The strong demand for minerals and metals and its concomitant effect on prices have prompted debates in resource-rich countries concerning the share of economic rent the state should retain and the structure and appropriate level of mining royalties required to achieve its financial and economic objectives.
Canada is no exception. In Quebec, a new mining royalty regime has been adopted in 2010 with the aim of increasing government revenues. Although there is general support for the new regime, its implementation has not quelled the public debate.
Quebec is a promising location for the development of new mines. There coexists in its large territory regions with known potential and several others with undetermined potential, such as the Plan Nord territory, where the likelihood of discovering various mineral deposits that would be competitive on a global scale is generally considered a distinct possibility. But there is much more to it. The availability of professional and technical personnel, a trained workforce and the quality of its geological database constitute major advantages. Moreover, Quebec offers a conducive and stable environment. According to the Fraser Institute, Quebec ranked as the 5th most attractive mining jurisdiction worldwide in its 2011/2012 Survey of Mining Companies.
The conclusion of the analysis is that the current mining royalty regime based exclusively on profits is optimal for the Quebec economy in that it allows government to capture a large part of the economic rent when prices are high without burdening mining operations with added fixed costs throughout the mining cycles.
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