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Gold/Mining/Energy : Inco-Voisey Bay Nickel [ T.N.V] -- Ignore unavailable to you. Want to Upgrade?

To: nickel61 who wrote (855)	12/29/1999 9:09:00 PM
From: Cumbrian	Read Replies (2) \| Respond to of 1615

Morning Line - "Sue Dyer" commented on Voisey's Bay with respect to Brian Tobin's position as it relates to getting something binding from INCO. Program: 10 CBC Radio Morning Line Media: CBN-AM Reporter: JIM BROWN Air Date: Wed, Dec 22 Jim Brown: Good morning to you. Sue Dyer: Good morning and Merry Christmas. Jim Brown: Well thank you. The same to you. Sue Dyer: Thank you. Calling this morning on Voisey's bay. Just doing some. .just watching I guess news headlines and so on with respect to Brian Tobin's position as it relates to getting something legally binding from INCO. Jim Brown: Yes. Sue Dyer: And you know I have a real question here. .. I don't have a question I guess but it should be thrown out. The Mineral Act which is an act of course. . there's three or four acts that govern mining in this province. One of them is the mineral act and it deals with issuing a lease to the operator you know to go ahead and mine and it basically says a lease issued under this act is subject to the following conditions and there's one of those conditions that is quite interesting that the less he *** we're required to do so by the Lieutenant Governor in Council that being Cabinet can treat primary production in whole or in part in the province of a mineral or mineral ore extracted or removed under the lease. Now when the law says that's what will be done at the wish of Cabinet, what's stronger, contact or any other piece of information can we possibly need or want. Jim Brown: So if Cabinet tells them that all of the processing must be done here, in whole or in part, if they say in whole the processing must be performed in this province and that's the condition of you receiving this license than yes exactly what stronger guarantee to do you need. Sue Dyer: I know that when there's something under law, certainly a provincial jurisdiction of which Voisey's Bay falls and the lessee needs you know got to have their mining lease to go ahead and move forward, This is the law that applies. I still believe that this is an issue and this law which by the way was strengthened by Brian Tobin a while back but was in place probably since '94 or '95, I still think it just takes away from the discussion on the royalties of Voisey's Bay which is an issue that's never discussed. In all the time that I've been listening to the debate on Voisey's Bay I've never heard a percentage come up as to what we're going to receive as a percentage. Jim Brown: So you think these comments from the Premier are red herring? Sue Dyer: Absolutely. There's no question about that. The law states that they must do it at the desire of Cabinet which is obviously the desire of Cabinet well than this is not an issue, what is an issue however is under our mining and mineral rights tax act. We don't have a royalty regime as such in the province. We have a mining tax which is an affect a royalty, we just call it something different. And what we did or Clyde Wells and Ed Roberts actually in drafting laws and changing laws at the time and this was prior to INCO's purchase of Voisey's Bay, prior to the four billion changing hands. They made a change and basically what the mining tax act would say is that an operator and the contractor is liable for and should pay to the Minister in the manner at the time set out in this act an annual tax of 15% of the taxable income. So that would be you know a current royalty regime. 15% of whatever that taxable income comes from the operator. What Clyde Wells and Ed Roberts did and in fact I guess all of the government administration when they passed the amendment at the time was they added on another sentence. It says a person may, in the case a person they mean corporation whatever, that's just the legislative term, in the current taxation year deduct from the amount payable under this section which is your royalty the amount payable to the province under the income tax act in respect of mining INCO in the province. So they are giving a 15 % royalty and they are able to reduce 16%. Jim Brown: Trading dollar for dollar with their income tax. Sue Dyer: Absolutely. And this goes on for a period and this sub section shall apply for each year of the first ten years of the achievement of commercial production. So when INCO bought into this they bought into a law which said they had a ten year tax holiday and nobody has dealt . . now had they changed it as with Clyde Wells and Ed Roberts wished because after they made this amendment, they came out shortly there after and said we made a mistake, we have to go back and alter this and change this. Obviously this was meant for marginal minds. We're going to have to fix it up. So there first order of business in the new year was to go in and change this and have public consultation on what proper royalties should be set up as they change it. And this was again prior to the purchase of INCO. Now what happened of course was Clyde Wells resigned and we went through a whole motion of politics and Brian Tobin has since become the Premier and remains the Premier and this has never been changed. So when INCO purchased it therefor, it purchased it under this law of a ten year tax holiday. Now INCO is holding a card over there that says they've got a ten year tax holiday. And they are saying well yes we have a law that you have to smelt it and refine it and all that and INCO says fine. Jim Brown: You've got two laws here not just the one. Sue Dyer: Not just the one. So INCO turns around and says fine. Have your smelter, have your processor but you're not getting your royalties. The Premier is saying well we had to have royalties, the people of this province won't tolerate no royalties and they are saying well do you want your royalties you're going to take it back on the smelter and refinery. So what's going on here I would think is a very very careful set of negotiations based on laws that were left in place that were not changed and a four billion dollar transaction by a publicly traded company was transacted on the basis of the laws that were present in the province at the time. Jim Brown: So the cost of some sloppy legislated book keeping could be in the billions of dollars. Sue Dyer: Absolutely and its not a matter of . . if it was just regular income tax government at will can change income tax every year you know up and down as it chooses but because this tax is dated, because it is ten years like EDGE you know, EDGE has a ten year period, you can't go into a company after they've spent a million dollars, hired a ton of people and say listen we've decided to change the law EDGE doesn't apply. What they'll get is they'll get the remainder of the term that's left. So nothing has been done to change that. The law is in place for the smelting and refinery so what's going on. Jim Brown: Thanks a lot for your call this morning. Sue Dyer: Thank you very much Jim. Jim Brown: good bye now.