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Quebec Mining

Commentary: Understanding [Quebec’s] Bill 43 – by Pascal de Guise, Yaël Lachkar and Misha Benjamin (Northern Miner – September 4, 2013)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. 

Bill 43 is the third attempt to reform Quebec’s Mining Act in the last five years. The first two bills were tabled by the Liberal government, but were not passed. This latest bill (Bill 43), tabled by the minority Parti Québécois (PQ) government, would be a major overhaul of the Mining Act, and its importance should not be understated. The prices of metal are falling and mining investments are slowing around the world. At a time when Quebec’s reputation as a mining-friendly jurisdiction is being questioned and critics from all sides are calling for a reform, Bill 43 could have an adverse impact on mining investment in the province.

It is in this context that the government of Pauline Marois has proposed a PQ version of the Mining Act and an overhaul of the way in which mining royalties are collected. The plan, which was referred to during the election period as the “North for All” plan, is a remodelling of the Liberals’ Plan Nord.

During the election period and the following months, drastic measures were proposed by the Minister of Natural Resources, Martine Ouellet, which were heavily criticized on the fiscal front. At the time, the PQ was criticized for aggressively seeking to maxi¬mize royalties from ex¬ploiting natural resources, affecting the industry’s ability to properly function.

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Hope muted but persistent for Labrador Trough iron rush – by Keith Norbury (Canadian Sailings-Transportation & Trade Logistics – August 27, 2013)

http://www.canadiansailings.ca/

Signs abound that enthusiasm for new iron ore mines in the Labrador Trough have tapered off since February 2011 when the spot price was nearly $190 a tonne. Since then, prices have been on a roller coaster, which experienced more downs than ups. They dipped as low as $87 last September, soared back up over $150 in February, and then tumbled back down to below $115 in June.

Coinciding with that volatility, Canadian National Railway suspended a feasibility study on a new $5 billion rail line to serve potential new mines in the Labrador Trough. Mining giant Rio Tinto has put up for sale its 58.7 per cent interest in Iron Ore Company of Canada, one of the Trough’s and Canada’s largest iron ore producers.

Champion Iron Mines Ltd., one of the promising junior players in the Trough, abruptly pulled out of its participation in a new multi-user $220 million multi-user iron-ore port at Pointe-Noire in Sept-Îles, Que. And Cliffs Resources shut down indefinitely its pelletizing plant at Pointe-Noire.

Despite those setbacks, the consensus among financial analysts and economists who follow the trials and tribulations of the iron ore industry, as well as of industry insiders, is that long-term prospects for ramping up iron ore production in the Trough remain solid.

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Aboriginal women offer solution to northern Canada’s skilled worker shortages – by Daniel Bland (Vancouver Sun – August 21, 2013)

http://www.vancouversun.com/index.html

Daniel Bland is lead instructor for the Eeyou Mining Skills Enhancement Program, an initiative of Cree Human Resources Development, in Mistissini, Quebec.

While economists and labour market researchers agree one of Canada’s greatest challenges over the next decade will be how to solve skilled worker shortages, there seems to be no consensus about just how to do that.

The skills shortage will be particularly acute all across northern Canada, where natural resource development and mining projects are projected to grow the northern economy over 90 per cent from 2011 to 2020. Led by northern B.C.’s mining output, which will increase by a whopping 300 per cent, that is more than four times the growth rate forecast for the Canadian economy over that same period.

And while that is good news on many fronts, the fact that many of the largest mining projects are close to remote First Nation communities without particularly well skilled or educated populations, is cause for growing concern. Our work in essential skills assessment and training for mining jobs with the James Bay Cree First Nation in northwestern Quebec has taught us some valuable lessons about what employers can do to maximize human resources in remote aboriginal communities.

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Nunavik mine owes $72 million to creditors; Chinese owners turn project over to Toronto bank – by Jane George (Nunatsiaqonline.ca – August 14, 2013)

http://www.nunatsiaqonline.ca/

Canadian Royalties Ltd. owes $53.6 million to eight Nunavik companies

Canadian Royalties Ltd.‘s Nunavik Nickel mine, which was to be Nunavik’s second operating mine, spinning out minerals for hungry markets abroad, appears so far to have left a trail of debt throughout Nunavik.

The creditors owed a total of nearly $54 million by the Chinese-owned mine include Nunavut Eastern Arctic Shipping, Desgagnés Transarctik Inc., the fuel division of the Fédération des Coopératives du Nouveau-Québec, Laval Fortin Adams, Iglu Construction and Nuvumiut Developments (Ganotec-Nunavumiut and Kiewit-Nunavumiut), which all have links to Nunavik Inuit organizations or individuals.

The construction firm Laval Fortin Adams is owed about $14 million, the largest amount of any of the Nunavik-based companies left holding the bill for work on the mine and docking complex. L’Echo Abitibien says another $16.4 million is owed to Construction Promec de Rouyn-Noranda.

Now the Chinese owners of the mine have turned the cash-strapped Nunavik Nickel mine over to a private merchant bank in Toronto, which will see if there’s hope of salvaging the project, where workers are still stockpiling ore.

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Three bidders out as Rio faces lackluster Canadian sale: sources – by Anjuli Davies and Clara Ferreira-Marques (Reuters U.S. – August 6, 2013)

http://www.reuters.com/

LONDON – (Reuters) – Three big-name bidders for Rio Tinto’s (RIO.L) majority stake in Canada’s largest iron ore producer are now out of the running, sources familiar with the talks said on Tuesday, after offers came in well below the mining group’s targets.

The sources said private equity firm Apollo, which had been working with Canadian pension fund CPPIB, rival Blackstone (BX.N) and commodity trader and miner Glencore (GLEN.L) were no longer in the race after a second round of bids last month. The low offers, at a time when dozens of mining assets are for sale and demand for steelmaking commodities is uncertain, raise questions over the future of a sale that could still take months to tie up – should Rio decide to push ahead.

Rio has a handful of assets on the block as it battles to cut a $19 billion debt burden and meet cost cutting targets. Like other miners seeking to divest unwanted activities, however, it has found buyers unwilling to pay up and in June was forced to scrap the sale of its $1.3 billion diamond business, 15 months after it was first announced.

Rio appointed banks to sell its 59 percent stake in Iron Ore Company of Canada (IOC) earlier this year after deciding to focus its iron ore efforts on assets in Australia’s Pilbara region, where the world’s second-largest iron ore producer has lower costs and higher grades.

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Disquiet in Québec as govt proposes tax, mining law changes – by Simon Rees (MiningWeekly.com – August 2, 2013)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – Like others across Canada, exploration and mining companies operating in Québec are suffering fierce economic headwinds and depressed metal prices, particularly so for gold. However, the gloom is doubly deep as concern mounts over the province’s newly proposed mining tax and Mining Act, both unveiled in May.

Under the current system, mining operations pay a 16% tax on net profits. The rate was pushed up from 12% during the previous Liberal government’s tenure. But for the Parti Québécois (PQ), led by Premier Pauline Marois, the increase was not extensive enough – it went on to call for a 5% tax on all mining activity and a 30% supertax on companies achieving profit margins over 8%.

“I think the PQ was looking towards the Australian model of increasing taxes on the mining sector, reasoning it could be applied to Québec . . . But most of our mines are smaller-scale operations. While some might have made good money, almost all reinvested profits into upgrading or expanding existing operations,” Institut de la statistique de Québec mining and natural resources specialist Raymond Beullac tells Mining Weekly.

“KPMG fairly recently released a report on Québec’s mining sector, highlighting the number of small-scale mines in production but unable to produce a taxable profit under the current mining tax regime,” Norton Rose Fulbright partner with specialist knowledge of the mining, oil and gas sectors Jean-Philippe Buteau tells Mining Weekly.

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Will three be the charm? Quebec makes third attempt to amend mining law – by Drew Hasselback (National Post – July 31, 2013)

The National Post is Canada’s second largest national paper.

This fall, Quebec’s legislature will consider several proposed amendments to the province’s Mining Act. The question is whether these changes will permanently impact the province’s reputation as a mining friendly jurisdiction.

That stature is already wavering. Each year the Fraser Institute ranks global mining jurisdictions based on their friendliness to investors. This year the province ranked 11th — a fairly strong showing, given that the 2013 survey covers 96 jurisdictions. But for the first time in years, the province didn’t make the top 10. Back in 2010 and 2009, it was even in first place.

“La Belle Province is no longer the belle of the ball it once was among mining jurisdictions,” says Tom Provost, a lawyer in the Montreal office of McMillan LLP.

“Even if it’s trying to do the right thing, the government is unfortunately sending mixed signals about whether Quebec is a mining friendly jurisdiction,” adds Frank Mariage, a lawyer in the Montreal office of Fasken Martineau DuMoulin LLP. “Quebec’s ranking on the Fraser Institute list of mining friendly jurisdictions has gone down.”

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Quebec eyes partnership on Nunavik iron mine project – by Jane George (Nunatsiaq News – July 29, 2013)

http://www.nunatsiaqonline.ca/

“We are very pleased to announce that the Ministry of Finance and Economy of the Government of Quebec has confirmed its interest”

Quebec wants in on a huge Nunavik iron mine project. Quebec says it’s ready to invest money as a minority partner in the Hopes Advance iron mine project near the tiny Nunavik community of Aupaluk on Ungava Bay.

Oceanic Iron Ore Corp. said last week that it had received a Letter of Intent from the Quebec’s ministry of Finance and Economy about its interest in becoming a minority partner in the Hopes Advance project, subject to additional future approval of the Quebec government.

The money that Quebec wants to plow into the project comes from the province’s mining and oil capital fund with $750 million for investment in the non-renewable natural resources sector. That fund was announced in November 2012 in Quebec’s 2013-2014 budget speech.

“Oceanic views the Quebec Government’s LOI as a critical step in securing a senior strategic partner and in obtaining future financing for the project’s initial capital expenditures estimated at $ 2.85 billion,” an Oceanic news release said.

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NEWS RELEASE: “When is a mine not a mine?” – IOC – Rio Tinto & IOC’s illegal mining activities the subject of a new lawsuit filed by Canadian Aboriginal group

UASHAT MAK MANI-UTENAM, QC, July 30, 2013 /PRNewswire/ – The Innu First Nation of Uashat Mak Mani-utenam filed another lawsuit on July 22, 2013, this time in Federal Court, in regard to Rio Tinto’s IOC mining project (in addition to the CAD$900 suit filed on March 18, 2013). While IOC (majority-owned by Rio Tinto) continues to violate the Canadian Aboriginal group’s rights, destroy their environment and intrude on their territory, IOC has announced that the company seeks to open a whole new mine (called Wabush 3) next to their current project in Western Labrador.

Not only would such a new mine be a clear violation of the Aboriginal group’s constitutionally protected and internationally recognized indigenous rights but, in addition, IOC is attempting to avoid an environmental assessment and review of the new mine. The Innu First Nation of Uashat Mak Mani-utenam had no other choice therefore but to file another lawsuit respecting IOC’s activities to attempt to stop such undermining of Canadian environmental laws.

“IOC has clearly become a rogue entity. Not only is IOC the only mining operator on the Uashat Mak Mani-utenam traditional territory without an agreement with our people (4 other agreements with other mining companies), but here it is involved with flagrantly violating Canadian environmental law in an attempt to push their new project through at any cost,” stated Mike McKenzie, Chief of the Innu First Nation of Uashat Mak Mani-utenam.

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Teck said to bid for Rio’s stake in Iron Ore Co. of Canada – by Matthew Campbell, Brett Foley and Liezel Hill (Bloomberg/Montreal Gazette – June 29, 2013)

 http://www.montrealgazette.com/index.html

TORONTO, VANCOUVER and LONDON (England) — Teck Resources Ltd., Canada’s second-biggest mining company, is among the remaining bidders for Rio Tinto Group’s controlling stake in Iron Ore Co. of Canada, according to a person familiar with the situation.

Rio may decide to keep its Iron Ore Co. stake after being disappointed with the bids it’s received so far, said the person, who asked not to be identified because the talks are private. While London-based Rio has considered selling the unit’s mining and infrastructure assets separately, it decided against the plan, the person said. Spokesmen for Teck and Rio and a spokeswoman for Iron Ore Co. declined to comment.

Buying Canada’s largest iron-ore producer would enable Vancouver-based Teck to diversify its production, which mostly comprises coal, copper and zinc. Rio’s 59 per cent stake in Iron Ore Co. may fetch as much as $3.5 billion, Crédit Suisse Group AG analysts said in a note in June.

An acquisition that size would be Teck’s largest since its C$10.4 billion ($10.1 billion) purchase of Fording Canadian Coal Trust in 2008, a deal completed just as commodity prices were beginning to plunge during the financial crisis. In 2009, Teck’s credit rating was cut to junk by Standard & Poor’s and the company sold a 17 per cent stake to China Investment Corp.

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Agnico’s spending cuts won’t affect Quebec mines – by Robert Gibbens (Montreal Gazette – July 25, 2013)

http://www.montrealgazette.com/index.html

The three Quebec gold mines of Agnico Eagle Mines Ltd. will probably escape the $250 million in spending cuts the company plans this year and next to offset sagging bullion and base metals income.

Agnico Eagle, which started producing gold north of Val d’Or in 1988 with the launch of its rich LaRonde mine, has since become an international company with operations in northwestern Canada, Finland and Mexico. It targets overall annual output of 1.2 million ounces within three years.

It had planned to invest $600 million U.S. a year on mine development, but with gold down to about $1,350 an ounce from a peak of almost $2,000 and co-products silver and zinc depressed, Agnico Eagle has cut that number to $400 million.

Most of the savings will come from delays in exploration and mine construction activity outside Quebec, CEO Sean Boyd told analysts Thursday. Year-end completion of a new cooling and ventilation system will boost output from LaRonde’s deep higher-grade reserves next year and the mine will produce 300,000 ounces a year for a long time yet.

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Osisko Deposits Study Reporting Local and Regional Economic Impact of the Canadian Malartic Mine

MONTREAL, QUEBEC–(Marketwired – July 10, 2013) – Osisko Mining Corporation (the “Company” or “Osisko”) (TSX:OSK)(FRANKFURT:EWX) is pleased to announce that in accordance with its environmental monitoring plan (“EMP”), it has filed with the Ministry of Sustainable Development, Environment, Wildlife and Parks (“MDDEFP”), a study on Canadian Malartic mine’s local and regional economic impact. This study was conducted by the independent consulting firm KPMG-SECOR and reports the economic impact of the Canadian Malartic mine. The study has also been filed with the Town of Malartic, as well as with the Canadian Malartic Monitoring Committee.

Sean Roosen, President and Chief Executive Officer of Osisko Mining Corporation, commented: “The KPMG-SECOR study demonstrates the positive impact of Canadian Malartic in recent years on the economy of Malartic, Abitibi-Témiscamingue and Quebec. During the BAPE hearings in 2009, Osisko had estimated that the project would be an economic engine for local, regional and Quebec economies. This study confirms our assessment.”

The study shows that Canadian Malartic:

Supports nearly 1,600 jobs in Abitibi-Témiscamingue, including 635 direct jobs at the mine site;

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First Nation reminds IOC suitors of ‘fierce opposition’ to on-reserve mining – by Henry Lazenby (MiningWeekly.com – July 9, 2013)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – The Innu First Nation of Uashat Mak Mani-Utenam has reminded potential suitors of mining giant Rio Tinto’s 58.7% stake in the Iron Ore Company of Canada (IOC), that the Aboriginal group continued to “fiercely oppose” IOC’s mining, railway and port operations within their traditional territory.

The group had, in March, filed legal proceedings against IOC, along with the Innu First Nation of Matimekush-Lac John, asking the Quebec Superior Court to block the company’s operations in Quebec and Labrador. The two groups had also sought C$900-million in compensation, which they alleged represented IOC’s profits at the facilities since 1954.

The Innu groups claimed the miner had violated their rights for nearly 60 years, causing harm by operating a large mining complex and 578 km railway on traditional territory (Nitassinan) in north-eastern Quebec and Labrador since the 1950s, without their prior consent. The facilities were located in the communities of Schefferville, Labrador City and Sept-Îles.

“The Innu are well past their breaking point and, in addition to the legal action, IOC can expect further acts of opposition in the coming months. While it is clear that Rio Tinto is looking to offload assets, the Innu First Nation of Uashat Mak Mani-Utenam cannot help but feel that Rio Tinto is also seeking to offload the ‘Innu problem’,” the group said in a statement on Tuesday.

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Quebec Environment Minister to refuse Strateco exploration permit – by Henry Lazenby (MiningWeekly.com – June 26, 2013)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – Explorer Strateco Resources on Tuesday said Quebec Sustainable Development, Environment, Wildlife and Parks Minister Yves-Francois Blanchet had served it with a notice indicating that he planned to “refuse to issue the permit for the Matoush underground exploration project” owing to “a lack of sufficient social acceptability”.

The notice gave Strateco 60 days in which to appeal the Minister’s intended refusal to issue the requested permit. The company in January filed a court order to force the Quebec government to make a decision on its exploration project in the province’s Otish Mountains.

On March 28, two months after Strateco filed the petition for mandamus, the Minister announced that no permits would be issued for uranium exploration and mining projects in Quebec until the Office of Public Hearings on the Environment, known by its French acronym Bape, had submitted its report on Quebec’s uranium industry.

The Minister specified, at the time, that the temporary moratorium, which could last for as long as 18 months or more, was applicable to Strateco. Strateco promptly reacted to what it termed an “illegal, abusive decision” taken by the Minister.

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Caisse de dépôt provides shot in the arm for mining – by Peter Hadeke (Montreal Gazette – June 20, 2013)

http://www.montrealgazette.com/index.html

MONTREAL — The mining industry in Quebec has been reeling since the Parti Québécois government made the provincial royalty regime more onerous.

The government’s decision to impose royalties on both production and profits was seen by industry players as the wrong move at the wrong time, given the volatility in metal prices and the scarcity of investment capital these days.

Now, an arm of the provincial government is stepping in with more positive news. The Caisse de dépôt et placement, Quebec’s giant pension fund manager, announced Thursday that it’s injecting $250 million to invest in Quebec mining companies through a fund known as Sodémex Développement. Its mandate will include investing in all stages of mining activity.

It will purchase stakes of between $5 million and $20 million, primarily through debentures or equity. The announcement comes at a time when many voices in the industry are complaining about a brutally tough investment climate that has made it extremely difficult to raise financing. The appetite for risk has diminished sharply.

“It might be the global economy, it might be the situation in China, it might be the decline in gold prices,” said Dany Pelletier, a senior Caisse executive who will be involved in the new fund.

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