Destination Plan Nord

(1)

Destination Plan Nord

Capturing the mining potential of

Northern Quebec

Nochane Rousseau

Partner and Quebec Leader,

Mining and Plan Nord Initiative

Mining Minds Breakfast Series

December 1, 2011

(2)

“The Plan Nord has been elaborated to take a stance in this

new world, further broaden Quebec’s approach centred on

openness to the world and strategic alliances, and develop

our economic potential through a sustainable development

partnership that respects the First Nations, the Inuit and

local communities.”

Jean Charest

Premier of Quebec

(3)

PwC

Area covered by the Plan Nord

• North of the 49

th

_parallel

• 1.2 million km

2

• 72% of Quebec’s geographic area

• Less than 2% of Quebec’s

population

(4)

A vast territory to discover

A bright future with promising

projects for Aboriginal and local

communities:

• Over 120,ooo people

(including 33,000 Aboriginals) • Four nations: Inuit, Cree,

Innu and Naskapi

• 32 Communities located in the

James Bay, Saguenay and Côte-Nord regions

(5)

PricewaterhouseCoopers LLP

Quebec’s Development

5 Locality Airport Hydroelectric station Hydroelectric lines Roads

Northern limit for commercial attribution of wood Next 100 years Actual (MH) 100 years (MHF) (M) Mines (M) Hydroelectricity (H) Forestry (F) Agriculture (A) 200 years (MHFA)

(6)

Approach: Building an innovative partnership

• Over 60 meetings, which involved nearly 450 participants, from

sectorial working or consensus-building groups:

• Government, local communities, private, institutional and environmental sectors

• The Plan Nord will be carried out over a 25-year period, which

includes five 5-year action plans

(7)

A unifying vision

“The Plan Nord must be an exemplary sustainable

development project that integrates energy, mining,

forest, bio-food, tourism, and transportation

development, the development of wildlife,

environmental protection, and the preservation of

biodiversity. It will foster development for the benefit of the

communities concerned and Quebec overall, in a spirit of

respect for cultures and identities.”

(8)

Objectives

The Plan Nord will ensure a socially responsible and sustainable

development seeking to:

1. ensure community well-being and development

2. harness Northern Quebec’s enormous economic potential 3. make Northern Quebec accessible

(9)

PwC

Development of economic potential

• Energy

• Mining

• Forest

• Wildlife

• Tourism

• Bio-food

Broader economic activity will

impact Quebec as a whole

9

• Over $80 billion in public and private

investment in the Plan Nord territory:

– $47 billion from Hydro-Québec in renewable energy development

– $33 billion in mining and public infrastructure sectors

(10)

Mining industry

Driving Northern Quebec development

• Accounts for over 34,000 jobs in Quebec, of which 10,000 are located

in the Plan Nord territory

• Territory comprises four regions well-known for their

geological features:

• James Bay region: gold, diamonds, uranium, zinc and copper • Nunavik: nickel and copper

• North Shore and Labrador Trough: iron, copper, zinc and nickel • Saguenay–Lac-Saint-Jean: niobium and tantalum

(11)

PwC

Mining industry

Driving Northern Quebec development

(cont’d)

At least 11 new projects are under

development:

• Generate over $8 billion in investments

• Create 11,000 jobs in the

construction phase, and nearly 4,000 jobs a year once in

operation

(12)

Mining industry

Driving Northern Quebec development

(cont’d)

11 New projects Location Mineral ore

Xstrata Nickel

Raglan Mine, phase 2 Northern Quebec (Nunavik)

Nickel, Copper MDN Crevier project Saguenay– Lac-Saint-Jean Niobium, Tantalum

New Millennium Capital Corporation

DSO project

Côte-Nord Iron

ArcelorMittal Mines Canada

Mont-Wright and Port-Cartier projects Côte-Nord Iron

Strateco Resources

Matoush project

Northern Quebec

(James Bay/Eeyou Istchee) Uranium

Stornoway Diamond Corporation

Renard project

Northern Quebec

(13)

Mining industry

Driving Northern Quebec development

(cont’d)

11 New projects (cont’d) Location Mineral ore Canadian Royalties, a subsidiary of

Jien Canada Mining Nunavik nickel project

Northern Quebec (Nunavik) Nickel, Copper

Mine Arnaud

Arnaud project (Yara International) Côte-Nord Apatite

Xstrata Zinc

Bracemac-McLeod project

Northern Quebec (James Bay/Eeyou Istchee)

Zinc, Copper

Metanor Resources

Bachelor Lake project

Northern Quebec

(James Bay/Eeyou Istchee) Gold

Mines Opinaca, a subsidiary of

Goldcorp

Éléonore project

Northern Quebec

(James Bay/Eeyou Istchee) Gold

(14)

Mining industry

Driving Northern development

(cont’d)

Other projects Mineral ore

Attikamagen (Champion Minerals inc.) Iron

B-Zone (Quest Rare Minerals) Rare earths, yttrium, zircon

Belleterre (Conway) Gold

Blackrock (Blackrock Métal) Iron, titanium, vanadium Duncan (Ressources minières Augyva) Iron

Eastmain-Rose (Critical Elements) Lithium Great Whale Iron (Niocan inc.) Iron James Bay Lithium (Lithium One) Lithium

(15)

Mining industry

Driving Northern development

(cont’d)

Other projects Mineral ore

Lac à Paul (Ressources d’Arianne) Apatite

Lac McLeod (Western Troy Capital) Gold, copper, zinc Lac Otelnuk (Adriana Resources inc.) Iron

Lac Tio (Rio Tinto Fer et Titane inc.) Iron, titanium Langlois (Nyrstar Canada) Gold, copper, zinc

Oceanic Iron Ore Corp. Iron

PD1 (Xstrata) Gold, copper, zinc

Vezza (N. A. Palladium) Gold

Whabouchi (Exploration Nemaska) Lithium

(16)

Overview of mining investments

Examples

Xstrata Nickel

Raglan mine, phase 2

Investment: Over $1 billion

Jobs: 700

ArcelorMittal

Mont Wright and Port Cartier

projects

Investment: Over $2.1 billion

Jobs: 8,000 (construction) and

800 (operation)

Adriana Resources

Otelnuk project

Investment: Over $10 billion

Jobs: 4,000 (construction) and

2,000 (exploration)

Stornoway Diamond

Exploration

Renard project

Investment: $450 million

Jobs: 300

(17)

Making Northern Quebec accessible

• Development of an integrated transportation and communication

services network

• Contribution from public and private partners to fund investments

for transportation infrastructure

• Challenges:

• Integration of different modes of transportation

• Major rehabilitation and maintenance needed to existing transportation network

(18)

Making Northern Quebec accessible

(cont’d)

Projects already under way or pending:

• upgrading of northern airports

• construction or rebuilding of four major roads

• studies to link the North from the 55th _{parallel to the South (e.g. land link}

from Kuujjuaq to Shefferville and deep-water port in Whapmagoostui-Kuujjurapik and land link to Radisson)

(19)

Making Northern Quebec accessible

(cont’d)

Examples of a PPP between Stornoway and the Government

• $331.6 million for the construction of the Route 167 extension • Two separate agreements executed, Stornoway has agreed to:

- Contribute $44 million, amortized over a ten-year period, starting in July 2015 and financed by Quebec at 6.3% and conditional on, among other things:

◦ completion of the road on schedule

◦ receipt of all regulatory approvals for the construction of the Renard project ◦ successful completion of Renard project financing

- Contribute a maximum of $5,000 per km, or $1.215 million per year, to the maintenance of the road during operation.

• Other partners may also be called upon to contribute to the financing of this infrastructure

(20)

Making Northern Quebec accessible

(cont’d)

A strategic road network allowing all users to travel within the territory

Action plan:

• Extend Route 167 to the Otish Mountains (Stornoway, Strateco, Abitex, Western Troy and Eastmain Resources projects) • Rebuild Route 389 between Baie-Comeau

and Fermont (Fermont, Lac Bloom, Mont-Wright and Fire Lake)

• Pursue the extension of Route 138 between Natashquan and Kegaska • Extend Route 138 by building a link

(21)

Making Northern Quebec accessible

(cont’d)

Energy

• The Government of Quebec has committed to developing 3,500 MW of

additional energy to meet the needs of Northern communities and industrial projects

• Mining companies that are active in the territory and whose projects will be connected to the Hydro-Québec power grid will need to negotiate connection agreements

• For other mining projects, as part of its mandate, Hydro-Québec could

develop and operate hydroelectric projects that are not connected to its grid to respond to the energy needs of specific industrial projects

(22)

Société du Plan Nord

A government corporation to coordinate the implementation of the

Plan Nord by:

• coordinating public investment in infrastructure and social sector

• coordinating the implementation of projects included in the action plan • negotiating financing packages for the projects for which it is responsible • acting as a key partner for local and Aboriginal communities

(23)

Plan Nord financial framework

Creation of Fonds du Plan Nord:

• A special-purpose fund devoted to the Plan Nord • Innovative funding:

• Will be funded by a portion of the tax revenues generated from economic activities carried out in Northern Quebec. These tax revenues will be

collected from new mining projects, new Hydro-Québec projects and public infrastructure projects

• Contributions that will be required from private and public partners to fund infrastructure built for their own use will also serve as a source of revenue for the Fund

(24)

Plan Nord financial framework

(cont’d)

In the five-year action plan 2011-2016, investments will total

$2.1 billion:

• $1.2 billion for infrastructure

• $382 million for socioeconomic measures

• $52 million to solicit investment abroad and for the administration of the Société du Plan Nord

• $500 million allocated to Investissement Québec for equity participations (capital stock, convertible debentures, joint ventures, etc.)

(25)

An attractive business environment

for foreign investors

Investissement Québec is playing a major role with respect to

international business development and financing by promoting the

Plan Nord’s economic potential, particularly in the mining sector:

• World’s top ten mineral producers • A stable and diversified economy

• A skilled labour pool of four million people • Competitive tax rates

• A financial sector that demonstrated its stability during the recent crisis

(26)

How to leverage the opportunities provided by

Plan Nord

• Mining companies have a keen interest in positioning themselves

strategically, not only within the boundaries of the territory covered

by the Plan Nord but also in proximity to the infrastructure projects

that have already been announced

• Financing part of infrastructures

• Competitive energy costs

• Financing from Investissement Québec – This is a golden

opportunity for mining companies to secure the involvement of

political entities providing financial backing

(27)

Challenges associated with Plan Nord

• Lack of existing infrastructure

• Recruitment of qualified manpower

• Availability and quality of housing

• Social acceptability of projects

• Effective partnerships with Aboriginals will be key

• Execution rhythm from the Government of Quebec

• Hydro-Québec’s role

• Proposed Bill 14

(28)

PwC’s views on the Plan Nord

• Undeniable strategic advantages

• Unique business opportunities

• Of interest to domestic and global mining companies

• Significant challenges

(29)

Key success factors

• What is the economic impact for Quebec?

• Have you thought about moving your head office or opening offices

in Quebec?

• Who are the stakeholders/shareholders?

• Do you plan to establish a partnership with Quebec-based companies

(e.g. engineering firms, etc.)?

• Are you there for the long term?

• Will you have transformation in Quebec?

(30)

PwC Plan Nord Team

Client Relationship Management

Dominique Fortier

Leader,

Plan Nord initiative Mining Nochane Rousseau 514 205 5199 Infrastructure and Project Finance Richard Deslauriers 514 205 5045 Government and Public Services Daniel Cadoret 418 691 2433 Energy Marc Fournier 514 205 5201 Engineering and Construction Sonia Boisvert 514 205 5312 Sustainability Janice Noronha 514 205 5693