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Editorial: Quebec walks the line on mining royalties – Montreal Gazette Editorial (March 8, 2013)

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

Next Friday, the Parti Québécois government will hold a forum to discuss increasing the royalties that mining companies pay the province on the minerals they extract here. Collecting more money from mineral resources could offset the provincial debt and help pay for the generous social programs that Quebecers enjoy.

Currently, mining companies in Quebec pay 16 per cent of their profits in royalties, a rate set by the previous Liberal government.

But one of the planks in the PQ’s platform in the last provincial election was to raise royalty rates. It called for royalties to be 5 per cent of the gross value of the minerals extracted (whether a mine was profitable or not), plus a 30-per-cent tax on “unusually high profits” whenever they appear. (What constitutes “unusually high profits” has not been spelled out.)

Taken together, these charges would result in much higher payments to the government by the mining companies, and the companies have not hesitated to express their displeasure at the proposal.

In a consultation document that Natural Resources Minister Martine Ouellet released Thursday in advance of next week’s summit, she again cites the PQ’s 5/30 royalty proposal, while adding that “the government is seeking a long-term good relationship with the mining industry to ensure its stability and equity.” The minister wants “a constructive dialogue with the mining companies,” the document adds.

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Cliffs Natural Resources: A bargain stock that’s only for the brave – David Milstead (Globe and Mail – March 9, 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.

When the shareholders of Montreal-based Consolidated Thompson Iron Mines Ltd. sold their company to Cliffs Natural Resources Inc. in the spring of 2011, they weren’t offered the high-flying shares of the U.S. acquirer as payment. They had to settle for cash, instead.

That proved to be fortuitous, as Cliffs’ shares have since, well, fallen off a cliff. At recent trades around $25 (U.S.), they are down by more than 70 per cent.

Cliffs’ plunge may suggest that it’s a buying opportunity – but if so, it’s an opportunity only for the brave. While the shares could conceivably double from current levels, there’s also a good chance they could approach zero.

Investors seeking upside in the sector have safer options in the three international giants BHP Billiton Ltd., Vale SA and Rio Tinto Group. But they should be aware that the clouds hanging over the iron-ore sector show no signs of clearing any time soon.

Cliffs’ fall from favour provides a dramatic demonstration of how quickly circumstances have deteriorated for miners. Only a couple of years ago, raw-materials producers were riding high, largely on the strength of China’s building boom. To investors and mining CEOs, it seemed clear the Asian country’s white-hot growth would require an endless supply of materials, from iron ore to copper to previously little-known rare earths.

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NEWS RELEASE: Quebec Polls Show Little Public Support for Mining Industry – Canadian Boreal Initiative Calls for Substantive Reform of Mining Practices

 OTTAWA, March 5, 2013 /CNW/ – In the midst of the annual convention of the Prospectors and Developers Association of Canada (PDAC) and just in advance of a third attempt at reforming the Quebec’s mining law in the National Assembly, polls by Léger Marketing released today by the Canadian Boreal Initiative (CBI) show that:

the overwhelming majority of Quebec voters disagree with current laws that give the rights of mining companies precedence over rights of private landowners, Aboriginal communities and municipalities, Quebecers feel that protection of the environment, and community and property rights should be prioritized in the mining reform legislation,

a large proportion of voters believe that mining royalties are inadequate; and that a province-wide independent evaluation of the economic, health and environmental impacts of uranium mining should be completed before the province approves any uranium mining proposals.

Suzann Méthot, CBI’s Regional Director in Quebec, said: “These surveys clearly show that that the mining industry needs to take immediate action to bring itself into the 21st century. It can start by ending their defense of the outdated idea that the rights of mining companies should supersede those of individuals, communities, and the environment.”

Poll Highlights

Private Property and Community Rights:

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Dented by aluminum, Rio Tinto aims to unload Iron Ore Co. – by Andy Hoffman, Boyd Erman and Pav Jordan (Globe and Mail – March 2, 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.

VANCOUVER AND TORONTO – More than five years after pulling off the largest takeover in Canadian corporate history, Rio Tinto PLC is still dealing with the pain.

The multinational miner never truly recovered from the massive debt load it took on to buy Alcan in 2007, paying $38.1-billion (U.S.) for the Montreal aluminum producer at the peak of the commodities market.

Burned by a bad bet on the prospects of the metal used to make pop cans, Rio has had to sell billions worth of mining assets to repair its balance sheet. In January, Tom Albanese, the chief executive officer responsible for the Alcan deal and about $14-billion in acquisition-related writedowns during his tenure, resigned and was replaced by the former head of Rio’s iron ore operations, Sam Walsh.

With aluminum prices still failing to recover as much as many of the other commodities Rio produces and with production costs for most operations continuing to increase, Rio and its new CEO are now putting more assets on the block, including the company’s Canadian iron ore operations in Labrador.

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Quebec drops in mining investment ranking amid concerns over political stability – by Peter Koven (National Post – March 1, 2013)

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

For the past decade, Quebec was considered one of the best places in the world for mining investment. Not so much anymore.

In the Fraser Institute’s latest annual rankings of mining jurisdictions, Quebec dropped out of the top 10, landing in 11th place. The province finished in first place from 2007 to 2010, and was fifth in 2012.

The drop was not a shock. Throughout last year’s election campaign, Premier Pauline Marois threatened the mining industry with higher royalties, a 30% super-profits tax and changes to Plan Nord, the province’s $80-billion northern development strategy. And her threats came shortly after former premier Jean Charest himself raised mining taxes.

No substantial changes have been announced by the Parti Québécois government so far, though they are being reviewed. The ongoing threat of them has been enough to rattle some mining executives.

“The respondents felt that political stability had deteriorated and that uncertainty about the enforcement of existing regulations had become more uncertain and negative,” survey director Kenneth Green said in an interview.

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Rio Tinto’s Canada ore assets may be divested – by Matt Chambers (The Australian/Herald Sun – February 25, 2013

http://www.heraldsun.com.au/

RIO Tinto’s $US1.7 billion ($1.64bn) Canadian iron ore assets could fall under the gaze of new chief executive and former iron ore boss Sam Walsh as he implements a more aggressive stance on sales of non-core or underperforming assets.

Mr Walsh, when asked specifically about the potential sale of the Iron Ore Company of Canada and whether it was considered a core asset, did not rule out a sale.

“I am looking hard at divestments,” Mr Walsh told North American investors in a conference call after the release of full- year earnings earlier this month.

“There are a number of assets for us that are not core or they are underperforming and you have got to say that any asset that falls into that category is going to fall within the radar screen.

“I am not confirming or denying any particular asset but we are going to take a very rational, a very logical approach and, quite frankly, if there are people out there who value these assets more than we do then certainly we will move forward and negotiate that opportunity.”

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PQ mulls broad consultation on uranium mining – by Kevin Dougherty (Montreal Gazette – February 14, 2013)

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

Quebec – Yves-François Blanchet, Quebec’s environment minister, indicated Thursday that the Parti Québécois government wants to order a consultation on uranium mining in the province.

Blanchet said the consultation is still in the “reflection stage,” but hinted it could take the form of a “generic BAPE” consultation.

The BAPE is Quebec’s environmental-impact body, the Bureau d’audiences publiques sur l’environnement. It usually conducts consultations on the environmental impact of specific projects. A generic BAPE would look at the issue of uranium mining without reference to a specific project.

“We would be irresponsible not to,” Blanchet added.  The issue came up in National Assembly committee hearings on the spending estimates of the environment department. Jacques Marcotte, Liberal MNA for Portneuf riding near Quebec City, accused Blanchet’s department of blocking the Matoush uranium project in the James Bay region.

Located 275 kilometres north of Chibougamau and 210 kilometres northeast of Mistissini, the mine project is in territory covered by the James Bay Northern Quebec Agreement and has not received the approval of the Cree First Nation.

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CN shelves study of $5-billion Quebec iron ore railway line – by Bertrand Marotte (Globe and Mail – February 12, 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.

Canadian National Railway Co. has shelved a study into a $5-billion project to build a major new railway line in northern Quebec to ship iron ore.

Montreal-based CN said on Tuesday it is suspending a feasibility study for the construction of the proposed 800-kilometre line that would run from Sept Iles on the Lower North Shore to Schefferville and then further on to the iron mines being developed in the Labrador Trough.

CN says the timing is wrong because of uncertainties regarding the completion of the various mining projects. The railway had teamed up with pension fund giant Caisse de dépôt et placement du Québec, with the backing of six mining companies, to fund the feasibility study.

CN said last week it is suspending preliminary planning work on the railway to give it time to evaluate the mining companies’ timetables on their respective iron ore projects. The initial deadline of June 2013 for completion of the feasibility study was pushed back. But now, CN says it’s putting the study – a key element of the project – on ice as well.

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The Downside of Plan Nord: Environmental Concerns Plague Northern Quebec Development Project – by Jane Gatensby (The Link – February 12, 2013)

The Link is Concordia University’s independent newspaper since 1980. http://thelinknewspaper.ca/

On May 9, 2011, then-premier Jean Charest launched the Plan Nord, an ambitious $80 billion development project aiming to build infrastructure in Quebec’s northern regions. Nearly two years later, the project’s still a magnet for controversy.

The plan proposed to find and extract mineral resource deposits, and to develop tourism, energy, forestry, wildlife and bio-food industries north of the 49th parallel.

The Plan Nord promises to generate $14 billion in revenue over the next 25 years, according to government estimates, during which time it will create or consolidate an average of 20,000 jobs a year.

The project has attracted significant backlash since it was announced, however. Last April, a protest at the first Salon du Plan Nord caused general mayhem in and around the Palais des congrès de Montréal, with close to 100 protesters arrested.

Since then, the project has managed to cause outcry among environmentalists and anti-capitalists—and everyone in between. “Northern Quebec is a fragile place,” said Greenpeace Quebec director Nicolas Mainville in an April 2012 press release.

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The Upside of Plan Nord: Spokespeople Defend Quebec Mining Industry at Employment Fair – by Michael Wrobel (The Link – February 12, 2013)

The Link is Concordia University’s independent newspaper since 1980. http://thelinknewspaper.ca/

While protesters rallied passionately outside Montreal’s convention centre in opposition, business leaders inside the Salon des ressources naturelles defended the mining industry’s practices and protocol in northern Quebec.

The convention—held Feb. 8 and Feb. 9 at the Palais des congrès de Montréal—was met with two days of rowdy demonstrations that saw hundreds speak out against Plan Nord.

The View From Inside

“Of course, in Quebec, we have freedom of expression and freedom of assembly, and this is an interesting opportunity for those who are concerned about social causes to come out and make their points of view known,” said Jean Carrier, president and CEO of the Institut national des mines, a government agency that oversees mining education and training programs in the province.

“[But] often, the people who are demonstrating against the mining industry or the principle of royalties don’t perhaps have all the information needed to arrive at conclusions that are objective.”

The mining industry has come a long way in terms of environmental restoration and sustainability, according to Guylaine Beaupré, the communications manager at the Comité sectoriel de main-d’oeuvre de l’industrie des mines, an organization that brings together business leaders and workers’ associations.

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Quebec needs to develop its natural resources – Montreal Gazette Editorial (February 11, 2013)

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

MONTREAL – There were demonstrations Friday and Saturday outside the Palais des Congrès where the Board of Trade of Metropolitan Montreal was hosting a job fair focused on opportunities in Quebec’s natural-resources sector.

The demonstrators were there to protest the Plan Nord, Quebec’s 25-year project for resource development in the province’s northern regions. Violence broke out on both days, and several dozen arrests were made.

Conceived and launched by the previous Liberal government, the plan calls for increased resource extraction in the area above the 49th parallel. It is projected to be carried out over a period of 25 years and expected to generate $80 billion in energy, mining and forestry investment, and create or consolidate 20,000 jobs a year for the duration.

Protests against the Plan Nord have been recurrent, with participants denouncing the presumed environmental damage that the development will entail. Yet, many of these same demonstrators have also active in the fight for a continued freeze on university tuition, if not abolition of tuition altogether, along with improved health care and expanded $7 daycare for all Quebec toddlers.

While it is undeniable that environmental concerns must be seriously taken into account when it comes to resource development, it is equally undeniable that Quebec’s prosperity and ability to provide the services to which its population is accustomed — and to which it widely feels entitled — is heavily reliant on development of its natural resources.

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NEWS RELEASE: Release of the study Metal Processing and Greater Montréal: A Sustainable and Promising Alliance by the Board of Trade of Metropolitan Montreal

Montréal, February 7, 2013 ‒ Today the Board of Trade of Metropolitan Montreal is releasing the results of its study Metal Processing and Greater Montréal: A Sustainable and Promising Alliance. The study shows that the economic spinoffs of metal processing for the Montréal metropolitan area are in the order of $1.8 billion per year, maintaining 19,000 direct and indirect jobs.

“The study we are releasing today furthers the analysis that began in 2012 about the spinoffs of natural resource exploitation for the metropolitan area,” said Michel Leblanc, President and CEO of the Board of Trade of Metropolitan Montreal. “The Government of Quebec announced its intention to hold consultations on the royalty regime and will soon propose new legislation on mining. Given this, it is important that we base our debate on facts and dispel any myths. The Board of Trade study clearly shows that Quebec already processes a significant portion of the metal extracted in the province, contrary to what is widely believed. This is in addition to processing ore from abroad.”

“The fact that we process a significant share of metals doesn’t mean there’s no room for improvement,” Michel Leblanc said. “To take full advantage of business opportunities in natural resource exploitation, we can increase the spill-over effects upstream and downstream in the value chain. That said, we have to do it intelligently, based on the particularities and challenges of each sector, from extraction to tertiary processing. The situation changes dramatically, depending on whether we’re dealing with iron, copper, nickel, gold or titanium.”

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Metals processing in Montreal worth about C$1.8bn to metropolitan economy – by Henry Lazenby (MiningWeekly.com – February 8, 2013)

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

TORONTO (miningweekly.com) – The economic spinoffs of metals processing in the Montreal metropolitan area are worth about C$1.8-billion a year and maintain about 19 000 direct and indirect jobs, a study by the Board of Trade of Metropolitan Montreal said on Thursday.

The report, titled ‘Metal processing and Greater Montreal: A sustainable and promising alliance’ found 46% of Quebec’s primary processing businesses and 42% of its secondary processing businesses were located in the metropolitan area, and an increase in activity in this sector would benefit the city’s manufacturing industry.

“The study we are releasing today furthers the analysis that began in 2012 about the spinoffs of natural resource exploitation for the metropolitan area. The Government of Quebec announced its intention to hold consultations on the royalty regime and will soon propose new legislation on mining.

“Given this, it is important that we base our debate on facts and dispel any myths. The Board of Trade study clearly shows that Quebec already processes a significant portion of the metal extracted in the province, contrary to what is widely believed. This is in addition to processing ore from abroad,” Board of Trade CEO Michel Leblanc said. He added that the fact that Montreal processes a significant share of metals did not mean there was no room for improvement.

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NEWS RELEASE: Lithium is Driver of Electric and Hybrid Vehicle Growth – by Jean-Sébastien Lavallée (February 8, 2012)

Access to Supply in Regions minus Geopolitical Strife Crucial

Jean-Sébastien Lavallée, P.Geo, President and Chief Executive Officer of Critical Elements Corporation, www.cecorp.ca, represents the third generation of an established Canadian mining family. Mr. Lavallée joined Critical Elements Corporation in 2009. In 2010, Mr. Lavallée made the discovery of the Company’s 100% owned-Rose Tantalum-Lithium Project in James Bay, Quebec.

Lithium is a key component of lithium-ion battery packs that power electric vehicles (Evs) and hybrid vehicles. A recent report from Pike Research forecast global sales of EV charging equipment will grow from 200,000 units sold in 2012 to nearly 2.4 million in 2020, representing a compound annual growth rate of 37%. With lithium a key component to the electric vehicle market, it is crucial that North America has adequate supply to this critical element minus any geopolitical conflicts.

Credit Suisse has forecast a 10.3 percent annual growth in demand for lithium between 2009 and 2020. Global lithium demand has tripled over the past decade, and the global market price of lithium carbonate has tripled since 2001 to its current level of around $6,500 per ton. An industrial research report by David & Company forecasts that the global market for lithium-ion batteries will increase to $43 billion by 2020 compared to an $11 billion levels in 2010 with the primary catalyst the increased demand for electric cars.

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Rio Tinto drops $4-billion plan for new plant in Bécancour – by Jan Ravensbergen (Montreal Gazette – February 5, 2013)

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

Low titanium prices, belt-tightening torpedo 400-job facility

MONTREAL – Rio Tinto Fer et Titane, a wholly owned subsidiary of global giant Rio Tinto Group, has abandoned plans for a large new plant in Bécancour, the company said Tuesday.

Rio Tinto had been developing a plan to double the capacity of its Sorel-Tracy metallurgical plant, between Montreal and Quebec City, with a “greenfields” project in Bécancour Industrial Park.

The project would have cost in the ballpark of $4 billion. Up to 400 jobs would have been created by 2016. A collapse in titanium prices is one of the prime elements of the decision.

In a statement, Jean-François Turgeon, the unit’s managing director, cited two factors: “a background of weaker market conditions for our products and the need to manage and reduce our costs.” The project would have expanded the company’s mining and smelting capacities in Canada, Madagascar, South Africa and Mozambique, Turgeon said.

“We were conducting pre-feasibility studies on this project here in Canada and in Africa and this work has been suspended,” company spokesperson Bryan Tucker said.

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