As clouds gather in Quebec, tax talk adds to miners’ pain – by Sophier Cousineau (Globe and Mail – March 13, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

MONTREAL — The Pointe-Noire iron ore pellet plant will go silent by next summer, and 165 workers will be out of a job. In the boom town of Sept-Îles, Cliffs Natural Resources Inc.’s decision to idle its plant shouldn’t be a tragedy. But it is an omen of the bad days to come for a Quebec mining industry that has been hit by setbacks.

A month ago, Canadian National Railway Co. shelved the feasibility study it undertook to build a $5-billion railway. The 800-kilometre line would have shipped iron ore from the new mines developed in the Labrador Trough to Sept-Îles and its deep water port on Quebec’s Lower North Shore. The uncertainty surrounding those mining projects has for now killed what was to become one of the province’s biggest infrastructure projects.

Uncertainty is also hanging over Iron Ore Co. of Canada and its Montreal headquarters. Its controlling shareholder, Rio Tinto PLC, is looking to sell its 58.7-per-cent stake in the country’s biggest iron ore producer to lighten the massive debt load it took on when it acquired the ultra-expensive Alcan.

It is against this grim backdrop that the Quebec government will hold a forum on Friday to discuss how to change the province’s mining regime. The Parti Québécois feels that Quebeckers have historically gotten a raw deal – and few people outside the mining industry would dispute this.

The PQ campaigned to increase royalty revenues by $388-million over five years, while reassuring mining producers that the province is still a good place to invest. The two objectives are about as easy to reconcile as having mining executives and environmentalists slow dancing under a disco ball.

Yet the changes that the PQ government is considering, shortly after the royalty hike that the previous Liberal government enacted, look out of sync with the current times.

Years of feverish deals and over-the-top acquisitions have left the mining industry with a legacy of debt and soaring costs. You can blame the CEOs with oversized egos. You can blame slowing growth in China, the recession in Europe and the disappointing recovery in the United States. But with softening metal prices, the never-ending riches promised by Plan Nord (former premier Jean Charest’s signature plan to develop the North) now look as distant and elusive as the lost paradise of El Dorado.

For the rest of this article, please go to the Globe and Mail website:


Comments are closed.