By Mark Cardwell
It seems that nothing – not falling commodity prices, costly mine closures, even a deadly railroad accident that has severed a critical land line into northern Quebec – can dissuade the province’s Liberal government from continuing to push ahead with Plan Nord.
The latest evidence came on November 20 when Quebec’s Minister of Mines and Natural Resources announced the signing of a $20-million feasibility study for the construction of a 310-km-long railroad north from Sept-Îles to the Labrador Trough.
“Today’s announcement is the first concrete step we are taking with our private partners for the realisation of this essential study for the development of our northern territory,” said Pierre Arcand, who is also the minister responsible for the Plan Nord strategy. “By putting in place the conditions necessary to stimulate investments in strategic infrastructures, notably in regards to transportation, the Quebec government is acting to improve access into (the region).”
Sponsored by Société ferroviaire du Nord québécois, a new joint venture between the Quebec government and mining companies Champion Iron and Adriana Resources, the feasibility contract was awarded to Canarail, a Montreal-based engineering firm that specializes in rail transportation. “We’re very happy and excited about this project,” Canarail President and Chief Executive Officer Miguel Valero told Canadian Sailings on November 25 – the same day that the first helicopter survey flights were carried out for the new project. According to Valero, as many as twenty engineers will be involved with the project over the next twelve months. In addition to making calculations of costs, payback, and potential economic, environmental and ecological impacts, the study will involve geotechnical tests at roughly 100 sites beginning next spring. Those tests will help to determine the best alignment for the proposed railway. “It’s an art,” said Valero.
“A hundred feet right or left can mean a savings of twenty percent in earthwork, which is the most expensive aspect of railway construction.”
His company, he added, is familiar with the challenges of building and operating rail lines that move large quantities of minerals across inhospitable northern landscapes to large deep-water sea ports. Canarail has done several railway feasibility and construction contracts for mining companies in Quebec and Baffin Island, and as far afield as Mongolia and Switzerland.
If built, the proposed multi-user rail line would be the third into Quebec’s iron ore-rich Labrador Trough region. Two lines currently connect mines there with the port of Sept-Îles. One is the Cartier Railway, which is a subsidiary of ArcelorMittal and serves the Mont-Wright mine. The other is the Quebec North Shore and Labrador Railway, which serves Iron Ore Company of Canada (IOC).
However, the future of the latter is now in jeopardy following the dramatic derailment of two locomotives and eight cars in early November. Caused by a landslide in a remote area, the accident claimed the life of the engineer, who was alone on the train.
Just days later, Cliffs Natural Resources announced it will suspend activities in the region after failing to find partners to share the $1.2-billion burden of making its Bloom Lake mine viable. In addition to laying off 400 workers, the Cleveland-based mining giant stands to lose as much as US$700 million, with much of those losses linked to its agreement with IOC to share costs of the latter’s now-inoperative rail line.
Adding to the November gloom was a prediction by former Rio Tinto boss Tom Albanese that weak iron ore prices are here to stay. “As long as there is a large amount of new supply, you are going to have a much softer pricing world than people would have anticipated for at least a couple of years,” Albanese told India’s Fairfax Media on November 26, the day iron ore dipped below US$70 a tonne for the first time in five years. He blamed the situation on a 2010 decision to ditch the benchmark pricing system for iron ore. “The new normal is volatility,” said Albanese. “It’s fun on the way up (but) painful on the way down.”
That hasn’t stopped the Quebec government from pushing ahead with its Plan Nord development strategy for natural resources north of the 49th parallel. Announced with great fanfare by former Liberal Premier Jean Charest in 2011, the plan was mothballed two years later by the short-lived minority Parti Québécois government. That was likely the main reason why Canadian National Railway decided in Feb. 2013 to suspend its own feasibility study for a $5-billion project to build a rail line from Sept-Îles to Schefferville. At the time, CN officials said “current market realities” undermined the project, which involved six mining companies and Caisse de dépôt et placement du Québec, Québec’s pension fund.
However, in its first budget after being re-elected with a majority in April, the new Liberal government announced $100 million in spending for the revitalized Plan Nord. In addition to $63 million for road building and repair projects, the government earmarked $20 million for the railway feasibility study.