The National Post is Canada’s second largest national paper.
MONTREAL – U.S. investors are readying legal action against the Canadian government over Quebec’s resistance to Strateco Resources Inc.’s Matoush uranium mining project, the company’s chief executive says.
“We have been informed that certain important American shareholders have the intention to sue under Chapter 11 of the [North American Free Trade] agreement,” Guy Hébert said in an interview Thursday.
Mr. Hébert said he has advised them to wait for the outcome of the company’s own separate case against Quebec’s environment minister on the matter, in which it is seeking to get a definitive answer on whether the project can move forward. Some industry players say privately the confusion surrounding Matoush has made Quebec a laughing stock abroad, preventing other firms from being able to raise capital for mining projects in Canada’s second-largest province.
“Investors are telling us ‘You’re too risky’ because you’re in Quebec,’” said one senior mining executive who asked that his name not be used. “They’re saying ‘We don’t know if you can get your permitting and we don’t know how long it will take.’”
Mr. Hébert declined to name the investors weighing the NAFTA challenge, saying only that U.S. pension funds are among Strateco’s shareholders. Cayman Islands-based private equity firm The Sentient Group, Toronto-based boutique investment management firm Goodman & Co., and Bank of Nova Scotia are Strateco’s three biggest shareholders, according to Bloomberg data.
If the investors move forward with their claim, it would mark the second such NAFTA action involving Quebec in a year.
On Nov.8, 2012, Lone Pine Resources Inc., a Delaware-incorporated oil and gas producer spun off from Forest Oil Corp., launched a claim against Ottawa for Quebec’s move to cancel oil and gas exploration permits for deposits under the St. Lawrence River. It claimed a minimum of $250-million in damages.
Chapter 11 of NAFTA between Canada, the United States and Mexico requires all three countries to meet specific foreign investment standards. Investors can claim monetary compensation if they believe a government policy has hurt their investment. The claim is against the federal government even if the matter concerns a province.
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