February 2014

Quebec’s changing environment

Investor uncertainty, development issues highlight discussion at Québec Mines

By Alain Castonguay

In November, the Quebec mining industry gathered for two events held concurrently in the provincial capital. At the second edition of Québec Mines and the annual conference of the Quebec Mineral Exploration Association (AMEQ), uncertainty over the province’s on-again, off-again mining reform added tension to the already gloomy atmosphere brought about by the market downturn and the lack of interest from financial markets.

“The industry needs to know that it is welcome in Quebec,” said Josée Méthot, Québec Mining Association’s CEO, during the opening plenary of Québec Mines. The province’s mining industry hit a pothole in 2013 after 10 consecutive years of increasing investment. Expenditures in the mining sector increased to $5.13 billion in 2012 from $3.9 billion in 2011 – a jump of 31 per cent. But the Institut de la statistique du Québec predicted a decrease of nearly 10 per cent, to $4.6 billion, in 2013.

Exploration spending has also de­creased. Forage Orbit Garant, one of the largest companies that specialize in drilling in Quebec, published its results for the quarter ending September 30, 2013: the company’s income dropped by nearly half compared to the same quarter in the previous year. The number of metres drilled in the last quarter was down 33.9 per cent compared to the period last year.

Attendees said the uncertain legislative agenda in Quebec was a burden added to the many other problems the mining industry is facing: higher costs, lower grades, environmental concerns, social issues and lower market prices. “The dialogue with the government is very difficult,” said Philippe Cloutier, president of the AMEQ Council and Cartier Resources. Françoise Bertrand, Quebec’s Chamber of Commerce president, echoed these concerns, stating that miners need a “predictable” environment in order to invest in Quebec. She hoped industry representatives could renew talks with the government about potential changes to the mining act.

During the plenary session, much of the discussion centred on how companies should approach communities and other local groups to build relationships when they seek to develop projects in the province. “A poorly defined or neglected issue becomes a risk,” said Dominique Ferrand, eco-advisory re­earch chair at Université du Québec à Chicoutimi (UQAC). “Therefore, sustainable development begins with a shared understanding of the issues.”

A project’s social licence is a very relative concept and can evolve or fall apart over time, he said. But a project can also be inadmissible from the start, Ferrand said, citing Vancouver’s Pacific Arc Resources, which began drilling in Laurentides municipalities in the spring of 2011, but neglected to advise local authorities. This led to angry protests. The company abandoned its project two months later. “Being advised is not enough,” he insisted. “Citizens now want to take part in the decision-making process.”

Mining legislation rewritten, again

From the get go, reporters swarmed Natural Resources Minister Martine Ouellet to ask her about the recently rejected Bill 43, which had essentially halted the Parti Québecois’ mining reform. Ouellet denied that the uncertainty was responsible for this year’s drop in investment in Quebec, and announced that she was prepared to negotiate with opposition parties to amend her legislative proposal.

It was the third bill that had failed to pass since 2009, the year when Quebec’s auditor general published a devastating report on the management of mineral resources. The two previous bills were submitted by Jean Charest’s Liberal government.

Mining companies, particularly those active in exploration, believed the system proposed by the Marois government would give too many discretionary powers to the minister responsible for the mining sector. The AEMQ had targeted 50 provisions of Bill 43, calling for “a transparent, predictable and stable legislative framework that will ensure the development of the Quebec mining industry based on Quebec’s best economic interests.”

On December 10, the government pushed ahead with a pared-down version of the bill, which was approved in a marathon midnight session. Bill 70 backed off on some of Bill 43’s stickier parts: for instance, companies will now be required to conduct a scoping and market survey about the potential of putting processing facilities in Quebec rather than a more expensive feasibility study that had been proposed in the earlier bill. (See the Jurisdictions column for a more detailed breakdown of Bill 70.)

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