Quebec signals flexibility on controversial mining plan

Fri Mar 15, 2013 4:26pm EDT
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By Judi Rever

MONTREAL, March 15 (Reuters) - 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 changed.

"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 share."

She added: "We are convinced it's possible to improve royalties while maintaining a competitive investment environment."

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.   Continued...