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The Progressive Economics Forum

Mining in the NWT: Who Gets What?

In a recent blog post at Northern Public Affairs, Stephanie Irlbacher-Fox looks at the issue of ‘who gets what?’ when a mine is developed in the Northwest Territories (NWT).

Here is an excerpt from the post:

  • The resource extractor: they pay royalties (the NWT has the lowest royalties in the world), and costs of production, then sell the resource at a profit. A mine is “economic” when they can make a profit at a level that is worth it to them.
  • The Government of Canada: gets all of the royalties; gets all the corporate taxes, gets income taxes. They also hand out various corporate subsidies and tax benefits, but that is another story.
  • The Government of the NWT: gets no royalties. They get some taxes, and can tax income on residents, and again on residents and non-residents alike through that lovely payroll tax salaried workers contribute to. They also hand out various subsidies and corporate tax breaks.
  • Aboriginal rights holders: if the mine is in your traditional territory, its likely you will get an Impact Benefit Agreement (IBA). That will see several communities sharing yearly cash payments, job quotas, and training opportunities; maybe a few scholarships as well. Terms of IBAs vary.
  • Dene Land Claim signatories: there is a provision in the Dene land claim agreements that entitle them to 7.5% of the first $2 million of resource royalties from the Mackenzie Valley each year, and a further 1.5% of additional resource royalties per year.
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Comments

Comment from Darwin O’Connor
Time: May 6, 2012, 4:18 pm

I pretty sure the government of NWT gets proportionately more funding from the federal government than the provinces. It may even exceed all revenues they get from NWT.

Comment from Erin Weir
Time: May 7, 2012, 12:41 pm

I don’t doubt that royalties are far too low in the Northwest Territories, but I wonder if “lowest in the world” might be an overstatement. This table suggests that mineral royalties are a bit higher there than in many Canadian jurisdictions (not a particularly high bar).

Comment from Purple Library Guy
Time: May 10, 2012, 9:23 am

Frankly, settlement at levels above “Really really low” in the NWT is probably not viable without a fairly strong public sector presence, with revenue coming either from outside or from sizable resource royalties or both. I tend to think it’s probably worth it to a point even if subsidy has to come from outside.

Although with climate change, who knows?

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