In May 2011, Premier Jean Charest announced the launch of the Plan Nord initiative, which provides for the development of Quebec’s territory north of the 49th parallel over the next 25 years. This ambitious project will extend Quebec’s natural frontiers, opening up a vast territory rich in natural resources to discovery and development.
The territory covered under the plan is immense and will undoubtedly lead to challenges in respect to development. The government’s ability to create favourable social, labour, regulatory and financial conditions to attract investment will be critical to implementing the plan. Due to its geographical reach, the mining industry is expected to be the driving force behind its execution.
Plan Nord will cover a land mass of almost 1.2 million square kilometres (about 72 per cent of the province). The territory is comprised of three regions: James Bay (Eeyou Istchee), with a concentration of Cree communities; Nunavik, inhabited by Inuit communities; and the North Shore and Labrador Trough, where the Naskapi Nation and Innu communities are situated.
A large portion of the plan’s territory is governed by modern treaties between Quebec and Aboriginal communities. Mining companies that seek to develop projects in Northern Quebec must first establish relationships with the Aboriginal communities.
Development in the territory will require transportation, energy and communications infrastructure. The cost of setting this up will be significant given the vastness of the territory and local environmental conditions. The plan proposes to entrust the Société du Plan Nord with coordinating public investments and encouraging private sector contribution to finance public infrastructure built initially for its benefit. A cost-sharing formula between private partners, users and the government will be established for major projects. The plan’s first phase (five years) will comprise $1.193 billion in investments in infrastructure.
In addition, Quebec has committed to developing 3,500 megawatts of additional energy, at an estimated cost of $25 billion, to meet the needs of northern communities and industrial projects. Currently, there is no indication as to how these projects will be financed.
With a projected 25-year lifespan, the plan will require sustained government support to develop infrastructure and ensure ongoing and permanent funding. To this end, we note two measures:
- First, the Fonds du Plan Nord (the “fund”) dedicated to implementing the plan will be established. It will be funded by a portion of the tax revenues it receives from natural resources development. In its 2011 budget, the government indicated that it plans to transfer about $2.1 billion in tax revenues to the fund over the next 25 years.
- Second, Quebec has announced that $500 million would be made available to Investissement Québec for equity participation in high-benefit projects leading to the development of the Plan Nord territory.
Société du Plan Nord
A new agency, the Société du Plan Nord, will assist in the execution of the plan. Its intended purpose is to contribute to the integrated and coherent development of the area in accordance with five-year “sub” plans prepared by the government. The Société will establish a strategic plan that will be subject to government approval. Once approved, the Société can use the funds it is granted to contribute financially or otherwise to the projects within its strategic plan.
It is expected that mineral development will be the core economic activity in the territory, which has seen unprecedented mineral exploration work. In 2009, 50 per cent of all investment in mineral exploration and mining ($958 million) was in the plan’s territory.
Sustainable development and environmental protection are at the core of the plan. The ecosystems of the North are complex due to the vastness of the territory and the dynamics of the changing climate.
Mining projects will require permits after rigorous social and environmental impact assessments are conducted by agencies that include First Nation and Inuit representatives. One of the government’s challenges in implementing the plan will be its ability to properly fund regulatory agencies, so as to conduct environmental reviews in a timely manner.
Furthermore, an objective is to prohibit industrial use on 50 per cent of the territory and to create a network of protected areas covering at least 12 per cent of the Plan Nord territory by 2015.
Plan Nord is a societal project that will shape Quebec for generations to come.
Charles Kazaz and Jean Masson are partners at the Montreal office of Fasken Martineau DuMoulin and members of its Plan Nord Team.