Plan Nord: How to Do Local Business Internationally

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There has been a lot of talk about the Plan Nord, the Quebec government’s initiative to develop Northern Quebec, not to mention the business opportunities that this will create in various sectors. Local, global and multi-sector partnerships will also be created, and these will prove to be one of the keys to the success of this once-in-a-generation project for Quebec companies. But the question remains: how can Quebec companies capitalize on these opportunities?

Take the mining sector, for example. Quebec is rich in resources and the demand for raw materials is on the rise in many emerging countries, including China and India, attracting numerous investors to Quebec. The infrastructure in the territory covered by the Plan Nord is still underdeveloped, while mining projects entail investments ranging from several hundred million dollars to billions of dollars, investments which Canada and Quebec cannot undertake on their own. Nevertheless, the Quebec government plans to invest $1.191 billion to develop infrastructure over a five-year period and has earmarked $500 million to acquire ownership interests in projects in the Plan Nord territory. Foreign capital will thus be required. It is essential that Quebec attract foreign investors, whether in the form of equity investments, debt investments or long-term procurement agreements.

A number of mining projects announced following the launch of the Plan Nord involve foreign investments:

  • ArcelorMittal (based in Luxembourg) – $2.1 billion to expand its Mont-Wright mining complex and its Port-Cartier facility
  • New Millennium and India-based Tata Steel – $4 billion for the KéMag project
  • Xstrata (based in Switzerland) – $530 million to expand the Raglan mine
  • Jilin Jien Nickel Industry (based in China) – $800 million to develop a nickel deposit in the northern tip of Quebec
  • Adriana Resources, in partnership with China-based WISCO – evaluation of an investment valued at more than $10 billion to operate the Lac Otelnuk project in Nunavik

The provincial government has an excellent grasp of the situation and has been using several different mechanisms to encourage international companies to invest in Quebec, including Investissement Québec, which has been promoting the Plan Nord in its foreign investment prospecting activities, including this past summer with Premier Charest in the US, China and Japan and this fall in Europe.

Thus, developing the Plan Nord territory will hinge in part on foreign investors, although it will primarily depend on Quebec-based companies, which thanks to their expertise and know-how will be playing a key role in the most critical part of this initiative, i.e. obtaining a “social licence” thanks to their understanding of the social context, the importance of partnerships with local and First Nations communities and the sustainable development-based environmental approach they have adopted.

In addition to forging financial partnerships with foreign investors, Quebec-based companies will have to foster trust-based relationships with these new investors, despite their significantly different business cultures; they will also have to identify prime contractors in order to create partnerships with them. In some situations, Quebec-based companies may also need to seek out other resources or expertise on the international stage, given the multiple challenges and issues associated with the Plan Nord.

Coherent partnerships, supported by local, global and multi-sector networks, will be one of the keys to helping Quebec-based companies profit from this opportunity and take their rightful place at the table as part of this once-in-a-generation project.

This article first appeared in the December 2011 issue of Premières en affaires and is republished here with permission.

Perspective North: PwC’s vision for the sustainable and integrated development of Northern Quebec.