Quebec lays out plans to raise mining taxes

(Reuters) - The Quebec government has laid out plans to extract up to C$1.8 billion (US$1.8 billion) more in taxes from the mining sector over the next 12 years, with measures that include a minimum royalty, arguing that Quebecers need to see greater benefits from mining ventures in the province.

The new taxation plan, less punishing than a scheme the separatist Parti Quebecois had promised in its 2012 election campaign, came as sagging demand and falling metal prices cut into already tight margins in the mining sector.

The plan, posted on the provincial government website late on Monday, would see miners pay the greater of two options: either a royalty on the value of ore, set at 1 percent for the first C$80 million and 4 percent for anything over that, or a graduated tax on profits, ranging from 16 to 28 percent.

The Parti Quebecois had previously proposed a 5 percent royalty on the gross value of all mining output, and a "super-tax" on profits above a certain point.

Dale Coffin, a spokesman for Agnico-Eagle Mines which operates three gold mines in Quebec, said the overall impact on Agnico's operations appeared to be minor, although he noted the company was still reviewing the proposed changes.

"Hopefully this will signal an end to this period of uncertainty, as it is important that stability and investor confidence is restored for the long-term viability of the industry," he said.

Metal prices hit record highs after the global financial crisis, prompting governments around the world to demand a bigger slice of profits from mining companies.

Quebec said the plan would increase government revenues by a total of between C$770 million and C$1.8 billion over the next 12 years. In 2015 revenues should be C$50 million higher than under the existing regime, introduced by the previous, Liberal, government.

"Quebecers were justifiably dissatisfied with the Liberal regime because some mining corporations could continue developing natural resources over a long period without paying a penny in royalties," Quebec Finance Minister Nicolas Marceau said in the statement.

"In addition, when large profits were earned because of a sudden rise in prices, the share of profits paid in royalties did not budge."

($1=$1.01 Canadian)

(Reporting by Randall Palmer in Ottawa and Julie Gordon and Allison Martell in Toronto; Editing by Bernard Orr and Janet Guttsman)

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Mining, China central issues in Greenland election

By Alistair Scrutton

NUUK (Reuters) - Voters in Greenland's capital will stream into the town's one polling station on Tuesday in a national parliamentary election in which mining, Chinese influence and the environment are core issues.

With sea ice thawing and new shipping routes opening in the Arctic, the former Cold War ally of the West has emerged from isolation as a geopolitical interest for governments seeking a share of untapped minerals and potential offshore oil and gas.

Prime Minister Kuupik Kleist, who in his youth hunted whales with a hand-held harpoon, has opened up Greenland to investors over the last four years.

The capital Nuuk has an art cinema, sushi bars, Thai restaurants and gleaming new office towers alongside older, grey Soviet-style housing estates.

Many of the 57,000 mostly Inuit inhabitants dotted along remote coastal towns and villages fear change has come too fast. Ice floes often are so thin that hunters can no longer use dog sledges.

And miners exploiting Greenland's resources may employ more foreigners than locals.

Revenues from mining may help wean self-governing Greenland off Denmark's roughly $600 million annual grant and lead to eventual independence. But they also bring worries of environmental damage to traditional hunting and fishing.

The main opposition leader Aleqa Hammond, who lost her father when young after he fell through ice on a hunting trip, has promised more taxes or royalties on foreign mining companies.

"Where is the voice of the people?" Hammond told Reuters last week. "People feel that the prime minister speaks on behalf of investors from outside."

The capital of 15,000 people overlooks a bay where whales can often be spotted. There are just two traffic lights and no roads or train links with the rest of the country - the only way in or out is by plane or boat.

Campaign posters vie with ice sculptures on the frigid main street for attention.

Polls show the results, which may not be known until late Tuesday night, could be close.

CHINESE INFLUENCE?

European Union officials have expressed concern about China's influence in Greenland, part of what some analysts say is a multi-pronged Arctic strategy by the world's most populous nation to secure needed resources.

One of the most controversial plans is a proposal for a $2.3 billion mining project by the British-based London Mining Plc near the capital Nuuk that could supply iron ore to China. Some 2,000 Chinese workers could be flown in for its construction.

Kleist's government passed a law that critics said allowed large companies to bring in cheap labor to work on construction projects. Hammond has promised to revise the law if she wins.

Another issue has been the mining of rare earths, essential in 21st century technology like smartphones. China currently has the lion's share of production.

Rare earths are often intertwined with uranium deposits. But Greenland is split over whether to jettison its zero tolerance policy on mining radioactive materials, which originates in Denmark. Kleist wants to keep the ban while Hammond would end it.

One rare earth deposit in southern Greenland, being explored by Australian-owned Greenland Minerals and Energy, could be one of the largest such mines outside of China.

"Everything is on hold for us with the election," said Ib Laursen, operations manager at Greenland Minerals and Energy.

(Editing by Michael Roddy)

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