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