royalty rate of 16% in 2012 on the annual profits from a mine, to 5% plus a “supertax” on excess profits, however that is defined. There would be a phase in period to the new regime.

Economically the mining industry contributes about 34,000 jobs to the Quebec economy. Yet investment is stagnant, mostly due to markets. Cliffs Natural Resources announced the closure of an iron ore pellet plant at Sept-Iles, that employs 165 people, citing high labour costs. CN last month put on hold a feasibility study for a $5 B rail link to the iron belt in Labrador/northern Quebec.

How do Quebec’s royalty rates compare to northern northern jurisdictions ?


Quebec’s royalty regime is non-competitive with other jurisdictions right now. Further, its income tax rates are higher as are its sales taxes. The move to a 5% rate would be positive. However the proof is in the pudding. A super-tax could easily render the benefits of a lower rate null and void.

An alternate strategy for Quebec would be to encourage CN to build that new rail line and try to get more iron ore investments in Quebec. Recognize Quebec’s amazing potential to produce mineral wealth. Increasing mining investments in Quebec would be a laudable and achievable goal.