CBC Uncovers De Beers’ $226 Ontario Royalty

CBC News reported that major diamond miner De Beers paid just $226 in royalties in Ontario from 2013 to 2014. Market watchers are looking askance at the low rate, especially given that Ontario reportedly made more money from salt royalties during the period.

As quoted in the market news:

The diamond royalty stirred a huge debate when the Ontario government suddenly introduced it in 2007. Then-premier Dalton McGuinty promised it would enrich all Ontarians. He promised the money would be used to hire more nurses and keep class sizes small in schools.

The real value has been a closely guarded secret, by government and the company, until the CBC-Michener-Deacon investigation.

That secrecy has baffled many experts consulted by the CBC, including accountants, and auditors.

‘It’s hard to believe that in a jurisdiction like Ontario there would be this lack of transparency,’ says Paul Zimnisky, an independent diamond analyst, based in New York.

The government says it has to protect proprietary information for the province’s single diamond company and De Beers does not report information on royalties.

A confidentiality clause in Ontario’s Mining Act means that diamond royalties never show up in government public accounts.

Given that secrecy, how did CBC find out about De Beers’ $226 royalty? Answering that question, the news outlet explains:

By studying public documents for a 12-year period from 2002 to 2014, the CBC found the diamond payments mixed in with salt royalties.

The Ontario government has confirmed that it has been recording diamond and salt payments together. The province also mistakenly broke its own secrecy provision with respect to the diamond royalty by releasing via email figures for 2013-14 — the $226 paid by De Beers.

Studying the public documents reveals that De Beers paid little or nothing for most of the seven years its Victor mine has been in production in Northern Ontario, about 90 kilometres west of Attawapiskat.

Click here to read the full CBC report.