mine mouth revenue and 12% of net 
revenue from the mine for the month. 

Mine mouth revenue in respect of a 
mine is calculated as:

• gross revenue for the mine

less

• certain permitted costs and 

allowances (such as transportation 
costs) between the mine mouth and 
point of sale.

Net revenue is determined by deducting 
exploration, development, recovery, 
processing, and transportation costs or 
allowances, as well as any carryforward 
deductions. Example 6 illustrates the 
different royalty computations for 
metallic minerals.

For non-metallic minerals, a standard flat 
rate applies. Some of the more common 
rates are outlined in Table 6.

Coal

Coal royalties are governed under 
separate regulations from other 
minerals. The royalty rate depends on 
the type of coal. The applicable rates in 
2013 are as follows:

• For sub-bituminous coal situated in 

the Plains region of Alberta and used 
to generate electricity, the rate is 
$0.55 per tonne. 

• For bituminous coal situated in the 

Foothills or Mountain regions of 
Alberta, the rate is equal to 1% of 
mine mouth revenue before mine 
payout and 1% of mine mouth 
revenue plus 13% of net revenue 
after mine payout.

Oil Sands

Alberta’s royalty regime for oil sands 
projects also has differentiated rates 
depending on the current price of oil, 
the financial status of the project, and 
whether payout has been achieved in 
respect of the project. The applicable 
rates in 2013 are as follows:

• The royalty before payout is 

calculated as 1% to 9% of gross 
revenue (project revenue).

• The royalty after payout is the greater 

of 1% to 9% of gross revenue and 
25% to 40% of net revenue (project 
revenue less allowable costs).

Table 6: Royalty Rates Applicable to Selected Non-Metallic Minerals, Alberta  
as at June 30, 2013

Commodity

Rate

Proposed Rate*

Limestone, other “stone”

$0.0441/tonne

$0.10/tonne

Bentonite

$0.11/tonne

$0.13/tonne

Clay for pottery and fireclay

$0.11/tonne

$0.13/tonne

Other clay, marl, volcanic ash

$0.0655/cubic meter

$0.13/tonne

Silica sand

$0.37/tonne

No change proposed

Salt

$0.45/tonne

No change proposed

*  The Alberta government has proposed changes to the royalty regime but has not committed to any time 

frame for the implementation of the amendments. At this time, there can be no assurances that these 

proposals will be implemented. 

Computation of Royalty Payment, Metallic Minerals

Minimum royalty (1% of mine mouth revenue)

Revenue  

$1,000,000

Less: Deductible costs and allowances  

 (500,000) 

Mine mouth revenue  

$500,000

Royalty rate  

1%

Royalties payable  

$5,000

After-payout royalty (12% of net revenue)

Revenue:  

$1,000,000

Less: Deductible costs and allowances  

 (750,000) 

Net revenue  

$250,000

Royalty rate  

12%

Royalty payable  

$30,000

EXAMPLE 6

© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms 
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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 A Guide to Canadian Mining Taxation