| MONTREAL, March 15
MONTREAL, March 15 The Quebec government on
Friday hinted at flexibility on its plan to raise royalties
mining companies pay on minerals extracted in the province, and
said Quebec would remain competitive even if the mining rules
"We are open to changes," Quebec Natural Resources Minister
Martine Ouellet said at a Montreal forum on a proposal by the
governing party to increase royalty rates, which companies say
will deter investment. "For instance, the royalty could vary as
a function of the number of years of exploitation of a mine."
The separatist Parti Quebecois government, elected in 2012,
has said it wants to impose royalties of 5 percent on the gross
value of all mining output, plus a 30 percent surtax on mining
profits over a still-unspecified rate of return.
The changes will boost government revenues by C$388 million
($380 million) over five years, it says.
But the Parti Quebecois has only a minority of seats in the
provincial legislature, and it will likely have to make changes
to the proposals in the face of opposition, from other parties
in the legislature as well as from business.
"We want to put into place a royalty regime that favors a
better sharing of mineral wealth," Ouellet said. "The state has
a responsibility to ensure that Quebeckers get their fair
She added: "We are convinced it's possible to improve
royalties while maintaining a competitive investment
French-speaking Quebec is home to two dozen active mines,
producing everything from iron ore to precious and base metals.
Big players include Rio Tinto Plc, ArcelorMittal SA
, Goldcorp Inc and other major miners.
In 2012, miners extracted at least $8.2 billion in minerals
in Quebec, according to a government consultation paper released
ahead of the forum.
But the government may have proposed the royalty plan at an
inopportune time. Metal prices climbed in recent years, but
escalating costs have cut into profitability. That has the
bosses of top mining companies preaching austerity, vowing to
cut costs and aiming to minimize risk.
"This is the second time the royalty regime has changed,"
said Alain Cauchon, VP Human Resources ArcelorMittal, referring
to an increase in payments from 12 percent to 16 percent
introduced by the previous Liberal government.
"Investors are starting to ask questions about Quebec. Jobs
are being put at risk. We shouldn't accept it... Our investors
are looking ahead 15 to 20 years minimum. And we're seeing the
rules of the game change every two years."
Quebec mining duties of 16 percent of an operator's profit
are already above the 10 percent rate on taxable profit over
C$500,000 in neighboring Ontario.
Other companies were more conciliatory.
"We're pretty confident we can find a middle ground some
place in all of this. " said Dale Coffin, spokesman for
Agnico-Eagle Mines Ltd, a gold miner.
"I think the government realizes that yes, we agree to pay
royalties, but there has to be some balance between what's fair
in extracting the royalties and what's fair for investors who
are taking all the risk," Coffin said.
"Is there room to move? Perhaps there is for the industry
but there's not room for the 5 percent that they want. The
'superprofit' is a vision that may not ever happen," he said.
Australia drew criticism from miners when it proposed a
"super tax" on the profits of iron and coal miners. The tax,
introduced last year, raised A$126 million ($131.13 million) in
its first six months, far below what the government had hoped.
Ouellet said the government was ready to look at how best to
apply its proposals.
"We are aware of the reality and differences from one mine
to the other. It depends on the mineral, the investments
necessary, the costs of production, the access to infrastructure
and other factors," she said, noting that half of Quebec mining
companies paid no royalties in 2012.
Representatives from industry and government will meet on
Saturday to work out the details of the new regime, which will
come into effect in the spring.