April 8, 2015 / 5:03 PM / 4 years ago

Quebec scales back plan to develop its resource-rich north

MONTREAL (Reuters) - The Canadian province of Quebec unveiled a scaled-back version of its long-touted plan to develop its vast, mineral-rich north on Wednesday as investor interest has waned due to weak commodity prices, particularly for iron ore.

Quebec Premier Philippe Couillard waits for the start of a meeting of provincial and territorial premiers in Ottawa January 30, 2015. REUTERS/Chris Wattie

The provincial government said it now expects its Plan Nord to attract C$50 billion ($39.90 billion) in investment for the northern region of the French-speaking province over the next 20 years, down from its 2011 forecast of C$80 billion.

“The economic context in 2011 was different,” Quebec Premier Philippe Couillard said at a press conference announcing the revised plan.

The province’s Liberal government said it will invest C$1.3 billion over the next five years in new roads and other infrastructure in northern Quebec, home to gold, diamond and base metal deposits.

Three mining companies will announce investments totaling C$150 million in Quebec’s north on Thursday, a source with knowledge of the deals told Reuters.

Plan Nord, which includes the iron ore-rich Labrador Trough, suffered a serious blow last year when U.S.-based miner Cliffs Natural Resources said it would close its Bloom Lake iron mine after struggling to secure funds to expand it.

Iron ore prices have plunged 70 percent in the past two years, with the fall stoked by a flood of new supply from Rio Tinto, BHP Billiton and Vale just as Chinese demand growth slowed.

In January, Cliffs sought creditor protection for its Canadian arm. Its mine, railway and port assets in Quebec will be put on the auction block next month.

Earlier this month, Labrador Iron Mines Holdings, another Trough miner, also sought court protection from its creditors.

Some miners remain optimistic. Osisko Gold Royalties Ltd Chief Executive Sean Roosen said that although iron ore is “a tough story right now”, prices will revive in time. Osisko owns royalties on two gold mines in the region.

“We think this is a good idea and we continue to invest in the north,” Roosen said.

Additional reporting by Nicole Mordant in Vancouver; Editing by Peter Galloway and Leslie Adler

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