Quebec’s reputation as one of the most mining-friendly places in the world is taking a beating as exploration companies sound the alarm over stringent new government regulations they say could scare away at least $1-billion in investments.
Quebec is pushing ahead with proposed new legislation that would force exploration companies to win approval from local and municipal authorities for their projects.
The proposed law – Bill 14 – means companies would have to deal with a third level of regulation for their projects besides federal and provincial rules.
It also spells potential chaos as small and medium-sized companies try to navigate the uncertainty of dealing with individual municipalities which have their own local standards, say industry officials.
For the Liberal government of Jean Charest, Bill 14 is an attempt to address a growing citizens’ backlash over the perception that mining and oil and gas exploration companies have been taking advantage of lax provincial regulatory and tax regimes.
Angry public concerns voiced earlier this year over the environmental impact of commercial shale gas exploration in the province helped bring to the fore the issue of stricter regulations in the resources sector.
The Quebec government in March put on hold all hydraulic fracturing activity until a comprehensive environmental review is concluded.
In the case of mining exploration, Quebec City has deemed that giving direct input to the province’s local governments is the best way of making sure the decision-making process is as open and fair as possible.
It is doing so at a time when mining activity in the province is booming. Projects include an $80-billion government-led initiative to foster mineral extraction in the northern regions over the next 25 years as well as Osisko Mining Corp.’s development of what is expected to be the biggest open-pit gold mine in Canada, in Malartic.
For Ghislain Poirier, president of the Quebec Mineral Exploration Association, the proposed law is a surefire way to help chip away at the golden egg mining represents for the province.
“Can you imagine the chaos that giving this power to 1,200 municipalities is going to create?” said Mr. Poirier.
“If this bill passes, investment in Quebec mining will take a hit because this will increase the risk, the fact that any single town or village mayor and his team could have the power to kill a project,” he said.
“We’re very concerned. This is a big mess.”
The association says passage of the bill as is could lead to losses of $1-billion in current and cumulative mineral exploration investments in the province as investors back off because of the increased risk a project won’t go through.
Anand Beejan, partner and mining sector expert at Raymond Chabot Grant Thornton, says the Northern Plan unveiled by Mr. Charest earlier this year has helped boost the province’s global profile as a top mining investment destination.
But the municipal-oversight aspects of Bill 14 will only lead to investor skittishness, he believes.
“You’re adding a layer of regulatory approval, which increases the cost for the company and the risk for investors because you’re hurting the valuation of the company investing in the property,” he said.
Instead of imposing the requirement that every town and village council have the right to veto exploration projects in their backyards, the mineral association is proposing that Quebec create an arm’s-length commission to apply and enforce the existing Mining Act, including arbitration of conflicts over controversial exploration plans.
The provincial government has said it’s prepared to study the proposed amendment.Report Typo/Error