Yukon News

Raise the royalty rates

Friday September 9, 2011

The Yukon and federal governments have announced there will be a change in the agreement for sharing resource revenues.

Currently, any amount of resource royalties the Yukon earns in excess of $6 million is deducted out of our transfer payments from the federal government.

Under the new agreement, the Yukon could receive more than $40 million in royalties before any money gets deducted from our federal transfer payments.

Well, $40 million is a lot more than $6 million, so let’s all go roll in the dough.

But there is one small problem.

The Yukon hasn’t even been collecting the $6 million, never mind anything above that.

Looking forward, it appears extremely unlikely that the Yukon will ever generate $40 million in royalties thanks to incredibly low royalty rates on mineral resources.

For the budget year 2011/2012 the Yukon expects to get $115,000 in oil and gas royalties and related revenue.

Mineral resources are expected to generate about $1,235,000 in permits, fees, leases and royalties. Of that, less than $20,000 is actually mining royalties, because of the outrageously low royalty charged on placer gold (37.5 cents an ounce, irrespective of the current price of gold).

There are no hard rock royalties paid to the Yukon government, and thanks to a hard rock royalty system that allows companies to write off almost all their expenses it is very doubtful whether the Yukon will see substantial hard rock royalties in the near future.

Chuck in other sources of revenue generation, such as land sales, forest fees and agricultural leases and it looks like the total raised through resource revenue will come in at $1,803,000.

Not even close to $6 million.

And 20 times less than the new cap of $40 million.

If the Yukon does not change its mineral royalties we will not benefit from the new transfer agreement at all. If the Yukon is serious about taking advantage of the new transfer agreement it has to get serious about royalties.

It’s time to apply a respectable royalty on the minerals that belong to all Yukoners. At the moment we are literally giving them away to the mining companies.

Lewis Rifkind, mining co-ordinator

Yukon Conservation Society

Whitehorse

4 Comments

Jerry255 wrote:
8:54pm Sunday September 18, 2011

Please examine the following details:  How many mines does the Yukon have operating?(3) How long have they been operating?(2007, 2010, 2011)  What are they mining? (Copper, silver, lead, zinc)

We have lots of exploration activity and minor amounts of mining activity and they are NOT one and the same.  Royalties are only from producing mines, which most people writing into this paper are busy protesting, then complaining that they aren’t getting enough money from something that doesn’t exist.  As it stands the only gold mines in the Yukon are placer mines which if you read my previous comments(and you should have) would give just under $2 million per year in royalties should the royalty be modernized.  Minto and Wolverine also produce gold but the gold is a byproduct, not the main resource, and therefore would not give the grossly misrepresented amounts of royalties implied by this article.

So yes, this article is a red herring because no mines have existed in the Yukon prior to 2007 for quite some time.  Kind of hard to make something pay for your bloated government spending when it doesn’t exist. As it stands Minto opened in 2007, Wolverine in 2010, and Bellekeno opened this year.

If you want the government to give you ‘royalty money’, maybe you should also look into how many tax dollars Alaska spends per capita as well.(you know…in Canada we have health care and work avoidance programs to pay for on the backs of the few hard workers out there…)

yukonjack wrote:
7:21pm Sunday September 18, 2011

Lewis has demonstrated time and time again that he does not understand economics. I echo the thoughts of Jerry.

susie rogan wrote:
2:47am Sunday September 18, 2011

Alaska pays for schools and roads with royalties, and also provides cheques to every resident Alaskan from royalties.  This is not a ‘red herring’ Jerry.  The Yukon is giving away non-renewable resources and Yukoners are waking up to this fact.  What is the problem with placer miners sending a real royalty in return for removing $1800 per ounce of gold?  Somehow or another they were still making a living when it was only $500 an ounce.  We should compare our royalty regime with that of Alaska.  I am really glad Lewis Rifkin wrote this letter because he has the facts which you TOTALLY glossed over in your previous posts - such as the fact that the Yukon is receiving basically NOTHING in royalties right now despite the massive amount of mining activity going on.

More stories on this subject please.

Jerry255 wrote:
4:20am Saturday September 17, 2011

And the mining industry is responsible for keeping the entire economy in the Yukon turning by purchasing from local businesses, hiring contractors, and directly employing many people.  Royalties are a red herring and this article is misleading and biased with it’s information about how much the mining industry contributes to our fine territory through taxation, of which royalties are a third tier of, and the aforementioned employment and spin off dollars to local businesses.

Since I love repeating myself every week in this paper’s comment section, please see my comments left here(about 5 pages of them) discussing the placer and hard rock royalty regimes.

http://www.yukon-news.com/business/24537/

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