Proposed changes to how much mining companies pay in royalties for mineral resources still favours industry at the expense of taxpayers, says the Yukon Conservation Society.

Gerry Couture, the society's mining critic, said this week proposed amendments to the Quartz Mining Act still lets companies write off everything under the sun before they calculate their net profits, on which royalties are collected.

While the Yukon's net-profit royalty structure continues to resemble the rest of Canada in all but three provinces, it's out of step with 68 per cent of the world's countries that charge a base amount for their mineral resources, regardless of the company's profit margin, Couture pointed out.

He said countries like Australia, for instance, assess their royalties on what companies receive back from the smelter.

"We need a better deal," Couture said.

He said Yukoners invest a lot of money in mining through tax incentives and other programs designed to court the hardrock industry.

At the very least, companies should be required to pay something from the resource they consume, rather than using fancy bookkeeping to keep the bottom line at zero, Couture suggested.

Yukon first nations, he said, are getting short-changed, and will continue getting the short end of the stick under the amended act, as their land claim settlements dictate they get a share of resource royalties.

But there's been nothing to share, and there likely won't be if Energy, Mines and Resources Minister Brad Cathers continues along the same fundamental path, Couture said.

"I think and the (conservation) society thinks the public deserves a better deal than that," said the critic.

"There are royalty regimes around the world that make sure the public gets their share when the resources are mined."

Couture said the society recognizes the benefits mining brings to the territory, with additional corporate tax, jobs and general economic stimulation.

Nonetheless, it should pay something on the profit it makes from what is a public, non-renewable resource, he said.

Couture pointed out the 1921 legislation governing the placer gold mining industry, as outdated as it is, still assesses a fee of 37.5 cents per every ounce of gold that goes through the smelter. The fee structure was set back when gold was valued at $15 an ounce, and hasn't changed, he said.

Cathers introduced proposed amendments to the Quartz Mining Act on the opening day of the legislature last Thursday.

The amendments call for numerous changes to the resource royalty regime, along with changes to the rules governing how mineral claims can be staked.

The current royalty regime is without a cap, and could be a disincentive to medium-sized and large companies, he told the legislature Monday during committee debate.

Cathers said a royalty cap has been included once profits hit $35 million, and he pointed out there will be a number of changes to what companies are allowed to write off.

Currently, for instance, a mining company is allowed to write off exploration expenses on other projects in the Yukon, but not related specifically to the mining property, the minister pointed out, suggesting that will change.

"Mr. Speaker, in summary, as I have noted, the proposed amendments are intended to encourage the mining industry to maximize benefits to the Yukon citizens while remaining competitive with other jurisdictions," Cathers told the House.

"The amendments will ensure that Yukon legislation fits with the realities of the modern mineral industry."

Changes to the legislation will also allow companies to write off investment into community development projects, he said.

Cathers pointed out the new legislation will not change the maximum $3 million the territory can keep from royalty revenues before shipping the rest off to Ottawa.

The amendments are designed to maintain the status quo for the Minto mine, said Cathers.

Bob Holmes, the Yukon's director of mineral resources, said today cabinet instructions were to modernize and streamline the existing Quartz Mining Act, without effecting a fundamental change in the royalty regime.

Going to a net smelter royalty from a net profit royalty would be a fundamental change, and would take the Yukon out of sync with the rest of Canada, he pointed out.

Holmes said new provisions under the proposed amendments will allow the government to encourage a larger royalty return through revamping what will be allowed as a write-off, for instance.

Mining companies, he pointed out, must use accepted accounting principles, and when their bottom line shows they haven't made a profit, the government does not want to put an additional financial burden on them.

While there are positive changes to the royalty regime, Couture acknowledged, he emphasized the method of assessing royalty rates comes down to the same old net profit of a company.

Through several years of profitable production, the Brewery Creek gold mine south of Dawson City never paid a cent in royalties, Couture said.

He said BYG Resources never paid a penny from its short-lived production at its Mount Nansen operation, now an abandoned mine costing Canadian taxpayers well over $1 million a year to look after.

The last royalties, he said, were paid by the Faro mine before it closed in early 1998.

Couture said the one-year-old Minto mine will probably never pay a royalty on the gold and copper it mines, given the list of write-offs available, such as millions of dollars in exploration work on the property.

The government suggests a royalty regime based on net profits is needed if the Yukon wants to stay competitive, he said.

Couture pointed out B.C., Alberta and Nova Scotia have shifted away from the profit-based royalty, though not entirely, but to some degree.

The Yukon does not have to sell the farm to keep mining companies interested in the Yukon, he insisted.

Couture said the territory is recognized around the world as favourable mining country.

Changing the resource royalty structure to a system used by most other countries, he insisted, will not chase companies away.

"We do not need to rush to the bottom to be competitive," Couture said. "What we need is a clear, stable regime that gives reasonable return to the people of the Yukon and a reasonable return to the company."

Carl Schulze, president of the Yukon Chamber of Mines, said this morning the royalty regime in the Yukon needs to be competitive with the rest of the country, and the changes proposed will ensure it is.

And while the conservation society seems to be focused on benefits from royalties, it isn't highlighting the additional benefits from the increase in corporate and income tax, jobs, and the general economic stimulation a mine brings, he said.

Like Holmes, Schulze pointed out mining companies are guided by strict accounting rules, and when the records show no profit, that's because after expenses, there was no profit.

He also said it is somewhat presumptuous for Couture and the conservation society to forecast what the Minto mine may or may not pay for royalties in the future.