Public involvement in diamond venture ends once gems are found
MONTREAL—Since the mid 1900s, every man, woman and child living in Quebec has donated the equivalent of $20 towards exploration costs for the province’s first diamond mine project. But when a mine was finally discovered and the promised rewards for years of the province’s investment began to be realized, the Quebec government sold the project to a private company. Not only that, but Quebeckers can expect to shell out even more as the now privately owned mine moves towards production.
According to documents obtained by The Dominion, all that’s left for the public after they invested over $157 million in the Renard Diamond Project is a 37 per cent stake in a private company, and token public representation on the company’s board of directors.
The diamond mine is today being hailed as a model operation by the Quebec government. But a deeper look into what this model would mean for Quebeckers casts a long shadow over the government’s economic policies.
For the last seven years, the sun has been shining over Quebec’s mining sector. Between 2009 and 2010, total mining investments in Quebec increased by almost 43 per cent, totaling $2.9 billion. Over the past six months, things have gotten so hot that the skin has started to peel off the hands of boardroom executives, geologists and international investors. The key moment came in May 2011 when Quebec Premier Jean Charest announced his now-famous legacy project, the Plan Nord.
The good times in the mining industry could last for the next 25 years, if Charest is to have his way. “The Plan Nord will lead to over $80 billion in investments… and create or consolidate, on average, 20,000 jobs a year,” reads the Plan Nord website. The idea behind the plan is to “stimulate” the energy, mineral resources, forest and wildlife sectors, as well as those of tourism and “bio-food” production.
The Renard Diamond Project is one of 11 mega-mining projects proposed as part of the Plan Nord. Unlike most of the other mining projects, the $675 million Renard project is the only mine venture whose development involved a serious public partnership approach—the rest of the projects are private sector initiatives.
The Renard Diamond Project got its start in 1996 in the Nord-du-Quebec region, about 600 kilometres north of the great Lac-St-Jean, as a 50-50 joint-venture between Diaquem—a wholly-owned subsidiary of crown corporation Quebec Society for Mining Exploration (SOQUEM)—and Ashton Mining of Canada Inc—a wholly-owned subsidiary of Rio Tinto plc.
Founded in 1965, SOQUEM is a holdover from the “maitres chez nous” (masters in our own house) economic doctrine which saw the creation of many Quebec-owned corporations. At one point, SOQUEM was an exploration powerhouse, employing more than 1,500 people and at the forefront of geologic mapping.
After 45 years in the business, SOQUEM’s mandate has shrunk to supporting specific projects only. In the first quarter of 2011, SOQUEM—now a 50-employee entity—was swallowed up by the mammoth Investissement Quebec (IQ), the Quebec government’s investment arm.
Fifteen years down the risky road of exploration, the Renard Diamond Project promoters discovered a field of kimberlite intrusions—volcanic rock known to contain diamonds—with a mineral reserve of 18 million carats. Exploration risks stem from the fact that anomalistic (diamond containing) geological formations are hard to find, and expensive to analyze.
Ashton Mining was bought out and the Renard Project is now under the Stornoway Diamond Corporation flag. “Excluding potential deposits, we evaluate the life duration of the project at at least 25 years,” Ghislain Poirier, Vice President Public Affairs at Stornoway told a local newspaper last winter. The plan for the mine includes two 100-meter-deep open pit mines, one 600-meter-deep open pit mine and several underground mines. The Renard mine would be Quebec’s first diamond mine.
For the rest of this article, please go to The Dominion website: http://www.dominionpaper.ca/articles/4305