Nov 20 (Reuters) – A plan by the Canadian province of Quebec to spend billions to develop the mineral riches of its northern region has been dealt a crippling blow by the pending closure of a major mine as iron ore prices sink and China’s interest wanes.
The Plan Nord project hopes to attract C$80 billion ($71 billion) of investment to the vast northern region, of which the iron ore-rich Labrador Trough is a major component. The French-speaking province is trying to sell the plan globally and is hoping miners will flock to northern Quebec after the government invests in the infrastructure necessary to open it up.
But Plan Nord took a big hit on Wednesday, when Cliffs Natural Resources said it is closing its Bloom Lake iron ore mine after struggling to secure funds to expand the mine and make it viable. Chinese steelmaker Wuhan Iron & Steel owns a minority stake in Bloom Lake.
Bloom Lake, one of three producing iron ore mines in Quebec, would have become a major customer for a railway line being considered under Plan Nord.
“Without Bloom Lake there’s no Plan Nord,” Cliffs Chief Executive Lourenco Goncalves told Reuters. “Without the mine, there’s pretty much nothing for Plan Nord to transport from point A to point B.”
But even before Cliffs’ move, Plan Nord was an idea struggling to get off the ground.
Launched by the Liberal provincial government in 2011, Plan Nord was shelved by the Liberals’ defeat in the 2012 election, but revived when they returned to power in April. The effort to reactivate it though came as iron prices were going into a downward spiral, and drumming up investment has been a tough ask as private funding for the mining sector has retreated with commodity prices.
Last year, Canadian National Railway and its partner, pension fund manager Caisse de depot et placement du Quebec, halted their study of an 800-kilometer (500-mile) rail line because miners were delaying projects. The line, estimated to cost C$5 billion, was set to run from north of the mining town of Shefferville to Sept-Îles on the Gulf of St. Lawrence.
“Plan Nord’s a good idea but I think it is something that can’t be done in one cycle,” said Sandy Chim CEO of Century Iron Mines, an exploration company with projects in the region.
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