Quebec government’s infrastructure initiative pays-off with diamond mine production

  • 26 Oct 2016
  • National Post – (Latest Edition)
  • Damon van der Linde in Lac Lagopède, Que.

Quebec’s Plan Nord yields first jewel


Stornoway Diamond Corp. CEO Matt Manson stands over a glass display case containing piles of shimmering stones destined for rings and necklaces around the world.

The diamonds are sorted by size, colour and shape, and using a pair of tweezers, Manson picks up one of the biggest: a clear eight- sided stone estimated to be worth more than $100,000.

“Diamonds are a mined product that people use to commemorate the most important personal moments of their lives,” he said at the inauguration of the Renard mine in north- central Quebec last Wednesday.

Although the entire 20,000- carat haul could fit inside a wedding party punch bowl, it took 450 workers six days to produce and is valued between $ 3 million and $5 million.

The piles of gems were not only to display the potential of Quebec’s first diamond mine — they also represent the initial spoils of the provincial government’s Plan Nord initiative.

Manson says that when Renard is fully operational, it should be able to produce the amount on display in less than three days throughout the project’s estimated 14-year lifespan.

“Mines really are made, not discovered,” he says.

Stornoway flew investors, analysts, media and politicians to its opening ceremony at the site more than 800 kilometres north of the company’s head office in Longueuil, Que., on Montreal’s South Shore.

From the small airport built by Stornoway, a wide gravel road passes between stands of tall, thin spruce trees and pale green moss of the rocky Boreal landscape. It’s mid- October and the ground is already speckled with frost.

Parts of the forest where vegetation is sparse allow views of Lake Lagopède, framed by rolling hills into the distance.

The end of the road opens to the mine site, where exploration first began in 2001 through a joint venture between Ashton Mining Canada and SOQUEM Inc. Stornoway acquired Ashton in January 2007 and the remaining interest in the project in April 2011. After breaking ground just under three years ago, the mine came online two months early and under budget, costing just $ 775 million to complete, compared to its original budget of $811 million.

For the Quebec government, the symbolism of Stornoway’s launch goes beyond opening a new mine with a new resource. It represents the first project to be completed under the auspices of the Plan Nord, a provincial initiative to invest about $1.3 billion in infrastructure and other projects over the next five years in hopes of attracting $ 22 billion in private- sector investment north of the 49th parallel.

In March 2014, Stornoway completed $944 million in financing transactions: $ 220 million in funding through the provincerun Investissement Québec, $105 million from the Caisse de dépôt et placement du Québec pension managers and US$ 360 million from the privately owned Orion Mine Finance.

The main structure at Renard is a complex of connected buildings, housing the offices, security post and a trio of navy blue, three-storey residences to house i ts eventual 525 employees. Beyond the operations centre is an underground mine that dives 250 metres into the earth, though it could reach as far as 710 metres during the mine’s lifespan. There’s also an openpit mine nearly half a kilometre wide and more than 60 metres deep.

From there, dump trucks haul the ore to a processing plant. Inside the plant conveyor belts carry the rocks from machine to machine — breaking, crushing, washing and sorting 6,000 tonnes of kimberlite a day. The company says this will increase to 7,000 tonnes by 2018. Stornoway finds about one carat of diamond — or 0.2 grams — for each tonne of ore taken from the ground.

The company says production is two months ahead of schedule, with the first sale of diamonds from Quebec taking place on Nov. 14 in Antwerp, Belgium.

Manson says the mine should be profitable by the end of 2017 and, according to March 2016 estimates, the project will net $974 million throughout its lifespan.

“Stornoway is an extraordinary example of the vision we had as a government,” said Pierre Arcand, Quebec’s Minister of Energy and Natural Resources, who is also responsible for overseeing Plan Nord.

“This is the best partnership there is. It’s a partnership with passionate developers, an involved community and a government that helps to confer the project.”

First conceived by then- premier Jean Charest in 2011, Plan Nord called for $ 80 billion in public and private investment over 25 years. But critics pointed out that many of the projects would have gone ahead anyway and that the whole operation was a convenient way for Charest to grab some headlines.

Four years later, the current Liberal government dusted off Plan Nord and relaunched it in April 2015. By 2035, the provincial government anticipates a total of $50 billion in private and public investments, of which at least $ 2.5 billion will be public money.

About $ 20 billion will come from Hydro- Québec from new projects and $ 2 billion will be spent on roads, airports and other public infrastructure. The remaining $28 billion is expected in the form of private- sector investment, largely in the mining sector, like the 29 per cent ownership in the Renard mine.

Although Stornoway says financial assistance was crucial in getting Renard operational, the road was one of the most simple but beneficial contributions from Plan Nord.

In 2012, t he government loaned Stornoway $ 77 million to complete a 240-kilometre extension of Route 167, giving allseason access by way of the Chibougamau and Mistissini communities. The road, championed publicly by Charest as a centrepiece of Plan Nord, became a political lightning rod after costs ballooned from the initial $260 million estimate to more than $470 million.

While every site visit used to mean flying in by float plane or helicopter, Route 167 has allowed Stornoway to drive in crews and equipment, as well as liquefied natural gas to power the mine operations.

Nochane Rousseau, the Mining Leader for Quebec at the PwC consulting firm, says the road will open the potential mining projects that previously could not be easily accessed. It also allows for exploration work that relies less on costly helicopter flights.

“When you have a new mine with new infrastructure you open the territory and decrease the exploration work,” Rousseau said.

At the opening ceremony, Arcand announced the government will continue Route 167 to connect with Route Transtaïga — a road that runs much of the way across the province 100 kilometres north of Renard.

“If they do that, they open northern Quebec,” Rousseau said. “(Arcand) did not say when they’re going to do it, but he said that they’re going to work on it.”

The Plan Nord covers 1.2 million square kilometres, representing 72 per cent of Quebec’s land mass but, with only 120,000 people — about a third of whom are First Nations — it’s less than two per cent of Quebec’s population.

Although the Renard mine is built on what is designated as public land, it is considered to be territory of the Cree First Nations.

The Cree do not have any direct investment and there is no financial compensation for having the Renard mine on the land.

Chief of the Mistissini Cree Nation, Richard Shecapio, says the community does benefit from training and employment, including business for contractors during the construction, operation and closure of the project. Though the mine’s staff come from more than 20 different countries, 92 per cent of workers have come from Quebec, 26 per cent of whom are Mistissini Cree.

“When there’s careful consultation with the population, it smooths out the resource development opportunities for companies,” Shecapio said, adding that this was the case with Renard.

When the mine’s resources are exhausted, Renard will close. Stornoway says it will leave the airport for the community, along with the access created by Route 167, which Shecapio says could mean more commercial investment as well as easier travel to traditional trap lines.

The Plan Nord has been criticized for focusing too heavily on the resource sector as the price of metals and minerals have fallen in recent years due to global economic factors the government describes as “cyclical.”

Manson says Stornoway’s revenue is set apart from these trends as 99 per cent of the stones at Renard will be sold as gems, with the last one per cent for industrial uses. While diamond prices have fluctuated over the years along with supply and demand, Manson says the market is more stable than copper, zinc and other minerals.

“These gifting traditions for diamonds are cross-cultural and across demographics. Human society needs there to be something like this,” he said.

Stornoway is now looking for more projects, exploring a site 100 km south of Renard as well as in Saskatchewan and Nunavut. For the moment Manson says the company is focusing most of its effort on this diamond mine.




About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on October 26, 2016, in diamonds, economic impact, political. Bookmark the permalink. Leave a comment.

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