Destination Plan Nord Capturing the mining potential of Northern Quebec

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1 Destination Plan Nord Capturing the mining potential of Northern Quebec Nochane Rousseau Partner and Quebec Leader, Mining and Plan Nord Initiative s Americas School of Mines May 15, 2012

2 Population: 8 millions Mainly French speaking

3 What is Plan Nord? 2

4 Agenda 1. The Quebec Mining Industry 2. Why Plan Nord? 3. Infrastructure Needs 4. Société du Plan Nord and Investissement Québec 3

5 The Quebec Mining Industry 4

6 Mining industry Driving Northern Quebec development Accounts for over 34,000 jobs in Quebec, of which 10,000 are located in the Plan Nord territory Quebec ranking in Fraser Institute Survey: 5 th place (2011 proposed new mining act), 4 th place (2010 changes to the mining duties) and 1 st place (2009) Territory comprises four regions well-known for their geological features: James Bay region: gold, diamonds, uranium, zinc and copper Nunavik: nickel and copper North Shore and Labrador Trough: iron, copper, zinc and nickel Saguenay Lac-Saint-Jean: niobium and tantalum 5

7 Mining industry Driving Northern Quebec development (cont d) 27 Active mines: $8.1B value of deliveries in Projects in evaluation and development 6

8 Quebec is competing with the major mining regions across the world Skilled labor Global expertise Geological database Economic and political stability Size of the territory Large and diversified mineral potential Clean and affordable energy (hydro) Abundant water Plan Nord! 7

9 Why Plan Nord? 8

10 Plan Nord has been elaborated to take a stance in this new world, further broaden Quebec s approach centred on openness to the world and strategic alliances, and develop our economic potential through a sustainable development partnership that respects First Nations, the Inuit and local communities. Jean Charest Premier of Quebec 9

11 A unifying vision Plan Nord must be an exemplary sustainable development project that integrates energy, mining, forest, bio-food, tourism, and transportation development, the development of wildlife, environmental protection, and the preservation of biodiversity. It will foster development for the benefit of the communities concerned and Quebec overall, in a spirit of respect for cultures and identities. 10

12 Why Plan Nord? Economic development project Develop Quebec s resource potential and respond to China and India demands Decrease Quebec dependency to its principal business partner (US) Plan Nord may be an antidote to economic slowdown (e.g. 2008) Strategic occupation of the territory Arctic (high potential for natural resources) Northwest Passage 11

13 Quebec s Development Locality Airport Hydroelectric station Hydroelectric lines Roads Northern limit for commercial attribution of wood Mines (M) Hydroelectricity (H) Forestry (F) Agriculture (A) Next 100 years (M) Actual (MH) 100 years (MHF) 200 years (MHFA) JM Lulin, Azimut Exploration,

14 Area covered by Plan Nord North of the 49th parallel 1.2 million km2 Almost twice the size of Texas! 72% of Quebec s geographic area Less than 2% of Quebec s population 13

15 A vast territory to discover A bright future with promising projects for Aboriginal and local communities: Over 120,ooo people (including 33,000 Aboriginals) 4 Nations: Inuit, Cree, Innu and Naskapi 32 Communities located in the James Bay, Saguenay and CôteNord regions 14

16 Development of economic potential Energy Mining Forest Wildlife Tourism Bio-food Broader economic activity will impact Quebec as a whole Over $80 billion in public and private investment in the Plan Nord territory: $47 billion from Hydro-Québec (HQ) in renewable energy development Develop an additional 3,500 megawatts of clean, renewable energy Connected and not connected projects to the HQ power grid $33 billion in mining and public infrastructure sectors 15

17 Mining industry Driving Northern Quebec development At least 11 new projects are under development: Generate over $11 billion in investments Create 11,000 jobs in the construction phase, and nearly 4,000 jobs a year once in operation 16

18 Mining industry Driving Northern Quebec development (cont d) 11 New projects Xstrata Nickel Raglan Mine, phase 2 Location Mineral ore Investment Northern Quebec (Nunavik) Nickel, Copper $500M Saguenay Lac-Saint-Jean Niobium, Tantalum $275M - $325M Côte-Nord Iron $360M Côte-Nord Iron $2.1B Northern Quebec (James Bay/Eeyou Istchee) Uranium $340M (Press release, August 2011) MDN Crevier project (Preliminary Economic Assessment, March 2010) New Millennium Iron Corporation DSO project (Feasibility study, February 2011) ArcelorMittal Mines Canada Mont-Wright and Port-Cartier projects (Press release, March 2011) Strateco Resources Matoush project (Preliminary Economic Assessment, April 2010) 17

19 Mining industry Driving Northern Quebec development (cont d) 11 New projects (cont d) Location Mineral ore Investment Stornoway Diamond Corporation Renard project Northern Quebec (James Bay/Eeyou Istchee) Diamonds $800M Northern Quebec (Nunavik) Nickel, Copper $800M Côte-Nord Apatite $750M Northern Quebec (James Bay/Eeyou Istchee) Zinc, Copper $160M Northern Quebec (James Bay/Eeyou Istchee) Gold $40M Northern Quebec (James Bay/Eeyou Istchee) Gold $1.4B (Feasibility study, November 2011) Canadian Royalties, a subsidiary of Jien Canada Mining Nunavik nickel project Mine Arnaud Arnaud project (Yara International) (Website) Xstrata Zinc Bracemac-McLeod project (Feasibility study, September 2010) Metanor Resources Bachelor Lake project ( Technical report, April 2011) Mines Opinaca, a subsidiary of Goldcorp Éléonore project (Press release, February 2011) 18

20 Mining industry Driving Northern Quebec development (cont d) Other projects Attikamagen (Champion Minerals Inc.) B-Zone (Quest Rare Minerals) Mineral ore Iron Rare earths, yttrium, zircon Belleterre (Conway Resources Inc.) Gold BlackRock (BlackRock Metals Inc.) Iron, titanium, vanadium Duncan (Ressources minières Augyva inc.) Eastmain/Rose (Critical Elements Corp.) Great Whale Iron (Niocan Inc.) James Bay Lithium (Lithium One Inc.) KéMag (New Millenium) Iron Lithium Iron Lithium Iron, titanium, vanadium 19

21 Mining industry Driving Northern Quebec development (cont d) Other projects Lac à Paul (Ressources d Arianne) MacLeod Lake (Western Troy Capital Resources Inc.) Mineral ore Apatite Gold, copper, zinc Lac Otelnuk (Adriana Resources Inc.) Iron Lac Tio (Rio Tinto Fer et Titane Inc.) Iron, titanium Langlois (Nyrstar Canada) Oceanic Iron Ore Corp. PD1 (Xstrata) Vezza (N. A. Palladium Ltd.) Whabouchi (Nemaska Exploration Inc.) Gold, copper, zinc Iron Gold, copper, zinc Gold Lithium 20

22 Infrastructure Needs 21

23 Plan Nord in numbers Actual transportation infrastructure in the Plan Nord territory Type Infrastructures Rail 1,190 km of rail lines making up the railway network 5 private rail networks Marine 4 of Quebec s 10 largest ports by tonnage handled Port of Sept-Îles is the third largest in Canada by tonnage handled Air 46 airport infrastructure elements, including 26 airports and 6 heliports (government administered) Roads km of logging roads West region concentrated within the James Bay/Eeyou Istchee region East region Routes 138, 389 and 385 Hydroelectric 21 hydroelectric stations Housing public housing units (often overpopulated and require renovation) Few owner-occupants in Nunavik (high construction and occupancy costs) Source: Plan Nord, Building Northern Quebec Together, The Project of a Generation. Government of Quebec

24 Transportation infrastructures

25 Hydroelectric infrastructures 24

26 Mining industry s infrastructure needs At the beginning of Quebec s new mining boom (around ), mining companies used the existing transportation infrastructure, mostly built during the 1950s to 1970s This historical infrastructure is now being used at almost full capacity The mining industry s continued development in Quebec depends on the provision of new infrastructure Contribution from public and private partners to fund investments for transportation infrastructure 25

27 Making Northern Quebec accessible Projects already under way or pending: This year, Quebec government will be spending $51 million mainly on studies: upgrading of northern airports $10 million for Hydro-Quebec to evaluate the feasibility of extending the hydroelectric network towards Nunavik construction or rebuilding of four major roads studies for new deep-water port studies of possibly opening up the Northwest Passage $30 million for Gaz Metro to analyze the possibility of extending its gas pipeline to the North Shore Caisse de depôt to work with Canadian National on a railway projet aimed at linking the port of Sept Iles with Kuujjuaq 26

28 Making Northern Quebec accessible (cont d) Examples of a public-private partnership between Stornoway and the Quebec government Renard Diamond Project Owned 37% by the Quebec government $331.6 million for the construction of the Route 167 extension Two separate agreements executed, Stornoway has agreed to: - Contribute $44 million, amortized over a ten-year period, starting in July 2015 and financed by Quebec at 6.3%. Partly conditional on: completion of the road on schedule receipt of all regulatory approvals for the construction of the Renard project successful completion of Renard project financing - Contribute a maximum of $5,000 per km, or $1.215 million per year, to the maintenance of the road during operation. Other partners may also be called upon to contribute to the financing of this infrastructure 27

29 Société du Plan Nord and Investissement Québec 28

30 Société du Plan Nord To be created in 2012 Proposed Bill n 27 : An Act respecting the Société du Plan Nord is currently under consideration by the Assembly A government corporation to coordinate implementing Plan Nord by: coordinating public investment in infrastructure and the social sector coordinating the implementation of projects included in the action plan negotiating financing packages for the projects it s responsible for acting as a key partner for local and Aboriginal communities 29

31 Plan Nord financial framework Creation of Fonds du Plan Nord: A special-purpose fund devoted to the Plan Nord Innovative funding: Will be funded by a portion of the tax revenues generated from economic activities carried out in Northern Quebec. These tax revenues will be collected from new mining projects, new Hydro-Québec projects and public infrastructure projects Contributions that will be required from private and public partners to fund infrastructure built for their own use will also serve as a source of revenue for the Fund 30

32 Expected financing structure for Plan Nord Source: Plan Nord, Building Northern Quebec Together, The Project of a Generation. Government of Quebec

33 Investissement Québec Investissement Québec is both a financial institution and an economic development agency of the Quebec government $1.2B available for mining projects allocated to Investissement Québec for equity interest: - Capital stock - Convertible debenture - Joint ventures - Etc. 32

34 Plan Nord Team Leader, Plan Nord initiative Mining Nochane Rousseau Engineering and Construction Sonia Boisvert Infrastructure and Project Finance Richard Deslauriers Sustainability Janice Noronha Government and Public Services Daniel Cadoret Inuit and First Nations Marc-Stéphane Pennee Energy Marc Fournier Client Relationship Management Dominique Fortier