PQ gov't would 'redo' Quebec's northern development plan
Published Sunday, August 12, 2012 7:09AM EDT
Last Updated Sunday, August 12, 2012 10:27AM EDT
MONTREAL -- The Parti Quebecois says it will give Jean Charest's signature northern-development plan a makeover if it wins the Sept. 4 election, altering a project the Liberal premier hails as Quebec's ticket to prosperity.
The party's mining critic said a PQ government would "redo" the multibillion-dollar Plan Nord. It argues the initiative offers up Quebec's natural resources for next to nothing.
Martine Ouellet said the PQ is pledging to raise royalties; ensure more Quebec resources are processed in the province; and spend less public money to help private companies -- unless Quebecers get something in return.
"The Parti Quebecois is okay with developing northern mines, but certainly not in the same way as the plan I call 'The Plan Marketing du Nord,' " Ouellet said in an interview.
"We can't continue like this, we're letting our minerals go for free."
Ouellet also said the PQ would launch environmental reviews before each project and boost returns for Quebecers by processing more of the resources in the province.
The $80 billion Plan Nord, which the Liberals have made a key part of their re-election platform, would also take a different shape if the province's upstart third party, Coalition Avenir Quebec, takes power.
The right-of-centre CAQ alleges the Liberal plan will primarily benefit foreign firms and Quebec mining companies cosy with the Liberals.
Francois Legault, the CAQ's leader, has said he would ensure Quebecers benefit more from resources in the north by investing public money in the companies that operate there.
"We have an extraordinary opportunity over the coming years," Legault told party members at the CAQ's founding conference in the spring.
"We have a chance to have a huge territory in Quebec rich in natural resources... All countries dream of being in our situation."
The CAQ would create a $5 billion natural-resources fund within the province's pension-fund manager. The money would be used for investment in mining firms and earnings would be directed at reducing the debt.
A CAQ spokesman said the party wants to wait before commenting further on its ideas for northern development because it's planning to make a campaign announcement on the subject soon.
Investors, meanwhile, are keeping an eye on the Quebec election race.
Desjardins Capital Markets advised investors in a recent research report that Plan Nord's current form could be at risk.
"The plan in its current form could be at risk if there is a change in government or if a minority government is elected -- creating uncertainty for investors," said the July 30 analysts' report, released a couple of days before the start of the election campaign.
"While political stability remains an important driver for investments, the development of mineral resources and related infrastructure will still occur when the economics are favourable -- and these continue to be supportive."
The PQ says it would help Quebecers capitalize on this resource boom by imposing a 30 per cent tax on all mining profits that climb above eight per cent -- similar to a model recently introduced in Australia.
It also criticizes existing plans to spend $2 billion of public money on infrastructure that will be used mainly by private industry.
Ouellet said a PQ government would only spend public money on infrastructure for mining companies, like roads and airports, if the companies offered something in return. One option might be stakes in the projects.
These PQ proposals, however, could turn off potential investors, warns McGill University mining expert Roussos Dimitrakopoulos.
He said higher royalties and less public infrastructure investment would compound concerns about opening shop in the harsh northern climate.
"We keep adding problems that we don't know if they can be dealt with," he said.
"You'd probably need a hell of a lot higher commodity prices and profit margins to make them interested."
Meanwhile, a possible public-private joint project could already be taking shape.
It was announced last week that Canadian National Railway will work with mining companies and the Caisse pension-fund manager to study the possibility of building a rail line, which analysts estimate could cost $5 billion.
Natural Resources Minister Clement Gignac defends the Plan Nord, saying Quebec already has one of the highest royalty models in Canada.
The province recently raised the rate -- to 16 per cent of profits -- from 12 per cent. The PQ would would, in addition to its 30 per cent tax on so-called "super-profits", replace the Liberal royalty on profits with its own five per cent royalty on the value of the minerals extracted from the ground.
The Liberals say their opponents should be careful to avoid overreaching.
"I prefer to have 16-per-cent royalties on many project activities than have 25-per-cent royalties with no projects at all," Gignac said in an interview.
Gignac said Australia can charge higher rates because it is closer to the Asian markets and production costs are lower than in the frigid climate of northern Quebec.
He acknowledged that the cycle of commodity prices also brings uncertainty, but said government experts will manage the risk.
The actual mining, however, should be left up to miners, Gignac said.