Québec's Finance Minister, Nicolas Marceau, unveiled
the province's strategy to correct its budget deficit in
2013-2014 by implementing spending restraints and imposing higher
taxes for the wealthy while sparing mining companies from the
anticipated increase in mining royalties.... for the time
Described as an immense source of potential opportunity for
Québecers, Mr. Marceau's intention for the mining
industry is to modify the regimes that establish the framework for
developing Québec's non-renewable resources in order to
allow Québecers to derive the maximum wealth possible, while
simultaneously ensuring that the environment and communities are
The budget tabled on November 20, 2012, by minority government
of the Parti Québecois (the "PQ") is four months
ahead of schedule, thus leaving the PQ government little time to
address all of the measures it intends to implement in order to
stimulate private investment in Québec, particularly in the
mining industry. Nonetheless, the budget does set out framework
measures that form part of Mr. Marceau's strategy for ensuring
the fruition of Quebec's mining industry and its plan for Plan
Specifically, the framework measures proposed by the PQ in their
2013-2014 budget include:
An interim stay in the anticipated royalty hikes for the mining
industry. The PQ government will continue to study royalty regimes
for natural non-renewable resources and changes will be made
"sooner rather than later," Mr. Marceau says. Details
about a consultation with the industry and the stakeholders affect
in order to reach a beneficial consensus on a new royalty regime
will be announced "in the coming weeks."
The PQ has also confirmed that it will maintain the option of
negotiating an equity stake in mining projects.
Projects that fall under the Plan Nord venture will be subject
to an infrastructure review which is currently underway for all
active infrastructure projects and spending will be kept to a
A new ten year tax holiday for large investment projects in
excess of $300 million in limited sectors, such as the
manufacturing sector and the transformation of mining
The extension of the tax credit for investments, available to
all regions, and a raise in the rates of the tax credit for
businesses in certain resource regions.
The creation of the Banque de développement
économique du Québec to help Québec
businesses obtain flexible financial and technical support in all
regions of Québec.
The 2013-2014 budget proposed by the PQ appears to have
spared the mining industry from an immediate adjustment in mining
royalties and has also set forth opportunities to benefit from
certain tax credits, however, uncertainty remains within the mining
industry as the Finance Minister has stated amongst other things
that "obligatory royalty based on the net value and a tax
based on excess profits are still viable approaches." Some
commentators are of the view that this adjustment could have
potential negative impacts on the mining industry in general. As
such, the next couple of months will be crucial for the mining
industry and close attention will need to be paid to the decisions
made by the government.
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