Quebec lawyers optimistic about revived Plan Nord

Quebec’s mining lawyers are cautiously optimistic about the impact of the Liberal government’s revival of the Plan Nord mining project.

“What lies ahead for Quebec’s mining industry is better than what the future looked like during the last two years when there was no clear signal from the PQ that the mining industry was welcome here, ” said Jean-Philippe Buteau in Norton Rose Fulbright Canada LLP’s Quebec City office. “That’s not to say we’re just a few weeks or months from being back to the good old days, but now there’s a majority government that has both hands on the steering wheel.”

Indeed, the stars seem to be lining up.

On July 8, Stornoway Diamond Corp. closed a $946-million comprehensive funding package for the construction of the company’s Renard Diamond Project in north-central Quebec.

“The government assisted Stornoway in building the access road to the project and was instrumental in obtaining financing,” said Michel Brunet in Dentons Canada LLP’s Montreal office.

Significant support from the new Liberal government, then, was instrumental in the deal’s culmination.

“Stornoway is a great signal that Quebec will stand beside the mining companies if their business plan makes good sense and they are willing to play by the rules,” Mr. Buteau said.

About one month earlier, Agnico Eagle Mines Ltd. and Yamana Gold Inc. completed their acquisition of Osisko Mining Corp. The new owners will take over operation of the Canadian Malarctic gold mine located in the Abitibi-Témiscamingue region about 550 kilometres northwest of Montreal. They also plan to expand and upgrade Osisko’s Kirkland Lake assets in Southern Abitibi.

“It’s clear that good people from good companies will invest in good opportunities in Quebec if the message from the government is that the door is open,” said Sebastien Vézina in Lavery, de Billy LLP’s Montreal office. “Obviously the Liberal government believes that these opportunities exist despite the current low commodity prices.”

Premier Philippe Couillard, who made the revitalization of Plan Nord a focus of the election platform that led to his majority government earlier this year, delivered on his promise quickly by incorporating what is now “Plan Nord +” in the June budget.

The bolstered Plan has added a $1-billion investment from the investment arm of the Quebec government to establish a network of contractors and businesses who could build what Mr. Couillard called a “complete mining industry,” including manufacturers of mining equipment.

Some $20-million of the $1-billion has been earmarked for a study on the feasibility of a new multi-user rail line providing access to the Labrador Trough, one of the world’s largest iron ore deposits. The government expects to partner with mining companies to determine the best rail option for miners seeking access to ports that will allow them to service international markets competitively.

Mr. Couillard also promised to share revenue with the regions affected to assist them with skills training and establishing businesses, all towards sustaining an entrepreneurial mentality. As well, the Liberals have announced the creation of Société du Plan Nord (Plan Nord Corp.), an independent body that will monitor the Plan’s progress, and promised to cut red tape by establishing a one-stop shop for environmental and other permitting.

“The current government is perceived as being much closer to business than the PQ, and it does appear to be giving Plan Nord considerable momentum with its financial commitments and establishment of priorities,” Mr. Brunet said. “Even the Minister of the Environment is seen as pro-business and pro-development.”

Adding to the confidence is the fact that talk of changing the mining tax regime has abated.

“The uncertainty about these changes did turn some companies and industries away from Quebec during the PQ’s regime,” Mr. Buteau said.

To a significant degree, however, the success of Plan Nord + is inextricably tied to commodities and metal markets.

“Everything the government is doing could mean nothing if metal and commodity prices remain low,” Mr. Buteau says. “But at the very least the mining industry is getting the signal that the government is welcoming investment for the next wave.”

And if all goes well, the government will certainly not suffer.

“By mid-term at the latest, the government will need the mining revenues to support its fiscal objectives,” says Marc Dorion in McCarthy Tétrault LLP’s Quebec City office.

If that’s the case, Plan Nord may have to move along even more quickly than it has in the last few months.

Financial Post

http://business.financialpost.com/2014/07/30/quebec-lawyers-optimistic-about-revived-plan-nord/