by Greg Klein | June 6, 2014
Downplayed if not dismissed by the previous Parti Quebecois government, Quebec’s Plan Nord is back “in an enhanced version,” the province’s new Liberal government says. Its 2014-2015 budget includes a number of funded initiatives to encourage infrastructure and resource development north of the 49th parallel, making natural resources “the centrepiece of Quebec’s economic development.”
Some spending highlights released June 4 include major road work, a feasibility study on a Labrador Trough rail line, government investment in mining and oil and gas companies, and training for northern residents.
A Northern Plan Fund commits $63 million during 2014-2015 for projects like “major work on road infrastructure in the Plan Nord territory, including the extension of Highway 138 and the repair of Highway 389 in the Côte-Nord region and the James Bay Highway.”
The government also plans to study the feasibility of a new rail line to the Labrador Trough. Media accounts put the price tag at a maximum of $20 million.
Finance Minister Carlos Leitao confirmed his government’s “intention to acquire equity interests in companies in the mining and oil and gas sectors, so that Quebec society can obtain, as a shareholder, a direct share in the profits.”
Plan Nord will encourage smaller, local hydroelectric projects while spending $1.1 billion on a fourth transmission line from the north to serve the northern Montreal “agglomeration.”
Education and training for northern residents will get a $100-million boost, the Liberals stated.
But the previous government’s controversial tax regimen stays put—for the sake of stability, Leitao claimed. Acknowledging that the taxes contributed to declining investment, he stated, “We will restore industry and investor confidence by ensuring the application rules are favourable, stable and foreseeable. We are maintaining the existing mining tax regime in order to preserve that stability.”
The government will support small mining companies and Quebec ownership, Leitao added.
To co-ordinate development in consultation with stakeholders, the government will create a new agency, la Société du Plan Nord.
Champion Iron TSX:CIA welcomed the railway feasibility study, even calling it “a defining point in the history of the mining industry in Quebec.” The company’s June 6 news release stated the global steel industry recognizes the Labrador Trough’s potential “to supply high-quality iron ore product, with a range of listed and private iron ore groups active in the region including Champion Iron.”
The company credits the Trough with “one of the world’s largest iron ore accumulations, with annual production of some 50 million tonnes.”
Two railways now connect the region with the St. Lawrence River deep-sea port of Sept-Iles. The 420-kilometre Cartier Railway, a subsidiary of ArcelorMittal NYE:MT, serves the company’s Mont-Wright operation. The 418-kilometre Quebec North Shore and Labrador Railway links operations of the Iron Ore Company of Canada (held 59% by Rio Tinto NYE:RIO) in Labrador City, on the Trough’s Newfoundland side. The QNS&L is obligated to carry other cargo, making it the region’s only rail accessible to third parties.