New mining sector fees while exploration already in decline

Mining Industry N.L. disappointed with cut to incentive program

Ashley Fitzpatrick
Published on April 30, 2015
The Wabush mine is shown in a Sept.6, 2012 file photo from the Newfoundland and Labrador Department of Natural Resources.
Canadian Press file photo

Mineral exploration is in steep decline in Newfoundland and Labrador, and now everyone in the mining sector — from individual prospectors to producing companies — will have to pay new fees tied to their work.

A previously offered provincial government incentive for the mining sector is also being cut.

“Significantly for us is a reduction in the overall Mineral Incentive Program funding. That’s a program that’s used by junior exploration companies to leverage grant money that’s put in the ground to advance exploration and that program was reduced from, I believe, $1.9 (million) to $1.6 million,” said Ed Moriarity executive director of Mining Industry NL, after sitting with representatives from the Department of Natural Resources Thursday.

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“That (cut) was, not unexpected, (but) it was disappointing to see a reduction. But I guess, against the climate that was there, it’s not unsurprising.”

He said the change has the potential to result in fewer exploration projects and less work. And when paired with the smattering of new fees, he said the budget is not a good one for provincial mining.

Some of the fees introduced are brand new charges being brought in under the Services Charges Act, to be passed in the House of Assembly. These range from $1,000 to $4,000, covering the registration of plans for the development, rehabilitation and closure of mines.

There are others. A new mill licence, for example, will cost $1,000, with another $750 cost for any changes. The cost of a new mineral claim will go from $10 to $15, as of May 1.

And any companies active in Labrador will have to cover off the new landing and terminal fee of $40 per flight to any provincially-owned airstrips, as of Sept. 1. That includes a dozen landing sites along the Labrador coast — common jump offs for uranium, nickel and rare earth elements seekers.

In the meantime, mineral exploration is into a continuing nosedive — moving from a record $194 million in 2012 to an expected $62 million in the coming year. The vast majority of that decline has been attributed to a pull out from Labrador and specifically the change in iron ore price.

Actual shipments of iron ore were down in volume year over year by about 20 per cent, while the total value of shipments fell by about 30 per cent, as the spot price for iron ore dropped from about US$133 per tonne to US$96 per tonne and mines closed. “Iron ore prices have continued to decline in early 2015 and as of April 10, prices were hovering around US$46 per tonne,” states a Department of Finance publication released with the budget.

Mineral exploration spending

Registered and forecast figures for overall spending on mineral exploration, with an eye to potential new mines, have dropped significantly since 2012.

2015 (forecast) — $62 million

2014 — $77 million

2013 — $104 million

2012 — $194 million

(Source: Government of Newfoundland and Labrador, Department of Finance)