On September 30, 2014, the Government of Québec, through its Minister of Energy and Natural Resources and Minister responsible for the Northern Plan, Mr. Pierre Arcand, tabled at the National Assembly of Québec Bill 11, entitled the "Act respecting the Société du Plan Nord".
The tabling of Bill 11, together with other recently announced measures, clearly shows that the Government of Québec is preparing the most favourable conditions to enable the Province to fully benefit from an eventual recovery of the global mining activity.
After examining the mission, the policy directions and the objects of the Société du Plan Nord ("the Company") as provided in Bill 11, we will describe its governance structure and then analyze its financing structure.
Mission, policy directions and objects
The Company is an organization whose mission is to coordinate the integrated and coherent.
Development of Northern Québec, defined as all of Québec located north of the 49th degree of north latitude and north of the St. Lawrence River and the Gulf of St. Lawrence, in accordance with the Government's policy directions and in keeping with the principle of sustainable development.
After consulting with its partners (discussed below), the Company must first establish a strategic plan, which must be submitted for approval by the Government, after consultations with the ministers whose responsibilities are related to sectorial activities carried out in the Territory covered by the Northern Plan.
Following the approval of its strategic plan, the Company sends annually to the Government, for approval, its operating plan and its capital plan.
Under Bill 11, the Company is given considerable powers to carry out its mission.
- with respect to its mission and its policy directions, coordinate and contribute financially or otherwise to their implementation;
- with regard to infrastructure, coordinate infrastructure projects and engage in infrastructure development and operation, alone or in partnership, including as a rail carrier, and set the fees payable for the use of infrastructures under its authority;
- with respect to natural resources, contribute to maximizing their economic spinoffs;
- with regard to research and development, carry out studies and conduct activities to acquire knowledge of the area covered by the Northern Plan;
- Assist and support local and Native communities in their development projects;
- Advise the Government on any matter the latter submits to it, and carry out any other mandate that the Government deems appropriate to give to it.
Bill 11 also provides an expropriation mechanism whereby the Company may acquire any property that it cannot otherwise acquire.
Furthermore, three important provisions warrant mention here.
First, to resolve conflicts that may arise concerning the use of infrastructures, the Bill stipulates that "Any person may use a government-designated infrastructure for which construction began after (the date of coming into force of the Act) and that is located on public land in the area covered by the Northern Plan." The Bill provides for mediation and arbitration in the event that the parties concerned cannot reach an agreement regarding the sharing of the infrastructure construction, maintenance and operating costs.
In addition, for the sake of legislative coherence, the contracts awarded by the Company and its subsidiaries are subject to theAct respecting contracting by public bodies.
Lastly, the Company must set up a marketing office whose object is to serve as a liaison between Québec suppliers and ordering parties.
Under Bill 11, the Company is administered by a board of directors composed of 9 to 15 members, including the chair of the board and the president and chief executive officer. A majority of the board members must qualify as independent directors in the opinion of the Government; they are appointed for a term of up to four years, except for the chair of the board, who is appointed by the Government for a term of up to five years.
If the Bill is adopted, Mr. Robert Sauvé, currently Associate Secretary General at the Ministère du Conseil exécutif, responsible for the Secrétariat au Plan Nord, will be the first president and chief executive officer of the Company.
The board of directors establishes a governance, ethics and human resources committee and an audit committee, each of which is composed of a majority of independent directors.
The Bill also provides for the establishment of an "Assembly of Partners" whose members are appointed by the Company so that they are representative of the local and Native communities in the area covered by the Northern Plan and the main sectors of activity concerned. The role of the Assembly of Partners is to provide an opinion on matters that the Minister or the Company submits to it and may also submit advice and recommendations to the Minister or the Company on its own initiative. The opinion of the Assembly of Partners is not binding on the board of directors of the Company; the chair of the board of directors and the president and chief executive officer of the Company may participate in the meetings of the Assembly of Partners as observers. As mentioned above, the Assembly of Partners must be consulted on the Company's strategic plan.
With the authorization of the Government, the Company may establish subsidiaries whose objects are limited to exercising activities that the Company itself is authorized to exercise.
Transitional provisions provide a mechanism for the transfer of employees assigned to the Secrétariat au Plan Nord to the Company.
Bill 11 provides that the Company is a joint stock company whose shares are allotted to the Minister of Finance; its initial patrimony consisting of the property transferred to it by the Government.
The Bill provides three sources of financing for the Company:
- the sums it collects for the use of the infrastructures under its authority;
- the sums that it receives under any agreement entered into with a government department and that are allocated to the activities of the government department;
- but mainly, the sums allocated to it from the Northern Plan Fund.
For fiscal 2014-2015 only, Minister Laitao's budget of June 4, 2014 provides a sum of $63 million to finance major road infrastructure work in the area covered by the Northern Plan, including the extension of Road 138 and the repair of Road 389 in the Côte-Nord region and the James Bay Road.
In addition, the act to establish the Northern Plan Fund is itself amended by Bill 11. As a result of this amendment, the Fund will be dedicated exclusively to the Société du Plan Nord for the financing of its administration, its activities that concern financial assistance for strategic infrastructure, measures promoting the development of the Northern Plan area, research and development, knowledge acquisition, protection of the Territory, and social measures aimed at meeting the needs of the populations living in that area.
Note that the Northern Plan Fund is composed primarily of (i) funds transferred periodically by the Government out of the income tax and the public utility tax payable, the amount of which is determined according to activities carried out in the area covered by the Northern Plan to develop the natural resources found there, and to the financing of infrastructure, up to a sum of $170 million, (ii) a sum of $10 million paid annually by Hydro-Québec and (iii) the sums transferred to it by a minister or a budget-funded body out of the appropriations allocated for that purpose.
These provisions should ensure stable, predictable funding of the Company's operations.
As mentioned in the introduction, Bill 11 is presented in the wake of a series of measures to prepare and position Québec so that it can fully benefit from an eventual recovery in global mining activity.
These measures include new budget funding, i.e. an investment of $25 million to carry out a feasibility study on construction of a new rail line from Sept-Îles to the Labrador Trough and an investment of $50 million in Gaz Métro LNG for the expansion of its liquefied natural gas plant which will supply certain projects located in the area covered by the Northern Plan including, first, the Stornoway Diamonds Renard project.
Although some challenges remain, including the future of uranium mining and the delineation of protected areas in the area covered by the Northern Plan, it is clear that much progress has been made in Québec recently; settling the mining royalties issue and updating the Mining Act are two prime examples.
The recently announced measures in connection with the Northern Plan, including Bill 11, finally enable us to look to the future with a renewed optimism which will be confirmed when the global mining activities will recover.