De Beers Attacks Ontario Diamond Royalty Proposal

Calling it “apparently arbitrary”, De Beers is criticizing a proposed change to Ontario’s diamond royalty law. De Beers is developing the Canadian province’s first diamond mine.

“The future growth and sustainability of the mining industry in Ontario will be best served by a tax regime which is applied equally across the mining sector, is predictable, stable, and non-discriminatory,” De Beers said Friday.

The Ontario government is proposing to introduce a new diamond royalty based on the value of a mine's output, and excluding diamonds from taxation under the province’s existing Mining Tax Act.

Currently the tax rate is 10 percent. The proposed diamond royalty would range from 5 to 13 percent, depending on annual production value.

De Beers complained that the proposal was not discussed with the industry prior to its inclusion in the provincial budget.

“We are concerned about these apparently arbitrary changes to the tax structure so close to the start of production at Victor,” the company said, adding that it is investing one billion Canadian dollars in Victor’s construction. The mining company further added that this investment will inject approximately $7 billion dollars into the Ontario economy.

The mine is scheduled to start production in the first half of 2008. Currently, 600 workers are employed on site in construction roles. When the mine begins operations, it will create approximately 400 new jobs in northern Ontario, says De Beers.