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CANADIAN MINING PERSPECTIVE: Two more reasons for investors to love Canada’s miners

Two rather wrong-headed moves in Venezuela and Australia have left Canadian mines looking like more profitable...


Two rather wrong-headed moves in Venezuela and Australia have left Canadian mines looking like more profitable choice for global investors.

Last week, word circulated that Venezuelan president Hugo Chavez is studying plans to nationalize that country’s gold mines. He says he must not allow foreign “capitalist mafia” to continue damaging the environment and violating workers’ rights. That’s high-sounding rhetoric, but Chavez has his mind made up, I’m sure. He has already nationalized the steel, oil, cement, power and telecom sectors in that country.

The Australian mining industry was stunned and irate last week when at the news that their government is overhauling the resource tax regime in a move that will cost them dearly. “Disappointing” and “regrettable” are two of the milder responses to the announcement. The new plan will result in a 40% tax on profits on top of the corporate tax rate which would be reduced to 28% from 30%. It will be applied to operating mines as well as to new projects. The exploration sector gets a small break in the form of a rebate on exploration expenses.

The upshot of both these moves is that they severely discourage the long-range investments necessary to develop major new producers. Worse yet, there is fear that other countries in Latin America and Africa will adopt windfall profits tax on the mining industry.

Canadian Finance Minister Jim Flaherty reacted to the Australian announcement by saying, “If it is what it appears to be, a significant tax increase, that’s another competitive advantage for Canada. We’re reducing our corporate taxes.”

Before we pat ourselves too much on the back, we must be reminded of the not one – but two – private bills now before Parliament that could cast our proud industry in a less than favourable light.

We are familiar with Bill C-300 that would make the federal government the overseer of all things environmental and human rights related where Canadian miners are active in foreign lands.

Now, from CAMESE, we learn on C-429 that has already passed second reading and is in committee. It would require that the Minister of Public Works, before soliciting bids for the construction, maintenance or repair of public works, federal immovables and federal real property, give preference to the use of wood. Why anyone would legislate the preferential use of one building material or industry over another is lunacy, in my opinion.

Both C-300 and C-429 are private members bills, and private bills seldom become law. That’s no reason to be complacent. If the mining industry does not make itself heard now, we will find ourselves hobbled by two more needless and potentially expensive regulations.


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2 Comments » for CANADIAN MINING PERSPECTIVE: Two more reasons for investors to love Canada’s miners
  1. carl huston says:

    CONCERNED TAXPAYER AND PROSPECTOR
    The land of CANADA was completely covered with thousands of feet of ice some 10,000 years ago which many people do not know and was completly devoid of human population of any kind. Climate changed and the ice melted which allowed migration of peoples from Europe and Asia to migrate to CANADA through the Bering strait of Alaska as the waters of the ocean had receded to form a land bridge between the continents of Asia and North America (CANADA)

    Peoples of many different origins migrated by this method to CANADA and spread across the land, each forming into separate communities, tribes and settlements and began living off the fruits of the land and were subsequently amalgamated into what today is known as CANADA.

    Europeans were the first to arrive and they brought technical advancemnts to the then settlers of PRE-CANADA and for convenience and preservation developed treatys and agreements so as to avoid wars and annillation with the then settlers and allow these settlers to control their own destiny by means of these treatys and help from CANADA.

    As the populations grew a country called CANADA gained its independance and included agreements with the other former settlers and the assumption that certain obligations on the part of CANADA were agreed to.

    It is the “OBLIGATIONS” that were agreed to at that time which are in contention. From conditions as of today it would appear that the obligations were that CANADA was to pay all costs and sustain the lives and the welfare of the setllers to such treaties and agreements and that these parties contribute nothing to the welafre of CANADA by means of taxes or other method.

    What has therefore been created is essentially a three nation country made up of CANADA composed of all nationalities of the world, so called first nations made up of early settlers to the land and to a government agency called “the block” made up of French separatist of Quebec paid for by CANADA.

    As far as is known there is no economic development on any so called reserve lands of first nations settlers in Ontario. The diamond mine established on adjoining crown land has been a direct benifit to a reserve and also a direct benifit to Ontario. The so called first nations people enjoy the benifits of and the generosity of the taxpayers of CANADA and contribute nothing but there presence to the welfare of the other citizens of CANADA.

    The only conclusion to this fact is that a privilaged class of peoples has been created with rights not equal to all.

    Ontario through its government wisdon has allocated some 45 million dollars to so called first nations education and a further cost of some 30 million dollars to the 2010 recent up-grade of the MINES ACT. This new act calls for mining exploration peoples are obligated to negotiate with first nations peoples and are excluded from exploration on reserves and that first nations reserve boundaries are extended with limits to such boundaries are arbitrarily set by first nations.

    There is no constructive work or industry on reserves and this should be a prime priority to establish some incentive to encourage participation and self reliance. If a mine was found on reserve lands would the results be shared with the province? It appears that a mine found on so called crown land would be required to be shared by first nations. Why would such a situation even be considerd and by what legal right would this be done.

    There is no law stating that ore found in the province must be refined in the province and as a reult of today ores can be removed and processed elswhere with much loss of revenue to the province. Also the mining of ore is not restricted as to grade recoverable and is up to the mines judgement with the resultant ore being mined at a maximum profit with certainly lower grade left behind and not later recoverable. A mine has an infinite life of ore and should be mined to return maximum recovery …

  2. Marilyn Scales, CMJ Net News Editor says:

    The following opinions are those of the letter writer and in no way reflect the opinion of CMJ, its staff or owners.

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