CALGARY – The Fraser Institute reports that uncertainly about protected areas and environmental restrictions, combined with tougher regulation and tax changes, has mining investors increasingly wary of doing business in Quebec.
The institute's study, Quebec's Mining Policy Performance: Greater Uncertainty and Lost Advantage, outlined the four key barriers to investment in that province.
Uncertainty over policy change involving protected areas such as wilderness zones, parks and archeological sites is the primary deterrent for investors. It has a multiplier effect in that activity is discouraged at the exploration level, and without exploration, the industry is at a standstill.
Uncertainty over environmental regulations has created the perception that special interests, not good science, guide policy decision. Such politization is deterring investors.
Increasing taxes threaten to make mining in Quebec unprofitable. Since 2010, the province increased mining duty rates to 16% from 12% of annual profits, and now bases "profits" on an individual project basis. Losses at one operation can no longer be used to offset profits at another of an owner's operations.
Red tape – in regulatory duplication and inconsistencies – is also choking off investment in Quebec's mineral industry. Notably, the province has steadily increased levels of red tape for mineral projects over the past five years.
The defeat of changes to Quebec's Mining Act, Bill 43, at the end of October 2013 does little to reassure would-be investors. The government has announced its intention to make minor changes and retable the legislation.
The study may be downloaded at FraserInstitute.org.
Or contact the authors, Dr. Kenneth P. Green (403-216-7175 ext. 426 and ken.green@fraserinstitute.org) and Alana Wilson (604-688-0221 ext. 547 and alana.wilson@fraseriinsitute.org).
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