TORONTO — Northern Development and Mines Minister Michael Gravelle says the Ontario government is not going to increase the mining tax, despite the auditor general's concern about falling revenues.
Auditor general Bonnie Lysyk says Ontario's revenue from mining taxes averages less than two per cent of the value of the minerals extracted, and less than one per cent of the value of diamonds that are mined.
Ontario is the largest mineral producer in Canada with about 25 per cent of total national production, but provincial mining revenues from taxes and royalties fell from a high of $236 million in 2008 to just $18.6 million in 2014.
Gravelle says it's a very challenging time in terms of commodity pricing, and the mining sector is at a low point right now.
And he says companies can spend $750 million to $1 billion before they "extract one piece of metal out of the ground."
Gravelle says mining companies employ hundreds of well-paid workers in the preparation stage and during operations, and the government doesn't want to discourage any new investments by hiking taxes.
"All of those things, I think, mitigate in a powerful way to us being very, very cautious about speaking about changing the mining tax or royalties," he said.
Progressive Conservative Leader Patrick Brown agreed with the government's decision.
"I'm worried about the decline in the mining sector and I think a new tax right now would be the wrong time," said Brown.
The province received only $20 million in royalties from $2.5 billion in diamonds that were extracted by De Beers over six years at Ontario's only diamond mine.
All minerals mined are subject to an Ontario mining profit tax of 10 per cent, except for diamonds, which are subject to royalty payments.
A reduced rate of five per cent applies to mines that are at least 30 kilometres from the nearest road or railway.
The auditor was critical of the Liberal government for leaving it up to private companies to meet its duty to consult Aboriginal communities on proposed mining activities, which she said may be hurting the ability to attract new investment.
"The ministry has not been effective in encouraging timely mineral development in the province," auditor general Bonnie Lysyk said in her 2015 annual report.
"Ontario is ranked near the bottom in Canada with respect to attracting mining sector investments."
Lysyk also said there has been virtually no progress in developing the huge Ring of Fire mineral deposit since it was discovered in 2008 about 500 kilometres northwest of Thunder Bay, and is believed to have a potential value of $60 billion.
"The area is still not close to being ready for production, and the ministry has no detailed plan or timeline for developing the region," said Lysyk.
Gravelle said the province was hopeful about moving forward now that the federal Conservative government has been replaced with a Liberal administration, but insisted it was hard to deliver the timelines the auditor is looking for.
"Conditions from a labour market point of view, from a negotiation with the First Nations point of view, let alone the federal government's point of view, make it a little challenging to impose a timeline, although we're as eager to do that as anybody else is," he said.
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Keith Leslie, The Canadian Press