Introduction to Québec Mining

Leveraging strength for a new era of mining

In learning of Québec’s cultural highlights, things quickly turn to food. In particular, the indulgent concoction of cheese curds, gravy and French fries called poutine. Addressing the popularity of the regionally conceived dish, Montreal-based chef Martin Picard said: “It is not haute gastronomy, but it permits Québec to get more interest from the rest of the world.”

Although it is unlikely mining will ever elicit the same level of pride amongst Québécois that poutine does, it nonetheless carries a rich history of strong government and community support that warrants the attention of the mining world. Look at the Fraser Institute's Annual Survey of Mining Companies, and you will find Québec is a perennial top contender when it comes to investment attractiveness. Behind its consistency as a leading mining jurisdiction is a recipe of government incentives, skilled workforce, social license, and a financing ecosystem that make it a remarkably propitious region to mine. It also has the legal transparency and quality geological information database that enable companies to confidently explore the province’s rich endowment of minerals and metals. As Jean-Francois Béland, vice president, Ressources Québec put it: “Mining is part of our DNA.”

Mining fuels development

The fundamental reason Québécois support the development of mining is that it delivers socioeconomic results. In conversation with Minister of Energy and Natural Resources Jonatan Julien, he highlighted that mining accounts for 32,000 jobs in Québec, half of which are direct jobs and well remunerated at around C$100,000 annually.

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Moreover, in royalties alone, Québec’s mining industry accounted for C$393 million in revenue in 2020, a welcome increase compared to the C$290 million it contributed in 2019. Minister Julien stressed that when metal prices are strong, it positively impacts remote mining regions, giving government the financial wherewithal to invest in development. “We are implementing our own development plan for the North with C$1.4 billion in public investment in infrastructure and technology,” he stated.

Josée Méthot, president & CEO of the Québec Mining Association (QMA) pointed out that mining’s impact is felt in urban areas equally as much as it is in the remote areas where many of the mines are located. “We find that a great portion of the mining industry’s large network of suppliers is often in large city centers such as Montreal, so not only do remote areas of Québec benefit from mining, large cities do as well,” she affirmed.

An explorers paradise

Given the cyclical nature of the mining business, it is inevitable that exploration and development funding will be scarce at some point. However, even when times are good, mineral companies still need to stretch every dollar. Québec’s system helps companies achieve this. This includes strong government funds willing to invest in exploration such as SIDEX, Le Fonds de Solidarité FTQ, Caisse de dépôt et placement du Québec (CDPQ), and Investissement Québec, exceptional infrastructure in producing regions like the Abitibi for gold, the Labrador Trough for iron ore, and clever incentives such as flow-through financing. Furthermore, up and coming prospective areas such as James Bay and Chibougamau have experienced an uptick in exploration activity as the past year progressed, whilst companies implemented health measures allowing them to return to site for exploration. According to Mathieu Savard, chairman of the board of the Québec Mineral Exploration Association (AEMQ): “In terms of fiscal incentives, there is no match in Canada: You can get more work done for each dollar spent than anywhere else in the country.”

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Filling the budget gap

After posting a 5.3% GDP decrease in 2020 after the province, along with the rest of the world, navigated Covid lockdowns and uncertainty, government ambitions to achieve a balanced budget have been put on the backburner. In many mining jurisdictions around the world, extractive industries would be one of the first targets to help fill the budgetary gap, but that is not the case in Québec. Even at a time when the government is forecasting a budget deficit of C$12.3 billion for fiscal year 2021-22, and damage caused by the pandemic leaving a structural deficit of C$6.5 billion, the province remains supportive of its mining incentives. Instead of dialing back, the mining industry has been targeted by the government as a key industry in Québec’s post-pandemic economic recovery.

La Grande Alliance

While financial incentives are a crucial tenet of Québec’s exploration environment, relations with communities and local First Nations groups are equally important. License to operate routinely tops the list of risks posed to the mining business, but Québec has been very proactive in cultivating strong community relations. Explaining the extent of how important getting this aspect right is, Justin Reid, CEO of Troilus Gold, whose Troilus gold project lies in the Frotet-Evans belt, noted: “You can have the best asset in the world, but if you do not have social license, it is worthless.”

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A shining example of advancement concerning community relations is La Grande Alliance, which is a C$4.7 billion dollar infrastructure agreement signed in February 2020 between the Cree and the province of Québec. It proposes road extensions and upgrades, a 700 km railway to the far northern reaches of Cree territory, a deep sea port, new power lines and the creation of a network of protected areas, among other infrastructure projects to be built in three stages over the next 30 years.

Under the plan, sensitive areas would be protected from development, with infrastructure built according to both community and industry needs. This will enable companies to unlock the wealth of the region’s varied natural resources and create jobs and business opportunities for the Cree and James Bay residents. Azimut Exploration president & CEO, Jean-Marc Lulin noted that since the signing of La Grande Alliance: “There is a strong will from both the Québec government and the Cree Nation to move ahead in a new spirit. The Cree Nation is very proactive in supporting the mining industry to progress with new mining projects.”

Image courtesy of Amex

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