Mineral Wealth of Northern Quebec: How to Convert Potential into Economic Reality? Jean-Marc Lulin President & CEO April 2013 AZIMUT

Transcription

1 Mineral Wealth of Northern Quebec: How to Convert Potential into Economic Reality? Jean-Marc Lulin President & CEO April 2013

2 From Potential to Economic Reality 1) Status 2) Advantages 3) Constraints 4) Development dynamics 5) Conclusion

3 From Potential to Economic Reality Today, mineral development must follow the principles of sustainable development, which revolve around three components: - Economical - Environmental - Human & social This presentation focuses on the economic component.

4 Mineral development of today must follow sustainable development principles

5 Quebec as a whole 234,867 active claims: 109,304 km 2, 6.6% of province s land base 22 active mines: 1 mine for every 11,000 active claims 1 mine for 147,000 virtual claims, if all Quebec s surface area was staked Average density: 1 mine every 76,000 km 2 (275 x 275 km) 100 years of mining activity: 325 active and former mines occupy only 0.03% of the total land base 430 km 2 : 280 km 2 of mining infrastructure, 150 km 2 of mining waste Active mines occupy 90 km 2 = 0.005% of the total land base Average area = 3.5 km 2 per mine

6 Plan Nord Statistics Area covered by the Plan Nord: 1,200,000 km 2 Above 49 th parallel, including Eeyou Istchee and Nunavik Exploration already prohibited: 242,225 km 2 (20.2%) Other constraints: 90,787 km 2 (7.6%) Category I lands: 17,854 km 2 (1.5%) Active claims: 86,285 km 2 (7.2%) 8 active mines: 37.5 km 2 (0.003%) Land free of claims: 1,113,715 km 2 (92.8%)

7 Nunavik Statistics Nunavik surface area: 507,000 km 2 Above 55 th parallel Exploration already prohibited: 87,063 km 2 (17.2%) Other constraints: 46,304 km 2 (9.1%) Category I lands: 12,029 km 2 (2.4%) Active claims: 28,863 km 2 (5.7%) 1 active mine: 3.16 km 2 (0.0006%) Land free of claims: 478,137 km 2 (94.3%)

8 La course aux ressources Status 1. Éléments clés 2. Enjeux globaux 3. Impact pour le Québec

9 La course aux ressources A Frontier Region 1. 1,200,000 Éléments km2 clés 2. 8Enjeux globaux 0.003% actives mines: Exploration claims: 7.2% 3. Impact pour le Québec Areas free of claims: 92.8% Very early stage of development

10 Mineral occurrences (all commodities) 6,735 prospects 500 km

11 Uneconomic deposits 554 deposits 500 km

12 Ni-Cu-PGE Mines Operating mines (22) Past mines (298) Fe Au Ti 500 km

13 6 737 Mineral occurrences and uneconomic deposits far outnumber the few operating mines Total Occurrences Uneconomic deposits Mines (total) Operating mines

14 Status Number of prospects, uneconomic deposits & mines per 1,000 km 2 Prospects Deposits & Mines Abitibi St Lawrence Lowlands/Appal Grenville James Bay Northern Quebec Mine development density in Northern Quebec is 20 to 30 times lower than the Abitibi region

15 Advantages Vast territory with diversified mineral potential Excellent geoscientific database Low maturity stage: good potential for discoveries at surface Highly qualified work force, world-class expertise Quebec recognized around the world for its: Stability, foresight Favourable legal and fiscal framework But Quebec s world leadership in mining dropped from 1 st rank (2009, 2010) to 11 th (2013) pending fiercely debated mining law and fiscal revisions

16 Constraints Northern Quebec Adverse climatic conditions: major impact during early exploration phases Lack of infrastructure High manpower costs & manpower shortage Remote markets Global Situation Unpredictable metal prices Unpredictable energy costs World-wide competition: the best projects in the best jurisdictions will be developed first and may fulfill market needs

17 Development Dynamics Developed mining regions (ex: the Abitibi) can be used as a reference to predict development dynamics in Northern Quebec Development trends through time: From surface discoveries to deep hidden discoveries From early major discoveries ( gravity centres ) to peripheral incremental often smaller deposits Leads to mining districts with sustainable and diversified economic development (for 50 to 100 years, or more)

18 Development dynamics Gravity centres (development nuclei) with spreading dynamics - Eleonore (gold) James Bay - Renard (diamonds) Otish Mountains - Fire Lake (iron) - Fermont - Raglan Mine (nickel-copper-platinum group elements) Far North Progressive conversion of prospects into mines (needs more than one mining cycle!) Potentially, several other unknown gravity centres Commodity diversification through time Overall timeframe: At least 50 years Surface inventory (2D) versus mineral resource inventory (3D): need more time Abitibi: 85,600 km mines 100 years / Plan Nord: 1,200,000 km 2 (14x size of Abitibi)

19 Municipality Airport Power dam Power line Road Northern limit for commercial forestry Next 100 years (M) _ Quebec development through time and space considering 4 components: - Mines (M) - Hydroelectricity (H) - Forest (F) - Agriculture(A) Present (M+H) _ Past 100 years (M+H+F) 500 km _ Past 200 years (M+H+F+A) JM Lulin, 2010

20 Quebec: A major project pipeline Copper Lithium Phosphates Bracemac +Zn-Ag (Donner-Xstrata) * James Bay (LithiumOne)* Lac à Paul (Arianne) Coulon +Zn-Ag (Virginia) * Qc Lithium (Can. Lithium) Sept-Iles (Yara-SGF)* Rex +Au (Azimut)* Rose (Critical Elements)* Rex South +Au-W (Azimut)* Whabouchi (Nemaska)* Rare Earths Scott +Zn-Ag (Cogitore)* Eldor (Commerce)* Nickel Kipawa (Matamec) Diamonds Dumont (Royal Nickel) Montviel (GeoMega)* Renard (Stornoway)* Nunavik Ni +Cu-EGP (Jien)* Strange Lake (Quest)* Niobec (IAMGOLD) Iron Niobium-Tantalum Uranium Attikamagen (Champion)* Crevier (MDM) Matoush (Strateco)* Century Iron Mine* North Rae (Azimut)* Chibougamau +Ti-V (BlackRock)* Gold North Shore (Uracan)* Fire Lake (ArcelorMittal)* Eléonore (Goldcorp)* Kemag (New Millenium)* Joanna (Aurizon) Lac Otelnuk (Adriana-Wisco)* Wasamac (Richmont) Ungava Bay Iron (Oceanic)* * : Located in Northern Quebec

21 Operating mine Advanced mining project Exploration Proven district PGE Emerging district REE Diamonds 500 km

22 Development dynamics How will the planned land withdrawal (see following slides) affect the economic development of Northern Quebec? Mineral discoveries converted into mines will drive economic development IF access to land allows discoveries to be made Despite the fact that >90% of the land is currently free of claims, the MDDEP s plan to withdraw 50% of the land will be a major deterrent to economic development Excessive land division will render exploration and development very difficult, including the construction of new infrastructure Dramatic reduction in wealth creation potential

23 Impact of withdrawal on mineral potential 2013 situation Prospects: 6735 / 6074 ( 9.8%) Unecon. deposits: 554 / 481 ( 13.2%) Deposits: 330 / 275 ( 16.7%) 661 prospects 73 uneconomic deposits and 55 deposits located in zones withdrawn from exploration Black areas: zones already withdrawn from exploration

24 Impact of withdrawal on mineral potential Prospects: 6735 / 4398 ( 34.7%) Unecon. deposits: 554 / 377 ( 31.9%) Deposits: 330 / 244 ( 26.1%) 2035 situation Hypothetical MDDEP scenario - 2,337 prospects uneconomic deposits - 86 deposits located in zones which may be withdrawn from exploration Black areas: surface areas scheduled to be withdrawn from exploration by 2035 Sources: - MRNF, Gestim - MDDEP, D. Jean, 2012

25 Municipality Airport Power dam Power line Road Northern limit for commercial forestry If 50% of the land base of Northern Quebec becomes closed to economic activity by 2035, it would have a major negative impact on Quebec s growth potential

26 Quebec geological map If 50% of the land base of Northern Quebec becomes closed to economic activity by 2035, it would have a major negative impact on Quebec s growth potential

27 Development Dynamics How does the mining industry compare to three other key sectors in Quebec (hydroelectricity, forestry and agriculture) in terms of: land footprint versus wealth creation?

28 Area km 2 Comparison of footprint in Quebec Energy 3.1% Agriculture 1.2% Forestry 0.2% Mining 0.005% Surface area of Québec: 1,667,441 km 2

29 Million $ / km 2 per year Value produced per surface unit Mining Energy Agriculture Forestry $190,000/km 2 $160,000/km 2 $2.03 M/km 2 $77.47 M/km GDP: $9.8 B $3.05 B $7.0 B $7.0 B

30 Mining Fact Comparison Footprint Comparison to Mining (km 2 ) Area Value produced / km 2 Mining 90 Forestry 3,432 (a) 38 times more 38 times less Agriculture 19,333 (b) 215 times more 485 times less Energy 51,474 (c) 572 times more 410 times less (a) Area harvested annually (b) Area under cultivation, 2006 (c) Hydroelectricity

31 Mines in Quebec Infinitesimal land use: 0.005% That s only 5 land units for every 100,000 units A claim is NOT a mine A prospect is NOT a mine Enormous value production per surface unit: $77.5 million / km 2 $7.0 billion GDP 23.2% of province s exports

32 Mines in Northern Quebec Scenario of 10 new mines operating for 20 years with a total footprint of 35 km 2 : Uses 0.003% of land base (35 km 2 of 1,200,000 km 2 ) to create a value of $54 billion Principle of substitution: Select for preservation a surface area equivalent to the surface area of any new mine Consistent with the principles of sustainable development

33 La course aux ressources Conclusion 1. Éléments clés 2. Enjeux globaux Short term: 1 to 5 years - Advanced projects or lateral/depth extensions of active mines - 3. Iron, Impact Gold, Lithium, Diamonds, Nickel, Rare Earth Elements pour le Québec - Often supported by existing infrastructure Northern development process according to two tandem dynamics: Mid to long term: 5 to 50 years or more: still a virgin ground! - New ideas, new exploration concepts, systematic approach - Founding discoveries leading to new districts - Will justify new major infrastructure

34 La course aux ressources Conclusion 1. Potential is NOT wealth, Éléments clésonly... potential wealth...the gap is huge 2. Enjeux globaux How to convert potential into sustainable wealth? 3.Five Impact pour le Québec critical factors: 1) 2) 3) 4) 5) Geoscience knowledge Legal access to the territory Stable investment climate Infrastructure Time

35 References Cyr J.(2011), Restauration des sites miniers, 22 septembre 2011, MRNF, PDF, 76 p. CIFQ.qc.ca Ministère des Finances du Québec (2012). Budget Le Québec et ses ressources naturelles. Pour en tirer le plein potentiel, PDF, 140 p. Gestim, MRN Jean D. (2012), Protection de l environnement et conservation sur le territoire du Plan Nord, MDDEP, 26 avril Planifier la conversation des grands écosystèmes nordiques québécois, le défi de la décennie, Symposium scientifique international, PDF, 17 p. Lulin, JM (1990). Une analyse du développement minier du Nord-Ouest québécois, La Ceinture polymétallique du Nord-Ouest québécois. Editeurs: M. Rive et al., Institut canadien des mines et de la métallurgie, Vol. spéc. 43, pp Lulin, JM (2012). What is a Mining Boom? Point in Natural Resources, Vol. 1, #2, pp Sigéom, MRN MAPAQ.gouv.qc.ca Stat.gouv.qc.ca