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By Rose Ragsdale
For Mining News 

Providing timely relief for miners

Officials in Western Canada fine-tune existing regulations to improve investment climate, clarify rules and order further study


Last updated 12/28/2008 at Noon

As financial conditions in the mining industry spiral deeper into a trough with the overall economy, the two westernmost governments in Canada are taking steps to cushion the fall, at least for mining companies doing business within their jurisdictions.

The Yukon Legislative Assembly moved in November to provide new certainty to Yukon's mineral sector by passing amendments to the territory's Quartz Mining Act and Miners Lien Act.

In British Columbia, meanwhile, officials set in motion plans to introduce legislation, subject to the approval of the provincial Legislature, that will extend the Mining Flow-Through Share Tax Credit to the end of 2009, retroactive to Jan. 1, 2009.

The province is also creating a new economic mining task force to help B.C.'s mining industry weather the worldwide economic downturn, Premier Gordon Campbell said Dec. 5.

Lowering exploration costs

The Honorable Geraldine Van Bibber, Commissioner of Yukon, quickly gave her assent to the amendments thereby making them law.

"The amended Quartz Mining Act and Miners Lien Act provide valuable clarity and certainty to Yukon's mineral sector during this time of global economic uncertainty," said Brad Cathers, Minister of Energy, Mines and Resources Nov. 27. "This legislation will encourage a mining industry that yields the most benefit to Yukoners, while remaining competitive with other jurisdictions."

The Quartz Mining Act regulates hard rock mining in Yukon. The amendments to the claims administration and royalty sections of the Quartz Mining Act will lower exploration costs, while ensuring the territory sets royalty rates for mine development that are competitive with other Canadian mining jurisdictions.

"Yukon's mining sector is a significant contributor to Yukon's economy," said Archie Lang, Minister of Community Services. "The Yukon government is committed to encouraging and supporting a sustainable mineral industry while ensuring that Yukoners receive maximum benefits from our resources."

Extending investment tax credit

"Mining is an incredibly important industry for British Columbia families, workers and communities and this government is dedicated to making sure it remains a strong part of our economy," said Campbell. "In this time of economic uncertainty it's imperative that we do what we can to encourage business and mining in B.C."

Many companies in the resource and renewable energy sectors raise money through flow-through shares, which allow exploration companies to pass eligible expenses to investors. Under Canada's federal income tax rules, investors can deduct 100 per cent of the eligible exploration expenses.

The Mining Flow-Through Share Tax Credit was introduced in British Columbia in 2001, paralleling a federal program. The 20 percent B.C. Mining Flow-Through Share Tax Credit is available only to individuals. The combined effect of the flow-through share deduction, the federal credit and the provincial credit for an individual investor is to reduce the cost of a C$1,000 investment to about C$383.

Since the Mining Flow-Through Share Tax Credit was introduced, investment in mining exploration spending in B.C. has increased by 1,300 percent from $29 million in 2001 to a record high of nearly $416 million in 2007.

Protecting contractors and suppliers

In Yukon, the amendment to the Miners Lien Act provides the opportunity for contractors and suppliers to lien mine and mineral assets in situations where they have not been paid for a good or service. Language and definitions in the Miners Lien Act have been amended to provide better clarity and certainty for suppliers, the mining industry and lenders that provide debt capital for mine development.

Yukon officials said the amendments to the Quartz Mining Act and the Miners Lien Act followed public advertising campaigns and a series of meetings, information sessions and workshops, beginning in early 2008.

Studying further assistance

By establishing the Economic Task Force for Mining, B.C. officials aim to bring together industry leaders to monitor the economic situation and recommend measures to mitigate the effects of the global downturn on the mining industry.

"We want to manage the areas we can to ensure investment in B.C.'s mining sector remains strong," said Minister of State for Mining Gordon Hogg. "By bringing significant innovation and experience to the table, we'll be better positioned to ride out this drop in commodity prices."

Miners applaud the changes

The mining industry praised both the B.C. and Yukon governments for the efforts to improve their respective regulatory regimes.

"The mineral exploration sector is pleased to see the B.C. government recognizes the value of extending the Flow-Through Share Tax Credit," said Association for Mineral Exploration of British Columbia President and CEO Gavin Dirom. "This measure, with the creation of the Economic Task Force, will help B.C. attract investment and remain globally competitive in this challenging time."

"On behalf of the Mining Association of B.C. and as a member of the Minister's Council, I welcome today's show of support for our sector from the B.C. Government," said Mining Association of B.C. president and CEO Pierre Gratton. "A special task force focused on how to ensure B.C.'s mining industry weathers the economic storm all of us are facing is a timely, proactive step. It's an opportunity to look at issues such as transportation, electricity, infrastructure, human resources - to name a few - to ensure we remain competitive in this difficult time and are well-positioned when the economy recovers."

The Economic Task Force for Mining will report through the Minister's Council on Mineral Exploration and Mining. Established in September, the council was created to recommend initiatives and policies for a sustainable, responsible mineral industry.

Carl Schulze, president of the Yukon Chamber of Mines said the group worked with the Yukon territorial government earlier this year towards completion of several government initiatives, including modernization of the Miners' Lien Act to improve viability of financing, modernize Yukon's royalty regime and improve regulations governing claim acquisition. The chamber also submitted suggestions for revamping Yukon's royalty regime, aspects of the Yukon Quartz Mining Act and, most recently, Yukon's energy strategy.

"It is incumbent on the territorial government to improve Yukon's mineral investment climate as much as possible. Even during good times, any jurisdiction is in competition with all others for a finite amount of investment funds. When times become more difficult, the investment climate must be maximized," Schulze said this fall.


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