Energy and resources | Mines paid nearly $632 million in royalties to Quebec

The mines brought in $631.7 million to the Quebec treasury in royalties in 2020, a high since 2014, when data by mine became public. In one year, the increase in rights paid exceeds 60%.

Andre Dubuc
The Press

Mining revenues are paid into the Generations Fund, which is used to repay the provincial government’s debt.

The document on the 2020 statistics has been made public in recent days on the website of the Ministry of Energy and Natural Resources (MERN).

As in the past, some fees are paid in Canadian dollars, others in US dollars. To put everything back in Canadian dollars, we took the average annual exchange rate published by the Bank of Canada.

The bulk of the royalties come from the iron and gold mines.

The price of gold has averaged US$1,774 per ounce in 2020. As for the price of iron, which has recovered from its low in 2015, it has averaged US$109 per tonne, according to the Statista.com website.

Since the price of materials is expressed in US dollars, the exchange rate must also be taken into account. In 2020, US$1 was worth C$1.3415 on average.

The highest paying mines

The highest-paying mine in Quebec is the Mont-Wright iron mine with paid duties of $175.5 million in 2020. It is followed by the Lac-Bloom iron mine, of Quebec Iron Ore, with duties paid. of 130.6 million. In third place, the Canadian Malartic gold mine with royalties paid of 87.9 million in 2020.

The 2021 results, which will be published in March 2023, look even better.

In its budget, the Quebec government forecasts mining revenues of $812 million for the fiscal year ending March 31, 2022.

Prudent, Quebec predicts that royalties will fall back below 500 million in subsequent years.

Mining rights

It should be noted that an operator is required to pay mining duties corresponding to the higher of his minimum mining tax and his mining tax on his annual profit, for the fiscal year.

For the minimum tax, Quebec requires the payment of duty of 1% with respect to the first tranche of $80 million of production value at the wellhead and of 4% on the value that exceeds $80 million. The notion of value at the pithead is equivalent to the gross value of the annual production minus the expenses incurred after the ore leaves the mine.

As for the mining tax on the annual profit, the rates applicable to the annual profit vary from 16 to 28% depending on the profit margin. If the margin is less than 35.01%, a rate of 16% applies; above 35%, it is 22%. Finally, a profit margin of 50.01% or more commands a rate of 28%.