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New surveys reveal changing attitudes toward the industry in the province, both on the street and in the boardroom.
The history of mining in Quebec stretches back over 300 years, to 1686, when Chevalier de Troyes discovered the province’s first lead deposit in the Abitibi-Témiscamingue region. However, Troyes’ discovery wasn’t exploited for nearly 200 years, when Quebec’s first mines opened in the 1840s and 1850s.
Today, mining is a key contributor to the province’s growth: Quebec is home to 200 active mines, quarries and sandpits, according to its natural resources department. That includes 20 metal mines, such as Xstrata’s (LSE:XTA) Raglan nickel project and Agnico-Eagle Mines’ (TSX:AEM,NYSE:AEM) LaRonde gold mine, which also hosts significant reserves of silver, zinc, copper and lead.
There is also huge exploration and development potential, notably in the Labrador Trough, which straddles the border between Quebec and Newfoundland and Labrador, where 15 billion metric tons of iron ore are currently being explored. In all, the provincial government states, 50,000 Quebecers rely on the mining industry for their livelihoods.
Mining execs cool on Quebec
Even so, the last few weeks have seen the release of surveys that indicate that both citizens and mining firms are exhibiting changed attitudes toward Quebec.
On February 28, the Fraser Institute released the results of its annual survey of mining companies, under which it queried 4,100 exploration, development and otherwise mining-related firms from around the world. Based on the data it collected, the think tank assigned each jurisdiction a rating, which it calls a policy potential index score.
The result? Quebec finished outside the top 10 mining destinations in 2012, coming in at number 11 of 96 jurisdictions. That performance comes after the province held the top spot from 2007 to 2010 before slipping to number four in 2011.
“Falling from No. 1 to 11th in just three years tells us that the mining policies of the Quebec government, particularly uncertainty around changes to the provincial mining act and proposed royalty hikes, are a serious concern to the global mining community,” Kenneth Green, the institute’s senior director of energy and natural resources and the survey’s director, said in a press release.
PQ’s election raises concern
Green’s statement refers to the province’s Parti Quebecois government, led by Pauline Marois, which was elected in September 2012. During the campaign, the PQ proposed a 5-percent minimum royalty on the value of all minerals mined in the province. It also advocated adding a 30-percent tax on mining company profits above a certain as-yet-undetermined level, similar to a tax currently in force in Australia.
In addition, Marois threatened to “redo” Plan Nord, the previous Liberal government’s strategy to bring infrastructure to the province’s north and spur the progress of various mining projects there. The Liberals felt the plan, which involves $80 billion in public and private investment over 25 years, would generate about $14 billion in revenue over that period and contribute $162 billion to Quebec’s GDP, according to an August 2012 Globe and Mail article.
The province didn’t introduce the new royalty regime in its first budget following the election, but Finance Minister Nicholas Marceau remains committed to doing so. However, he now plans to hold consultations with miners before the government unveils the new royalty scheme.
“We want to bring in these changes in an orderly and responsible manner to ensure the stability of the mining sector,” he told the Montreal Gazette in November. “We will consult the industry and the stakeholders concerned about this issue so that everyone benefits from the changes that will be made.” These consultations will be held at a meeting on March 15, according to a recent Forbes article.
The government’s approach to Plan Nord also remains unsettled, though Marois’ view appears to have softened somewhat. “We are committed to the Plan Nord, but we will do the thing differently,” she told Bloomberg in December. “We will respect the First Nations, and we will protect the environment because it’s important for us.”
Quebecers favor higher royalties: poll
Meanwhile, recent polling from Leger Marketing for the Canadian Boreal Initiative shows that the PQ’s position on royalties appears to be resonating with the province’s population. Leger polled 1,000 respondents from across Quebec. Of that sample, 55 percent said mining royalties are too low, 11 percent said they are fair and 6 percent feel they are too high.
Moreover, 82 percent of respondents said that mining companies shouldn’t be granted claims on private land without first getting landowners’ consent, as is the current practice in Quebec. And 82 percent feel that municipalities should be able to restrict mining on certain parts of their territories.
Opinion split on uranium mining
Leger also polled Quebecers specifically on uranium mining. Results show that just 24 percent of respondents were aware of plans to mine uranium in Quebec. When asked about their approval of these operations in the province, 35 percent were in favor and 39 percent were opposed.
In Northern Quebec, where Strateco Resources (TSX:RSC) is focused on expanding the uranium deposit at its Matoush property in the Otish mountains, opinion was similar, with 55 percent not in favor of such a project in the province’s north and 35 percent supporting it. Awareness of the issue ran higher in Northern Quebec, at 66 percent.
“The findings show that more than three-quarters of respondents [in the province as a whole] haven’t heard of this issue,” said Strateco spokesperson Denis Boucher in a March 11 phone interview. “That lack of awareness allows people to fill the void.”
“Uranium mining has been done safely in Saskatchewan for 50 years,” he added. “We have to make sure we are present with science-based information that uranium mining is safe. The more we explain what measures are being taken, the more we can raise awareness. People are intelligent; the more we communicate, the more they will understand that uranium mining can be done safely and that they can rely on the judgments of experts — including the Canadian Nuclear Safety Commission.”
The company has been waiting for the province to issue a decision regarding the project’s advanced exploration phase for two years, according to a recent press release. The delay has prompted Strateco to file a motion with the Quebec Superior Court to force a resolution.
“The next step is to get an answer from the provincial government,” said Boucher. “We have had favorable responses from all regulatory bodies to this point — including the federal government, the Canadian Nuclear Safety Commission and the provincial review committee — and we are waiting for one last decision from the province. But it is taking a very long time, which is why we turned to the tribunals.”
Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.
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