Québec seeks to reinvigorate its mining industry with favourable investment policies

By David Duval

Mining has long been a major driver of Québec’s economy and the province ranks sixth in the world in the Fraser Institute’s Investment Attractiveness Index. In an effort to maintain and enhance its position, a strategic initiative announced by the provincial government lays out clear lines of action that it believes “will reinvigorate the mining industry and solidify Québec’s position among the leaders of responsible mining development.”

The initiative aims to ensure that rules and operating conditions are clear and predictable, particularly on issues such as land access; responsible mining development and the implementation of best practices will be a priority; the government will leverage its Plan Nord, an economic development strategy intended to develop the natural resources extraction sector in the part of Quebec north of the 49th parallel; local communities will be provided with assistance to ensure they benefit from mining projects; close attention will be paid to developing a qualified workforce, particularly among Aboriginal youth; and a specific emphasis will be placed on creating a network of suppliers and equipment manufacturers across all regions of Québec.

The province will also be focusing on niche commodities that have rarely or never been mined in Québec such as apatite, lithium, diamonds, rare earths and graphite. “With these projects shaping up, new opportunities are opening for value-added industries such as electric transportation,” the government notes.

The government intends to provide more effective support to exploration companies by allowing admissible companies to obtain $300,000 in financing per year for a three-year period. The program has a global budget of $10 million. Admissible companies must have their head office and principal exploration project in Québec. Other factors are also taken into account such as capital structure and costs, the quality of the project, its social acceptability, and the expertise and composition of the management team.

Tax assistance for exploration will also consider the remoteness of a project from infrastructure. According to a study carried out by the Mining Association of Canada in the Northwest Territories, Nunavut and Yukon, exploration costs are proportional to the distance from transport infrastructure, with the most remote projects costing six times more than closer projects.

Québec is a huge province and boasts a total area of 1.7 million km² of which only 1% is currently mined and 5% is covered by mining rights. The province has set its sights on the vast territory north of the 49th parallel and is currently expanding its transportation infrastructure to ensure easy access to the Far North.

One-fifth of Canada’s mining output comes from Québec and the resources exploited there are the most diverse in Canada: 15 metals and 13 minerals are produced and upgraded there including lithium, rare earths and apatite. In December 2020, Québec had 22 mines in operation and four mines in maintenance. Currently, some 29 development projects are under study,

The main metals mined are, in decreasing order of shipment value, gold, iron, nickel, titanium, niobium, copper and zinc.

In addition, Québec is one of the rare producers of niobium, titanium dioxide, cobalt and platinum in the world besides being Canada’s biggest producer of iron concentrate and zinc and the second-largest producer of gold. Its subsurface also contains huge potential for such substances as graphite, lithium, diamond, rare earths and tantalum.

According to the Institut de la statistique du Québec, the value of mineral shipments was more than $10.9 billion in 2019, a 15% increase over 2017.

The mining industry in Quebec employs over 45,000 people which is renowned for its proficient, highly skilled workforce. In particular, there is an impressive pool of qualified engineers in Québec, 63,000 in the Ordre professionnel des ingénieurs du Québec alone. Québec also boasts major world-class engineering firms with their own mining divisions, including Ausenco, WSP Global, Norda Stelo and SNC-Lavalin.

Ressources Québec is the gateway for companies seeking to invest in Québec’s energy and natural resources sectors. The agency supports companies at every stage of their natural resource exploration, development and processing projects or energy production, storage, transport and distribution projects. It offers a full range of financial products, including investments in share capital, debentures and various types of loans.

Supplementing private funding sources, Ressources Québec focuses on projects that have good yield prospects and that foster Québec’s economic development objectives. It also manages the $1-billion Natural Resources and Energy Capital Fund, which enables the Québec government to acquire equity interests in energy and natural resources companies.

A single point of access will help coordinate the delivery of the various permits required for mining projects and peat harvesting projects. This will ensure permits are received within a reasonable timeframe. Québec is clearly open for business and the province is laying the groundwork for an industry-friendly and supportive regulatory regime.