made-in-Ontario diamond royalty systemMcGuinty government announces made-in-Ontario diamond royalty system
Deductions boost mining competitiveness, recognize benefits to Aboriginal and Northern communities
TORONTO - (July 5) - The Ontario government today finalized details of its diamond royalty system with the introduction of unique made-in-Ontario deductions that support the expansion of Ontario's developing diamond mining industry while benefiting Ontarians.
"This new system acknowledges the unique challenges associated with mining in Northern Ontario," said Rick Bartolucci, minister of Northern development and mines.
"The additional deductions provided in the diamond royalty will encourage the long-term sustainability and global competitiveness of diamond production in Ontario, and support investments in diamond mining communities - in particular northern and aboriginal communities," said Bartolucci.
With the new deductions, the government is completing the work on the royalty system it began in the 2007 budget.
The Ontario diamond royalty will be calculated on net profit less allowable deductions, paralleling the Canada Mining Regulations (CMR) in other Canadian diamond-mining jurisdictions.
In addition, Ontario will allow the following deductions to further encourage and support diamond mining and community and economic development in Ontario:
- A 100 per cent deduction for qualifying expenditures made under agreements with aboriginal communities or municipalities.
- A 100 per cent deduction for qualifying donations in Ontario of a charitable, educational or benevolent nature.
- An additional 15 percent allowance for the cost of establishing and operating a new diamond mine in Ontario.
This allowance will be in addition to the allowable deductions for such expenses already available under the royalty, and limited to a maximum 20 percent of annual net profit.
Qualifying expenses for this allowance will include salaries and wages, training costs, infrastructure investments, exploration, research and development, charitable donations and payments to municipalities or aboriginal communities.
A key feature of Ontario’s diamond royalty is the progressive rate structure.
“To ensure fairness, our diamond royalty will work on a sliding scale, which could be lower than four percent,” said Finance Minister Greg Sorbara.
“With our Ontario-specific deductions, not only are we encouraging investments in local communities, we are supporting the expansion and development of Ontario’s diamond mining industry while making it even more competitive,” Sorbara said.
Ontario will also follow the CMR practice of valuing stones and setting royalties before they leave the province.
This is another example of how the McGuinty government is working with Ontarians to strengthen the province’s global competitiveness through Ontario’s mineral development strategy.
Other examples include:
- $15 million over three years for geological mapping in the Far North.
- One-stop Internet access to services for the province’s mineral exploration and development industry.
- $60 million over six years for clean-up of abandoned mines to protect the public and environment.
- $10 million to launch the Centre of Excellence for Mining, an initiative that will conduct research in areas such as mining exploration, deep mining research, tele-robotics, automation and reclamation.
The mineral development strategy is one of several Northern Prosperity Plan initiatives aimed at bringing renewed economic strength to northern, aboriginal and rural communities.
The prosperity plan’s four pillars are: strengthening the North and its communities; listening to and serving Northerners better; competing globally; and providing opportunities for all.