Canada asbestos mine financing deal extended

Mon Aug 15, 2011 5:23pm EDT

TORONTO (Reuters) - One of Canada's last remaining asbestos mines was thrown another lifeline on Monday, as the Quebec provincial government extended its deadline for a consortium of investors to finalize a deal to buy the mine.

The consortium, led by private import-export firm Balcorp Ltd, has been given until October 1 to raise C$25 million ($25.5 million) in order to secure a C$58 million loan guarantee from Quebec.

The cash infusion would allowed the consortium to complete an expansion at the Jeffrey mine, which has operated in the town of Asbestos, Quebec, for over 130 years.

The open-pit mine was originally built out underground in early 2000s, but financial difficulties in 2003 forced the mine to reduce output and delayed the move to underground mining.

The mine has operated intermittently from the open pit over the past few years. The expansion is expected to create about 500 jobs and extend the mine's life by 25 years.

The consortium, which includes investors from India, said it will invest C$83 million at the mine over three years to complete the transition to underground operations and return the mine to full commercial production.

"Once financing is in place, it will be possible to restart mining operations and to produce chrysotile fibers within a few months," the group said in a press release issued on Monday.

Canada is the world's fifth largest exporter of chrysotile asbestos, with the Jeffrey and Thetford mines in Quebec accounting for all production.

The country produced over 150,000 tonnes of asbestos in 2009. The vast majority was exported, with India being the primary market, according to the U.S. Geological Survey.

Once a commonly used building material popular for its sound insulation and fire resistance properties, asbestos is now strictly regulated in Canada under the Hazardous Products Act and the Environmental Protection Act.

Asbestos exposure has been linked to lung and other cancers. More than 107,000 people die from asbestos-related illnesses every year, according the World Health Organization.

Critics of Canada's asbestos mining industry are concerned about exports to developing countries that lack the safeguards to ensure the material is used safely.

Health and public safety groups have been pressuring the federal and Quebec governments to halt asbestos exports.

($1=$0.98 Canadian)

(Reporting by Julie Gordon; editing by Rob Wilson)