[This was submitted to the Globe and Mails comments editors but wasn’t selected for publication so here it is….]

The December 6 commentary in the Globe and Mail’s Report on Business by David Parkinson (Ring of Fire could get burned by heavy-handed tax regime – subscription required) rightly draws attention to the low tax rate applied to mining in Ontario. However, Parkinson is entirely off the mark in concluding that we ought not follow Quebec’s example of implementing modest increases in our tax rates because Quebec has scared away exploration companies.

First, the main driver of exploration expenditures is commodity prices, something well beyond the control of the Quebec government. Declines in exploraiton expenditures have been seen across most jurisdictions due to the decline in prices of most minerals.

Second, exploration companies don’t pay taxes because they don’t generate profits for tax purposes and are unlikely to factor in potential future taxation of an operating mine that may be decades down the road.

Third, Quebec’s increase in taxes was modest, and Quebec remains in the mid-to lower range of mining taxes collected in Canada.

Fourth, while exploration expenditures in Quebec have declined, the province that has seen the greatest increase in relative exploration expenditures in Canada is Saskatchewan – which has the highest tax rates on mining in the country.

Finally, Parkinson relies on the Fraser Institute’s annual ranking of mining jurisdictions. This is a highly subjective and fickle ranking that is more akin to a mood ring for the mining sector than a serious evaluation of what’s happening on the ground.

Regarding Cliffs’ recent decision to suspend its activities in the Ring of Fire, Parkinson’s comments are no more than rote repetition of Cliffs’ public assertion that it was suspending activities on its chromite claims in the Ring of Fire because of “uncertainty about the infrastructure plans and delays in environmental and First Nations approvals.”

There are some key economic facts that pundits and the public should consider. As noted by Northern Miner editor John Cummings (sorry – this article is by subscription only too), the price of chromite is down well below what Cliffs determined would provide a decent return. Cliffs has also had a rough ride through the economic downturn with a billion dollar write-down on its purchase of iron ore mines in Quebec, and less than 1/3 the market capitalization it had in 2011. Mining companies around the world are pulling back from capital expenditures and the first to go are those with major infrastructure investments needed to make them viable. Ignoring these realities and putting the blame on environmental assessment processes, First Nations, and the provincial government is convenient for Cliffs, but we don’t have to take their word for it.

For a development of this magnitude with considerable environmental risks and assumptions of massive public subsidies it’s crucial to take our time to “get it right”. Riding roughshod over First Nations and the environment to rush projects to production only to find they’re not really economic won’t help anyone.