Blog Entry

Interest Strong in Mining Subsidies Report

Jamie Kneen

National Program Co-Lead

There is strong public interest in "Looking Beneath the Surface", the in-depth report on mining subsidies prepared by the Pembina Institute and MiningWatch Canada, and released on October 28, 2002.

Over 8000 copies of the report and the executive summaries were downloaded from the website or distributed in hard copy within two months of the report's release. Environmental groups, communities facing the impacts of mining and unions are telling us that the report is very valuable to them in their work.

Mining industry lobbyists are angry.

An op-ed written by Gordon Peeling of the Mining Association of Canada in the Ottawa Citizen (December 7, 2002), justifies subsidies to hard rock mining with data that applies to other kinds of mining (including oil and gas, diamonds, and industrial minerals), and to the mineral industry as a whole (including refining and manufacturing); thereby grossly exaggerating mining's contribution to employment and GDP. Although we made it clear that our study only looked at government expenditures particular to the mining industry and that the Technical Committee on Business Taxation headed by Jack Mintz had analysed effective federal corporate taxation in 1998 (this report found that mining enjoyed the lowest rate of all sectors at 6% — manufacturing was 16%), he accuses us of "ignoring" the general taxes paid by companies. (See Peeling's opinion piece for yourself.)

A letter, from an unknown source, is currently being circulated to prospectors and other industry employees throughout the country urging them to send it "when appropriate" to the media. The letter makes the usual inaccurate allegations about "well paid southern environmentalists" trying to take jobs away from northern communities, and repeating inaccurate and exaggerated claims about mining's contribution to regional economic development.

Jim Wilson, Ontario's Minister of Northern Development and Mines wrote on January 17, 2003: "there are questions regarding the accuracy of the data on estimated government expenditures on the metal mining sector and significant limitations to the analyses and scope of the study". In response, we wrote: "We are surprised at your statements questioning the accuracy of the data upon which the chapter is based, given that the data used in the chapter was drawn entirely from Government of Ontario sources" (Read Wilson's letter and the full text of our response.)

Meanwhile, the subsidies to mining exploration keep coming. Here are a few of them since October 29, 2002:

  • 50% - roughly $7.5 million - half from the federal government and half from Quebec — to Globex Mining Enterprises for Phase 1 of a bankable feasibility study for a magnesium-talc mine in the Timmins area.
  • $3.5 million to the Deep Mining Research consortium from the Northern Ontario Heritage Corporation for research into deep mining.
  • proposed amendments to the Newfoundland Mining and Mineral Rights Tax Act to exempt taxes on royalties up to $100,000 a year and a partial tax on royalties up to $200,000. The amendments would also allow explorationists to deduct exploration expenses from other properties against their royalty income.
  • an amendment to the Ontario Mining Act that accelerates the depreciation rate for mining and transportation equipment for tax purposes, retroactive to 1985.
  • a cut in the mining tax rate in Ontario from 14% to 12%.
  • a grant from the Ontario government of $2.3 million for four years to the new Ontario Exploration Corporation to administer a prospector fund.
  • $1 million from Manitoba, matching $1.1 million (some $800,000 already announced) from the federal government for geological research to help exploration companies find precious metals and rare earth elements in Northern Manitoba.
  • $1.4 million from Manitoba Exploration Assistance Program in exploration assistance to 41 projects.

Despite its privileged position, the mining industry is currently lobbying for a lower general federal tax rate, and John Manley has included this in the February budget, though at the same time eliminating the 25-per-cent "resource allowance".