A few years ago, Quebec was the belle of the ball for prospective mining investors. Now, it seems, its Parti Québécois government's policy positions are well on their way to making the province a wallflower.
A new global survey of mining companies, from Canadian economic think tank the Fraser Institute, shows that Canada in general remains highly desirable for mining investment. Seven Canadian jurisdictions rank in the top-16, out of 112 global jurisdictions, in terms of overall mining investment attractiveness, a measure that combines the quality of the mineral potential and the receptiveness of government policy. (Newfoundland and Labrador, ranked 3rd in the world, is Canada's highest-ranked jurisdiction.) Also, five provinces rank in the top-20 in a list of jurisdictions with the most investment-friendly government policies (led by Alberta, at No. 3).
In both rankings, Quebec isn't among them – underlining the province's rapid fall from grace as a mining-investment destination.
As recently as the Fraser Institute's 2009-2010 survey, Quebec ranked No. 1 in the world in terms of both policy perception and overall investment attractiveness. In 2011-2012, mining companies still rated the province the second-most attractive mining jurisdiction in the world (behind Yukon Territory at the time), and fifth in the policy score. Now? The latest survey has Quebec in 18th place in overall investment attractiveness – and it has fallen to 21st in the public-policy rankings.
Let's look at the roadblocks the Parti Québécois has thrown in front of mining investors in just the past year. It passed a new Mining Act that toughened environmental rules and added new commitments to local economic spinoffs, while simultaneously setting up potential legal battles with aboriginal communities over their right to participate in the approval process for projects involving native lands. It increased taxes on mineral production, while offering to give producers tax breaks if they process the minerals within the province. It proposed new powers for Quebec-registered companies to ward off hostile takeovers from outsiders.
In short, Quebec is distinguishing itself by adding costs, risks and barriers to mining investors – much of it in the name of extracting more tax dollars, more jobs and more benefits for Quebeckers. And it has done so at a particularly inopportune time, as the global appetite for mining financing and investment has taken a harsh turn. Instead of attracting the increasingly scarce dollars, Quebec's policy shifts have given miners a grocery list of reasons to stay away.
Of course, Quebec isn't the only mining jurisdiction in Canada that needs to get its house in order. Ontario, for instance, ranks considerably lower than Quebec on the policy-perceptions front (28th), bogged down by government indecision over expected changes to mining taxation, uncertainty over native land-claims issues, and political wrangling over funding for desperately needed infrastructure. British Columbia's ongoing disputes over native land claims and cumbersome environmental assessment process have garnered it an even lower policy ranking, at 32nd in the survey. These are jurisdictions that, like Quebec, have world-class geology (B.C. ranked fifth-best in the world in terms of its mineral potential, Ontario was 12th), but are handcuffed by their own regulatory inefficiency and uncertainty.
But what's startling about Quebec is that it has been moving so rapidly backward. In an attempt to revamp its mining policies in its own Quebec-first image, the government has shown just how little time it takes to turn a key industry against you.