Saturday, October 29, 2011

On complexities

Bruce Johnstone makes about the best case one possibly can for the Sask Party's refusal to review potash royalties. But it necessarily misses a rather important point.

After all, there's absolutely no basis to consider the current royalty structure as an essential element to mine development to the extent any given mine would be profitable even under a royalty structure that results in a better return for the province. Which means that there's a desperate need for actual evidence for Johnstone's assertion that we should give it all of the credit, rather than paying attention to how changes in potash prices over the past decade have influenced investment decisions.

And if we want to figure out exactly how much effect the royalty rates have (and ought to have) on investment...well, the best way to do that is through a royalty review.

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