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Strateco Resources is suing the provincial government for $190-million in investment losses as a result of Quebec’s blocking its underground Matoush uranium project in the Otish Mountains.

Quebec is moving steadfastly ahead on its Plan Nord project to open up the vast resource-rich northern reaches of the province. But there is one activity notably absent from the to-do list in the 20-year mining-forestry-energy action plan: uranium mining.

Despite progress made in recent years polishing Quebec's image as an unwelcoming place for investment in mining ventures, uranium exploration and development continue to be blocked by the government over environmental, health and social concerns.

Quebec uranium mining company Strateco Resources Inc. – once promoted as a high-profile player in a previous, more ambitious incarnation of the Plan Nord – is caught in the middle of a seemingly endless conflict over the right to mine the yellow mineral.

The latest blow to Strateco's nearly decade-long effort to launch the province's first uranium mine – in Northern Quebec – is a recommendation from the Bureau d'audiences publiques sur l'environnement (BAPE) agency that it would be premature at this time to authorize development of a uranium industry.

Allowing uranium mining operations would be "premature" in the current context because there are too many uncertainties and unanswered questions as to the risks involved, the BAPE said in its 626-page report recently made public. The report, based on one year of public consultations throughout the province, said Quebec should – however – carefully weigh the consequences of a temporary or permanent ban on uranium extraction, specifically the "legal and economic impacts."

The Quebec government said it will establish an interdepartmental committee to assess the findings.

The province's Cree Nation strongly opposes Strateco's proposed mine. "The BAPE's report confirms what the Cree Nation has long maintained: that uranium development poses unique and significant risks for our lands, our environment, our communities and our future generations," Grand Chief of the Grand Council of the Crees Matthew Coon Come said.

For Strateco president and chief executive officer Guy Hébert, the BAPE report amounts to a moratorium on mining the material used as fuel in nuclear reactors.

"This is a very bad message [the Quebec government] is sending to foreign investors," he said.

Strateco is suing the provincial government for $190-million in investment losses as a result of Quebec's blocking its underground Matoush uranium project in the Otish Mountains. Mr. Hébert said his company invested an average of $20-million a year on the project between 2006 and 2012 based on the existing legal and regulatory framework that never suggested uranium was problematic.

Then, in 2013, the newly elected Parti Québécois government brought down a moratorium on uranium-related activities, pending an environmental review. Following that, the environment minister of the day declined to grant Strateco the certificate needed to start the advanced exploration phase of Matoush.

And yet Matoush was cleared for underground exploration by the Canadian Nuclear Safety Commission and the federal environment minister based on detailed environmental impact studies.

Raymond James mining analyst David Sadowski said the Quebec government's position on uranium mining is puzzling given the fact that secure mining and management of radioactive effects have been solidly established over the years, with no safety or environment concerns to note in Saskatchewan, the hub of Canada's uranium mining industry.

"They should be opening the door on every commodity, on every mineral," he said. "A commodity like [uranium] can really add jobs and revitalize part of Northern Quebec."

Developing new uranium mines may not be economical for most companies in the current context of global oversupply and low prices, but demand for the commodity is expected to rise over the next several years as China, India, South Korea and other countries build up their nuclear energy programs, Mr. Sadowski said.

"Strateco did define a reasonable resource potential with long-term viability," which can turn out to be profitable if spot uranium prices – now in the $36 range – break through the $70 ceiling in the longer term, he said.

Last month, Strateco, based in Boucherville, Que., filed for bankruptcy protection under the Companies' Creditors Arrangement Act (CCAA), claiming that the Quebec government's actions have "placed Strateco in a situation where it has become impossible to interest investors in the Matoush project" and that it can no longer meet its financial commitments.

The company is seeking interim financing to allow it continue its $190-million suit against the government.

Follow Bertrand Marotte on Twitter: @globemontrealOpens in a new window

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