Bill 70 offers stabilization not satisfaction
The Quebec legislature passed Bill 70 on Monday night.
Photograph by: Jacques Boissinot , THE CANADIAN PRESS
MONTREAL — With the passage of a new law to regulate mining activity in Quebec, industry officials say they are relieved that a cloud of uncertainty has been lifted.
But they are not entirely happy with the results of Bill 70, which was passed around midnight Monday in an extraordinary session of the Quebec National Assembly.
The good news is that after years of debate and three previous stabs at legislation, the Mining Act has at last been modernized.
But while compromises were reached on all sides in the final draft of Bill 70, the regulatory burden on mining companies in Quebec has increased, said Michel Rathier, an industry consultant with KPMG.
There are many questions about how the new law will be applied that must wait until formal regulations are drafted, he said.
“The proof is going to be in the pudding, I guess, on the application of these modifications.
“I think the industry is relieved. This debate has been going on for the last four years and it’s time everyone is able to move on to other issues and to start repairing the damage to Quebec’s reputation as an attractive jurisdiction” for mining investment.
The Fraser Institute, a Vancouver-based think tank, ranked Quebec as the most attractive jurisdiction in the world for mining activity between 2007 and 2010 but the province has since slipped to 11th place.
The regulatory regime has become more burdensome, Rathier noted, but the Parti Québécois government’s first attempt at a new mining law, Bill 43, would have been “far worse.”
“It’s probably a satisfactory outcome, given what had been proposed. There are probably 20 important modifications and everyone is breathing a little easier today.”
Among the changes are a requirement that all mining projects of 2,000 tonnes or more must undergo environmental hearings at the Bureau d’audiences publiques sur l’environnement (BAPE). The threshold in the old law was 7,000 tonnes but the PQ government’s first proposal had called for hearings to be held on every project.
On the contentious issue of mineral processing, the government has largely given up the right to veto a mining lease if it isn’t satisfied with a company’s plans to process ore. Instead, it’s asking companies to simply produce a market study on the issue.
Operators will have to publicly disclose the volume of minerals extracted and the amount of royalties paid. And there is also an obligation to guarantee restoration costs at closed mines.
The Conseil du patronat, representing Quebec’s largest employers, said the new act “is not perfect and certain irritants remain.” It’s particularly concerned that some provisions could increase delays, raise the cost of new projects and impose more administrative burdens on companies.
Nevertheless, the Conseil said it was essential to come up with a regulatory framework to govern the industry for the long term and to set the stage for sustainable development in the future.
While it imposes new obligations on the private sector, the new law is not exactly a tonic for the ailing mining industry and there is plenty of reason to be concerned about the slowing pace of mining activity in Quebec.
Global uncertainty over resource prices, coupled with a severe shortage of investment capital, has resulted in steep declines in exploration activity over the last two years, said Josée Methot, president of the Quebec Mining Association.
Also, a new and more punitive royalty regime on mining companies is expected to kick in on Jan. 1, although formal adoption of the legislation, known as Bill 55, will wait until the National Assembly reconvenes and there is always the possibility the bill could be defeated.
The new fiscal regime set out in Bill 55 replaces the 16 per cent royalty that had been charged on profit with a complex calculation based on both levels of profit and production.
Quebec’s Institut de la statistique says total mining investments in the province are expected to fall by 10 per cent in 2013 — the first such decline in 10 years.