René Branchaud, Partner,

Josianne Beaudry, Partner,

LAVERY

"We have been involved in several acquisitions of either companies or properties over the past year or two. This trend is continuing, with a lot of US and multinational corporations acquiring projects or mining companies in Québec."

How has Québec’s mining industry evolved over the past two years?

RB: We have seen a lot of interest over the past few years in strategic minerals, such as lithium, niobium, nickel and other minerals that are used for the development of batteries, not only for cars but batteries in general. Québec has a lot of mining resources devoted to base metals and gold, but we see more and more junior mining companies as well as larger companies, such as BHP, investing in exploration in Québec to find strategic and critical elements.

JB: There is also a lot of interest in R&D because these minerals are more difficult to find. Technologies are being developed to better process them. This differs from gold or silver where we export the minerals without transformation. The government wants to incentivize companies, not only to extract the minerals, but also to transform them in Québec.

How is the provincial government supporting industry from an infrastructure and permitting standpoint?

RB: The government is investing in infrastructure up north, including the construction of roads and development of cities, while also trying to streamline the process to obtain permits. Companies need around 600 permits to open a mine, so streamlining the permitting would save time and money.

JB: Although you need many permits to develop a mine in Québec, in the most recent Fraser Institute report, Québec has raised its ranking, and one of the reasons for its high position is that it is easy, rapid, and transparent to get the permits.

What are the biggest challenges companies face when developing a mine in Québec?

RB: It is not unique to Québec, but the “not in my backyard” symptom can be an impediment to the permitting process. We all want electric cars, but there is a reluctance to produce the minerals here, and that is a huge problem even in the Abitibi now. To overcome social acceptability challenges, companies must make sure they have good ESG practices that will help alleviate this problem. The government and its different arms like Caisse de dépôt are huge investors pushing hard to develop good ESG practices, so I think industry is moving in the right direction. CDPQ will make sure that by 2050, all of its investments will be carbon neutral, so the government is pushing for positive changes in ESG.

Beyond financing, what are some of the biggest advantages for companies operating in Québec?

JB: The presence of natural resources is of utmost importance, but also hydroelectricity is very cheap, which is very attractive for project developers. Québec is also renowned for having skilled professionals in the mining industry, and from a political point of view, we are a very stable province. These factors bring comfort to investors for the development of mining projects.

To what extent is Québec’s cheap hydroelectricity a draw for companies?

RB: Hydroelectricity was very significant for the creation of the aluminum industry. Québec does not produce bauxite. It comes mainly from Brazil, but the companies were bringing the bauxite to Québec to produce aluminum because of the agreements with Hydro Québec for the availability of cheap electricity. The government can do the same thing for other corporations that will transform minerals in the province, particularly for significant projects that require a lot of energy. Corporations have significant advantages working in Québec, especially in this era of ESG where you have to be carbon neutral.

What are your views on the current M&A environment in Québec?

RB: As an independent law firm, Lavery works closely with law firms in Ontario that have no presence in Québec, we have been involved in several acquisitions of either companies or properties over the past year or two. This trend is continuing, with a lot of US and multinational corporations acquiring projects or mining companies in Québec.

JB: As long as metal price are strong, transactions are more compelling. Although we believed at the start of the pandemic that there would be less transactions, and that people would prefer to remain prudent, we have seen a more active market than we expected.

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