Quebec’s Plan Nord
With its Plan Nord, the Quebec government has committed to generating CAD 80 billion in investment over 25 years in the north of the province, including several billion public dollars to build core infrastructure and improve local socioeconomic conditions.[1] The area’s resources include 75,000 square miles of commercial forest; vast hydroelectric, wind, and solar power potential; unspoiled landscapes and wildlife to sustain tourism; and important mineral resources—including rare earth elements. After some wavering and subsequent pressure by various stakeholders,[2] Quebec Premier Jean Charest reaffirmed his engagement in the plan’s extensive conservation component at the Rio+20 Summit in June 2012 (50% of the plan’s territory is to be excluded from all industrial development).
Only a few measures and projects have been announced since the plan’s launch 14 months ago, and thus the effects in terms of economic development and resource availability will not be felt for several years. In the meantime, the best commercial opportunities that the plan will bring about might well be in building and upgrading the infrastructure needed to access remote resources.
Rare Earths and Specialty Minerals in Northern Quebec: Not China (Yet)
Quebec has yet to produce an ounce of rare earths, but the government and some mining companies contend that the province is prime ground for these commodities. For instance, the owner of Quebec’s niobium mine asserts that it sits on 7.7 million metric tons of rare earth oxides, equivalent to 60% of current U.S. reserves.[3] This is one of the least advanced projects in the province, none of which should begin production until at least 2015 (Table 1).
*Rounded to the nearest hundred tons.
**Quebec does not yet have resources that have been classified as economically viable “reserves.” Only the latter are shown for the world (in the first part of the table).
Source(s): World production and reserves from the U.S. Geological Survey’s Mineral Commodity Summaries 2012; Quebec resources from company websites and La Presse’s May 2012 and June 2012 articles (in French).
Some financial analysts contend that the global market for rare earths will be saturated by 2014, with the kick-starting of exploitation at 2-3 deposits worldwide. Much uncertainty remains, however, and there might be room for several more players despite past Chinese practices of undercutting market prices (which led to the current situation of China being home to 97% of global production).
Indeed, China should see its production costs rise as it improves its environmental and labor standards and moves to less accessible deposits. Furthermore, with the prospect of several governments (re)building stockpiles of rare earths and the fact that China might become a net importer of the minerals in a few years, the likelihood of a medium-term glut seems rather low. The U.S. Department of Energy projects that the global supply of at least five rare earth elements crucial to clean energy technology will be at critical risk between 2015 and 2025.
This may help explain why the owner of the small Kipawa project in Quebec has already signed a joint venture agreement with Toyota, more than three years before production begins. Given the reserves available on American soil,[4] Japanese and European industries seem more at risk for rare earth shortages than their U.S. counterparts.[5] Nevertheless, U.S. manufacturers should probably look for additional stable and predictable procurement. A more diversified and environmentally sound supply is the first pillar of the DOE’s 2011 Critical Materials Strategy.[6]
In Quebec, however, U.S. companies stand to be overtaken by Asian and European interests who are poised to further benefit from the upcoming development when the Northwest Passage becomes navigable year-round. The latter advantage might be compounded by plans to build a deep-water port in Kuujjuaq, one of two possible shipping points for the ore from Eldor.
British Columbia’s Mineral Strategy
Closer to Asia, the province of British Columbia is also seeking to develop its mineral potential. Its Mineral Exploration and Mining Strategy[7] was designed as part of the broader BC Jobs Plan, and as such it focuses on job creation. It contains actions to help achieve the province’s ambitious aim of seeing the opening of eight new mines and the expansion of nine others by 2015. Rare earths are not explicitly mentioned in the strategy, but resources have been identified in the province in the past.
While this strategy’s breadth and time horizon do not compare with Quebec’s Plan Nord, it contains actions likely to improve access to resources, including minerals. British Columbia’s northern territory is generally better served by infrastructure than is Quebec’s, and the planned upgrading of ports, roads, and power lines might well deliver the competitive advantage the government seeks. Tax incentives and regulatory streamlining shouldn’t hurt, either. Because of its location on the Pacific, the province is already benefitting from investments by the Pacific Gateway Alliance, which brings together Western Canadian governments and air/rail operators. The Alliance’s main interest, however, is in trade with Asia and not the United States.
Footnotes
[1] For more information, see the official dossier and the territory covered by the plan.
[2] Even The New York Times published an editorial supporting a strong conservation component to the plan.
[3] These “resources” are still not labeled economically viable “reserves.” See www.iamgold.com/English/Operations/Reserve-Resources/default.aspx, and Appendix C of the U.S. Geological Survey’s Mineral Commodity Summaries 2012 for technical definitions of the terms.
[4] For instance, Molycorp is ramping up production at Mountain Pass, California, to 40,000 metric tons of rare earth oxides per year as of 2013 (www.molycorp.com/about-us/project-phoenix).
[5] In 2011, Japanese scientists announced a massive discovery of underwater rare earth minerals; extracting these from the Pacific Ocean’s floor might prove costly and environmentally challenging, however, and seems unlikely to take place until decades from now. For more information, see Nature’s original article and news coverage from Nature and Le Figaro (in French).
[6] See http://energy.gov/articles/department-energy-releases-its-2011-critical-materials-strategy.
[7] For a detailed description and promotional material, see www.empr.gov.bc.ca/Mining/Pages/MiningStrategy2012.aspx.