Mining industry payments to Canadian governments reached $9 billion in 2011: Report

Amount nears peak period of 2007-2008 backed by higher prices and rise in production

OTTAWA, Sept. 10, 2012 /CNW/ - The Mining Association of Canada (MAC) today released its annual report on mining industry payments to Canadian provincial and federal governments. The report, prepared by ENTRANS Policy Research Group, found payments reached an estimated $9 billion last year in aggregate mining taxes and royalties, corporate income taxes and personal income taxes.

"The increase in payments made to federal and provincial governments last year is directly related to the mining industry's economic strength during this period," said Pierre Gratton, MAC's President and CEO. "Despite fiscal policy changes, notably the reduction in the federal corporate tax rate in 2011, payment levels were buoyed by generally higher metal prices and increased production."

In fact, according to Natural Resources Canada, the mineral sector experienced a 21% increase in the value of Canadian mineral production in 2011 to a record $50 billion stemming from a combination of higher prices and expanding output.

Key findings:

• Total payments reached an estimated $9 billion in 2011.
• Royalty/mining tax payments increased by about $700 million over last year, with most of the increase coming from Alberta, Saskatchewan, Newfoundland and Labrador, and Ontario.
• The mineral sector has contributed $69 billion to government treasuries over the past 10 years -$30 billion to federal and $39 billion to provincial coffers.

Of particular note is the study's findings that show a steady increase in overall mining tax and royalty payments since the 2009/10 figures seen during the international recession where payments to governments declined almost 60% compared to 2008/09. In 2010/11, royalties and mining taxes began to recover, increasing by 45% from $2.2 billion to $3.2 billion. They increased by a further 20% in 2011/12 to $3.8 billion, which is well above the 10-year average.

Regionally, Alberta and Saskatchewan accounted for the largest portion of royalties and mining taxes at 64% last year stemming from the provinces' respective strength in bitumen and coal, and potash and uranium.  Newfoundland and Labrador saw royalty and mining tax revenues rise by almost 70% on the strength of higher iron ore and nickel prices, and increased volumes from the Voisey's Bay operation. Ontario's annual revenues more than doubled—from $72 million to $180 million—likely attributed to higher gold and copper prices.

"The strength of the study is that it measures one of the significant economic contributions of the Canadian mining industry both nationally and regionally," said Gratton. "Canadians from coast to coast benefit from a strong, competitive mining industry that supports critical government services such as health care, education and skills training, as well as creates hundreds of thousands of well-paying jobs."

To view the report, please visit www.mining.ca.

About MAC
The Mining Association of Canada is the national organization for the Canadian mining industry.  Its members account for most of Canada's production of base and precious metals, uranium, diamonds, metallurgical coal, mined oil sands and industrial minerals and are actively engaged in mineral exploration, mining, smelting, refining and semi-fabrication. Please visit www.mining.ca.

SOURCE: Mining Association of Canada (MAC)

Jessica Draker
[phone] x225 or [email protected]