EDITOR: | November 8th, 2014 | 12 Comments

First Nations “demand” a moratorium on rare earth mining in Quebec

| November 08, 2014 | 12 Comments
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imagesKROO9X2GThe Assembly of the First Nations of Quebec and Labrador (AFNQL – the political organization regrouping 43 Chiefs of the First Nations of Quebec and Labrador) has demanded a moratorium on rare earth elements in the mining sector in Quebec. This decision affects Matamec Explorations directly. Matamec Explorations Inc. proposes the construction, operation and decommissioning of mines rare open land treat 1.3 million tons of ore per year over an operating period of 15 years, about 40 kilometers east of the municipality Kipawa, in an area where First Nations Eagle Village and Wolf Lake exercising their aboriginal rights and aboriginal title. Matamec faces an uphill struggle, but not all is lost.

Matamec specializes on the development of heavy rare earths in the Canadian provinces of Quebec and Ontario but its main interest is the Kipawa project in Quebec. Matamec has a partnership with Toyotsu (a division of Toyota Motors) that has enabled the Company to move quickly through the various stages of development such that production was expected to start in 2016. Toyotsu had agreed to buy all metals produced at the Kipawa property. Matamec has already started metallurgical tests, including the construction of a pilot test facility and its property includes heavy rare earths (HREE) and some niobium (Nb). Niobium has a number of applications but in the automotive sector it is especially desired for its steel strengthening qualities and used to make the future ‘high strength low alloys’ to enable manufacturers to reduce weight and, therefore, lower fuel consumption. The partnership has enabled Matamec to overcome the financial hurdle of funding the FS and the construction of the production plant, which would have allowed Matamec to join Lynas and Molycorp as one of the few companies outside China able to supply high-quality rare metals. As a further boost, last March, the Government of Quebec expressed the economic and technological importance of Kipawa, prompting Resources Quebec (RQ) to invest CAD$ 1 million in equity capital and a minority equity of CAD$ 3 million in the Project, which is part of a total CAD$ 6 million project (in which Matamec will invest CAD$ 2 million).

The partnerships with Toyota and the Government of Quebec encouraged Matamec to announce, just last September, that it was considering various business opportunities to develop the rare earth mining project located in Témiscamingue. However, RQ’s investment was always going to have to pass the hurdle of due diligence, featuring a crucial negotiation with the local native communities represented by AFNQL. Sensing the difficulty of this ‘negotiation’ and the Natives’ hostility toward the Project, Toyotsu through its Toyotsu Rare Earth division (‘TRECan’) signed a ‘termination and release’ agreement between itself and Matamec, converting a 49% stake in Kipawa into a 10% net profits interest royalty, leaving Matamec as the sole owner of the HREE deposit. This was a move likely intended to reduce Toyota’s exposure to the social battle that has been brewing with the local community.

Toyota, which presents itself in advertising as the Company behind the Prius, the poster child for ‘green’ motoring and icon for environmentalists and sandal wearers everywhere, could not afford to risk its reputation in a possible dispute with eco-social ramifications even if Matamec, once operational, would be employing at least 229 workers in a region that should have welcomed badly needed employment opportunities. Evidently, Matamec and the Government of Quebec (GoQ) failed to impress the leaders of the AFNQL, who have not even considered the employment opportunities. Indeed, on October 23, 2014, the leaders of the AFNQL adopted resolution No. 20/2014 supporting the position of the Algonquin First Nations of Eagle Village and Wolf Lake for a moratorium on the extraction of rare earth elements (as part of the current moratorium on uranium mining in Quebec). The AFNQL’s argument, directed at the GoQ and Canadian Prime Minister Harper himself, is that economic development is welcomed but that it must come as part of a program of responsible, sustainable resource development and protection of the territory and traditional ways of life in a context where the survival of their ancient culture is directly threatened. GoQ, says the AFNQL, has not fulfilled its duty to consult and accommodate two Algonquin First Nations in the exploration phase or stage of development of Matamec’s proposed rare earth mine and the results of the cultural and socio-economic assessments by the two First Nations Algonquin already indicate that the rare earth project Matamec will have “an irreversible impact on their quality of life”.

The government of Quebec is reviewing its (temporary) ban on uranium mining.  On November 11, the Bureau for Public Hearings on the Environment (BAPE) will commence the final phase of public hearings on the issues of the uranium industry in Quebec. During this consultation, the permits for the start of the Strateco’s Matoush project are suspended while another proposed uranium mine in Sept-Îles, has been idle for the past few years, opposed by 20 physicians in 2009, which had threatened to leave the city if the mine was built. Since then, the company behind the project, Terra Ventures, became a subsidiary of RioTinto. The GoQ, now in managed by a far more mining friendly Liberal Party, may be close to lifting its ban on uranium mining and this would give Matamec some legal leverage to challenge the AFNQL and save its Kipawa project. Alternatively, and more likely, Matamec will have to negotiate better terms with the local communities taking some lessons from such rivals as Ucore (TSXV: UCU | OTCQX: UURAF) and Avalon (TSX: AVL | NYSE MKT: AVL), to cite two, which have placed relations with the local communities among the top priorities of their projects, succeeding even to welcome some of their leaders to join their Boards.


Editor:


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Comments

  • hackenzac

    Restless natives; misread the locals at your peril. Are there any other Canadian mining projects also running in to First Nation’s opposition?

    Focus Graphite seems to be doing a better pr job.
    http://ibftoday.ca/focus-graphite-enters-into-a-pre-development-agreement-with-the-uashat-mak-mani-utenam-innu-first-nation-on-the-lac-knife-graphite-project/

    Aboriginal rights are a wild card for sure that could delay other projects such as Bear Lodge.
    http://ndnnews.com/2013/08/public-meetings-held-on-mine-near-devils-tower/
    http://www.indianz.com/News/2014/014257.asp

    November 8, 2014 - 12:23 PM

  • Dean

    It seems that native groups are very short-sighted and do not
    look at the benefit of these resource projects that are really not toxic at all and done with the best available technology and the cleanest standards in the world. The native groups and their teams of lawyers (paid for by taxpayers) who benefit the most from the non-ending litigation and challenges, are doing a disservice to the Canadian economy and their own prospects for education and employment.

    Maybe it does not matter when government money is freely
    available without having to make alliances and partnerships to get the
    resources out of the ground. Using the word “environmental” conjures
    up a lot of support among Canadians and so it is used a lot when these groups want to shut down industry and mining and when they want to prevent the country from benefiting from increased tax revenue streams.

    I would say that the radical concept of a nation within a
    nation would not hold up in any court, including the Supreme Court, and so if natives want to go it alone, then they ought to cut themselves off all
    government support completely to see how it feels to really rough it and to go back a few hundred years in time. My guess is that they would be quickly asking their leaders to sign into the 21st century very promptly.

    Not only do and should natives have a say in these projects but all
    levels of government must also have a say as well as shareholders who have been horribly routed by endless red tape and now the native claims. Maybe a class action suit against native bands who want to prevent clean development would test the resolve of native bands to bring down development because at the present the dreadful impacts of litigious, gratuitous and false claims have not been challenged properly.

    November 8, 2014 - 4:12 PM

  • Richard

    to Dean: Not toxic at all? You better leave your asceptized first-world bubble before bullshitting such a non sense. Maybe you are not aware of China’s worst pollution cases? Or even here in Canada with all the chemicals release in fragile ecosystem, but also near communities and our real natural ressources, fresh water. You stand for a colonized world and enjoy your so unjust privileges. Wake up.

    November 8, 2014 - 4:27 PM

  • Thunder

    To Dean: Do you live under a rock? Did you not see the Mount Polley mine disaster, the damage it did, or other rare earth mining disasters from around the world or the pollution or poison air quality, shareholders will lay down the bullshit on you on how its safe and nothing can go wrong, but it always does, it’s industry, no industry is 100% safe, so open your eyes and realize we don’t want this happening here, if your apart of this community you have a say, postive or negative, if your not part of our community maybe you should worry about your own. You also sound like you really don’t like natives in general with your comments, maybe you should study your history and remember, we natives were here first, and we care about the land we use and live on, and we will fight to stop the this project because we have no interest in a Mount polly disaster here, or drinking poisoned water or breating toxic waste in our air. Where they plan on mining here, will affect the water we drink and the animals we hunt and fish for, We along with everyone including white people have cottages, and hunt and fish and use these rivers and lakes. And natives work here and pay taxes like everyone else, so government money isn’t free and we have a say in what happens in our community.

    November 8, 2014 - 5:32 PM

  • Colette

    To Dean
    Maybe you should inform yourself on rare earth mining… check rare earth mining in China and see the mess it did there… A whole city had to move because they were all ill from the toxic from that kind of mining…Thank god for the natives at least they care about the environment…We cannot eat money…Man is slowly destroying our planet…. Someone has to stand up and make sure the environment is safe with good air to breath and drinkable water…We have to think of our future generation…

    November 8, 2014 - 8:36 PM

  • Tracy Weslosky

    The feedback on this column is outstanding: thank you graciously to the writers who have had the courage to comment on this very sensitive cultural topic. In fact, I would like to see if I may secure an expert on aboriginal relations expert to touch on the sensitivities relating to cultural exchanges and business negotiations between the mining community and our esteemed natives to comment here.

    Additionally, may I draw your attention to something that we all know in the rare earth industry that Alessandro Bruno delicately steps over — and that is the impact of leadership in such negotiations.

    In attempting to be proactive here, I wish Matamec and their shareholders the very best as this is an exciting deposit, and all of my experts tell me that it is — but in my experience leading a public co is a rough job, and few are great at it. Additionally, the market the last couple of years has not made it any less challenging.

    Perhaps the real catalyst here is that the Assembly of the First Nations of Quebec and Labrador just could not support the leadership? Let’s not discount the wisdom and appreciation of understanding that sometimes — its not the car: but whose in the drivers seat.

    November 9, 2014 - 9:13 AM

  • Dean

    I hate to inform you that the terrible record of mining rare earths in China and other places is due to poor regulation which the government of China is now in the process of getting under control and consolidation.

    Everything has risks – even hunting and fishing if you use that as your primary source of income and the stocks are depleted by over fishing and over hunting.

    Government money is not free. It also comes at a cost to citizens throughout the country (if you pay taxes you will know). People must have more self-respect and develop more self-reliance and look to clean methods to mine and extract resources – but not to choke off development altogether because it is your “culture” to live a subsistence life subsidized by the Canadian and provincial governments.

    Have you ever heard of sustainable development? These rare earths projects come under that category if done properly. Their footprint is not large unless they are conducted in a rapacious way by scoundrels as is/was happening in China.

    Bringing this industry to North America will make this a viable industry that benefits all Canadians and employ our children in the future. I am not for dirty industry, I am for smart development that improves lives and showcases what inventiveness we have as Canadians to show the world how good we are at environmental solutions that also make us prosper. Saying “no” to every pipeline and every mine and industry is not very smart and will lead to more of the same poverty we see in the north. That’s okay for Chiefs making 500K or more per year but it will not help the average person.

    Also, native rights are not the only rights in this country. You might want to blame “whitey” forever but where has/will that get you? Canada is a great country and that includes the First Nations people but if they go down the path of radicalism rather than cooperation, then everyone suffers and prejudice increases on both sides. Do you really want a Canada where there is tension, violence and endless bickering?

    November 9, 2014 - 9:47 AM

  • Tracy Weslosky

    Dean – welcome to InvestorIntel, where we have been covering rare earth issues since 2008. My point is that we have 20,000+ original articles written by the world’s top experts in the REE sector – and so we understand the many issues around the REE recovery processes…or should I say: we are reporting on them.

    There is no blame being driven anywhere here — just an update on a story we have been following for years….

    As for Sustainability, this is one of our favorite topics….so welcome to II, but remember this audience is sophisticated and no one is blaming anyone, this is just a complex formula where there are many variables to consider….including assumptions.

    Thanks for visiting.

    November 9, 2014 - 10:10 AM

  • Dean

    I am responding to the assumptions that Thunder is making about me. For his information I have worked in a teaching capacity with the native community and respect them as equals in every way – but I do not want them to become radicalized by their warriors and leftist haters of Canada and I think that seeing themselves as anti-Canadian is taking them down the right path.

    Also, these automatic, drastic, knee jerk reactions by leaders of native communities to shut down whatever industry they deem will help Canada, despite the fact that they are shooting themselves in the feet at the same time, are counter-productive and bring everyone else down at the same time. ‘

    Sometime the truth, when stated bluntly, sounds harsh…but stomping out projects is even more harsh and punishing and in no way, shape or form helping the country. Killing mining projects makes Canadians rely on other countries and make them rich rather than developing our own country’s resources which belong to all of us.

    November 9, 2014 - 10:40 AM

  • Tim Ainsworth

    Rather ironically, environmental controls are something that both Lynas & Moly appear to have got right. Recent IAEA visit to LAMP concurs.
    Maybe some currency there once they get the rest of the equation sorted.

    November 9, 2014 - 11:36 AM

  • Dean

    First paragraph, last sentence…I meant to say …the wrong path.

    November 9, 2014 - 1:03 PM

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