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EMJ Quebec 2011

EMJ Quebec 2011

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Published by: José Gregorio Freites on Sep 22, 2013
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TABLE OF CONTENTS
Rediscovering a Vast Mining Territory ............
p48
Interview with Minister Serge Simard ............
p56
Gold Production in Québec ..........................
p58
Base Metals ...............................................
p64
The Abitibi’s Remaining Potential .................
p67
Other Areas, Other Minerals ..........................
p72
Rare Earths and Strategic Minerals ...............
p77
A New Day for Canada’s Iron Ore...................
p86
Raising Funds in Québec .............................
p90
A Hub of Engineering Expertise .....................
p93
Québec’s Services Industry ........................
p101
This report was researched and prepared byGlobal Business Reports (www.gbreports.com) for
Engineering & Mining Journal.
Editorial researched and written by Alfonso Tejerina,
Clotilde Bonetto Gandolfi, Sarah Timson and PatriciaMatey Garcia. For further information, contact info@
gbreports.com
NOVEMBER 2011
Cover photo: Canadian Malartic open-pit gold mine inthe Abitibi (courtesy of Osisko Mining Corp.)
 A REPORT BY GBR FOR E&MJ
M  QUÉBEC
 As the province’s gold and iron camps witness a true renaissance,exploration in new areas unveils great potential in other commodities.
 
48
E&MJ
NOVEMBER 2011 www.e-mj.com www.e-mj.com
E&MJ
NOVEMBER 2011 49
Québec: Redscover a Vast M Terrtory
The province is attracting fresh investments to traditional mining areas, as wellas opening up the immense potential of the Greater North.
Québec is a great place for mining, as itsFraser Institute ranking as the world’s topmining jurisdiction for three years run-ning bears witness. It fell to fourth placein the latest survey, but is still considereda tantalizing location for a sector boast-
ing healthy growth figures. According to
the Québec Mining Association (AMQ inFrench), investments in exploration anddevelopment have increased from lessthan C$1 billion in 2005 to C$2.5 bil-lion in 2010, with expectations of reach-ing C$3 billion by the end of this year.The province has benefited from highmetal prices and mining exports in 2010amounted to C$6.8 billion, C$5.2 billion
of which came from metallic mining.In terms of volume, it is gold and iron
ore that steal the spotlight. Gold produc-
tion has remained quite flat over the last
years, between 750,000 and 900,000 troyounces/y (810,000 oz/y in 2010); howeverthe addition of Canadian Malartic in 2011,a large open-pit mine operated by Osisko(a remarkable story of a junior companybecoming a large producer in a record pe-riod of time), is already having a significantimpact on the province’s gold output, ex-pected to reach more than 1.1 million oz/ythis year and roughly 1.4 million in 2012.On top of this, Goldcorp’s upcoming invest-ment at Éléonore in the James Bay will alsobring an additional 600,000 oz/y.With regard to iron ore, the LabradorTrough area, around the border of Québecand Newfoundland and Labrador, is hometo an exploration and development frenzy,with all active players expanding their cur-rent operations, including Rio Tinto IOC and
Mining in QUÉBEC
ArcelorMittal. Other large players, such asChina’s WISCO and India’s Tata Steel, arealso present through partnerships in ad-vanced exploration projects. The latest big
news on the mergers and acquisitions front
was the takeover of iron ore producer Con-solidated Thompson by U.S.-based Cliffs
Natural Resources, in a transaction valued
at C$4.9 billion.Production of iron ore attributable to theQuébec province in 2010 was 17 millionmt/y, an 18% increase year-on-year. Other
significant commodities on the metallic side
include silver (4.1 million oz/y in 2010),nickel (28,000 mt/y), zinc (201,000 mt/y)and copper (24,000 mt/y).
not umber 1 aymore. Why?
The latest Fraser Institute’s Survey portraysAlberta, Nevada and Saskatchewan as bet-ter places to do mining than Québec. Thisis probably due to the hike in mining du-
ties and the uncertainty over changes to
the province’s mining regulations. On theirside explorers, who enjoy a very favorableframework with some pretty unique tax in-centives, point at a more restricted accessto land as a negative trend. “The govern-ment has defined a number of protectedareas to comply with international commit-ments, which is something we support asan association. The problem lies in the wayyou do this. Currently, 9% of the territory isprotected, but as an industry we have notreally been consulted. A further 3% needsto be defined as to comply with the 12%commitment by 2015, yet we hope thatthis will be done in closer consultation withthe mining and forestry companies, as well
as the locals. If you add other areas where
exploration is restricted, 20% of the terri-tory is not accessible. That is a lot,” saidGhislain Poirier, President of the QuébecMineral Exploration Association (AEMQ).Pierre Bertrand, CEO of government-owned exploration company Soquem, said:“It would be great to have thorough stud-ies done so as to confirm the inexistenceof geological potential where a protectedpark is going to be created; however thesums needed for that would be colossal.
Furthermore, the mining industry is not the
only one that would be affected as other in-dustries could be interested in a particularterritory, like the forestry industry. There is
a need to accommodate the interests of ev
-eryone and that is certainly a difficult task.”The fact that in the past the Québec gov-ernment has had to pay for the remediationof abandoned mining sites has also prompt-ed new demands from the general publicfor the mining sector to contribute more to
Mining in QUÉBEC
Photo courtesy of Osisko
Ghislain Poirier, President, AEMQ
 
50
E&MJ
NOVEMBER 2011 www.e-mj.com www.e-mj.com
E&MJ
NOVEMBER 2011 51
“It is not easy to get a permit here, but it isan extremely transparent process and har-
monized with the federal system. In other
provinces and countries, the process is nolonger as transparent and easy to follow.”Xstrata Zinc’s vice president of opera-tions, Jean Desrosiers, thinks along the samelines. “In Québec, the rules of the game are
very clear. If you do the right things and en
-gage the right people from the beginning,the outcome is quite predictable; you knowthat you will get your permits,” he said.Stability is indeed a key aspect for long-
term investment. As the world requires anincreasing amount of resources, the security
of supply is paramount. If all the proceduresare done in the right manner and the permitsare in place, it is assumed that an operat-ing mine in Québec will only have to worryabout global metal prices and its own opera-tional challenges, but not about the govern-ment causing production to halt. If investors
and final users of commodities have arrived
in the region to explore the potential of Qué-bec in strategic minerals like lithium, nio-bium and rare earths among others, it is notjust because they see the province’s greatgeological upside, but also because theyknow they stand a good chance of puttingdeposits into production here.
Socal acceptablty
To maintain its privileged position, the in-
dustry needs to find the formula to grow
sustainably and obtain social acceptability inthe process, as well as to find enough peopleto enable this growth; a major headache that
is common worldwide. In this huge territory,
where mining has been traditionally concen-trated in a few specific spots, the assumptionthat ‘Québec is a mining province’ is prob-ably misguided and has the negative effect ofmaking the industry rest on its laurels.As anti-mining groups have gainedstrength, the industry has finally responded
with the recent creation of Minalliance, a
communication-oriented coalition that in-
cludes the two main industry associations,the AMQ and the AEMQ.
“The mining industry in Quebec is un-der severe attacks by a number of special-interest groups. We are not communicatingproperly the benefits of the industry. Thatbecame evident from the Auditor General’sreport that led to a raise of mining royalties.Changing the industry’s image in a mean-ingful way requires a long-term effort,” saidNormand Champigny, chairman of the board
of Minalliance.
While towns like Val-d’Or and Rouyn-
Noranda are definitely mining towns, with
a strong past and present link to the in-dustry, youngsters in Montréal, Québec’slargest city, may know surprisingly littleabout mining.“There is a fundamental misunderstand-ing that develops when people live in thecities. A Blackberry has about 30 differ-ent minerals and anti-mining protestorsuse these. I don’t know what they woulddo without them; we would all have togo back to carrier pigeons. And even car-rier pigeons need to be fed wheat, to growwhich you need fertilizer, made of potash,which is mined. If you don’t grow it, youmine it; it is a very simple axiom of life. It
is a failure of the industry that we have not
properly maintained the educational func-tion of where we fit into society,” said the
President of the Canadian Institute of Min
-ing, Metallurgy and Petroleum (CIM), ChrisTwigge-Molecey.The lack of positive information from thesector has allowed negative perceptions tosurvive as stereotypes through generations.“72% of the public responded to Minal-liance’s survey in favor of the mining sec-
tor. Having said that, the NGOs still raise
the issue of old abandoned sites from 50-60 years ago when there was no environ-mental regulation,” said André Gaumond,
President and CEO of Virginia Mines, the
company that discovered the large Éléonoregold deposit.Gaumond and Champigny were amongthe promoters of a successful industry ini-tiative called the Restor-Action NunavikFund, whereby a partnership between theprovincial government, the First Nationsand 30 mining companies and institutionsput together C$6 million to clean up old,abandoned exploration sites in the northernarea of Nunavik.“The mining industry today is totally dif-ferent; we are actually leaders in terms ofenvironmental care and the largest employerof First Nations,” said Gaumond.
Uvel the north’s potetal:the Pla nord
In May, Québec’s Premier Jean Charestdisclosed the details of the ambitious ‘PlanNord’; a program of expected investmentsworth C$80 billion over a 25-year period.The aim is to develop an area of 1.2 millionkm
2
into a haven for investment in mining,
infrastructure and renewable energy. Thefirst two would account for C$33 billion ofthe total amount, with 11 mining projectsin the pipeline.“The north makes up two thirds of theprovince and is being slow in development.The whole northern part was only handedover to Québec’s provincial authorities in1912. It only began attracting attention inthe 1950s with the development of HydroQuébec and some forestry operations. It isa new world and a lot of work needs to bedone there,” said Raymond Savoie, formerdelegate minister of Mines of Québec andchairman and CEO of Ditem Explorations, ajunior company.While skeptics in the industry may seethe Plan Nord as a marketing campaign at
a moment where the government is increas
-ing mining duties and tightening up the reg-ulations, it cannot be denied that facilitatingthe development of the north will ultimatelyhave a positive economic impact. “It is likethe saying, ‘if you build it, they will come.’ Ifthey put in new roads and railways then wecannot help but access new opportunities,”said Rob Metka, Hatch’s managing directorin Québec.
Grant Arnold, President and COO of Ca
-nadian Royalties, a Chinese-owned nickelplayer said: “The economic engine thatdrives most of the province, outside ofGreater Montréal and Québec City, is allresource-related. I firmly believe the govern-ment is on the right track identifying miningas one of the main drivers of employment incertain regions.”One of the main aspects of the Plan Nord
is that it enters the area of influence of the
First Nations. The idea is to partner withthese communities to promote employment
and economic growth in areas where very
little activities can be developed due to theextreme weather conditions. Allen Palm-iere, CEO of Adriana Resources, a companyadvancing a massive iron ore explorationproject in the north, gave his perception onthe situation of the Inuit people. “They arenot connected to the power grid. Everythinghas to be brought in by freighter during the
summer window, therefore living costs are
extremely expensive. The entire populationof the area of Nunavik is only 40,000 peo-ple so there is not an economic justificationthe province’s coffers. The increased min-ing duties of 16% (as compared to 12%before), combined with high metal prices,will boost the province’s revenues by 328%between 2010 and 2015, from C$327million to C$1.4 billion, according to theAMQ. The new regime will tax profits on amine-per-mine basis, thus preventing com-panies from reducing the taxable profits inone particular operation with the losses in
another one.
In parallel to this, the environmentalregulations are also becoming stricter. Soonmining companies will have to provide adeposit of 100% of the costs of mine re-mediation before mine closure, as opposedto 70% now. The period to give this moneywill also be shortened. “The governmentof Québec is probably responding to theperception that there has not been enoughregulation in the past. From what I have
seen, the new rules are generally aligned
with the industry’s best practices anyway,so investment will not stop pouring intoQuébec,” said Lithium One President andCOO, Patrick Highsmith.
Tyler Mitchelson, President and CEO of
Royal Nickel Corp., a company advancingthe Dumont nickel project, points at Qué-bec’s stability as a very important aspect.
Mining in QUÉBEC
M  Québec  the 21stCetury: the Era of SocalAcceptablty
By Frank Mariage,
Partner, Miller Thomson LLP
In 2006, the National Assembly ofthe Province of Québec enacted theSustainable Development Act, whosepurpose “is to establish a new manage-ment framework within the Administra-tion to ensure that powers and respon-sibilities are exercised in the pursuit ofsustainable development.” The era ofpromoting sustainable development ingovernment legislation had begun; itwas therefore only a question of time before existing mininglegislation would be affected by this noble objective.In May 2011, after a first failed attempt (Bill 79 was present-ed in December 2009 and never made it through the legislativeprocess), the Minister for Natural Resources and Wildlife, SergeSimard, presented Bill 14 entitled “An Act respecting the devel-opment of mineral resources in keeping with the principles ofsustainable development.” The bill proposes a series of amend-
ments to the Mining Act, including a change to the title, which
is proposed to be the same as Bill 14.The bill proposes changes to obligations of mining claimand mining lease holders, such as: the obligation to inform aland owner within a delay of 60 days following the registra-tion of a mining claim; the obligationto inform the municipality at least 90days before work on a mining claim isto begin; annual reports to be filed onwork performed and to be performedon a mining claim; the Minister given
authority to refuse or to terminate, at
any time, a mining lease in the publicinterest; the obligation to submit a re-habilitation plan and to furnish a guar-antee covering the costs of such plan atthe beginning of the process; the grantof mining lease subject to the holdingof public consultations by the applicantand the setting up of a monitoring com-mittee to ensure that the undertakingsmade by the applicant in public hearings are carried out; andthe exclusion from mining exploration and operations of areaslocated in an urbanization perimeter or an area dedicated tovacationing (for any work on such excluded claims to be car-
ried out, a holder will need the consent of the concerned local
municipality, and no compensation will be provided for anyconsequence resulting from the failure to obtain such con-sent).To date, the bill has not been well received by the industryor by environmental groups, each group opposing it for com-pletely different reasons. The government has begun consulta-tions on the bill, which is expected to go through the usuallegislative process this fall.
Frank Mariage, Partner, Miller Thomson LLPAndré Gaumond, President and CEO,
Virginia Mines

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