Categories: Base Metals / Precious Metals
Topics: General Base Metals / General Precious Metals

Quebec Woos Japan, China to Invest in $80 Billion Regional Plan

Japan’s “investment houses” are in talks about potential investments in rare earths and lithium deposits, as well as in infrastructure, Charest said in an interview yesterday in Tokyo, declining to name the companies.

Quebec, which hosts metals from gold to iron ore, is betting that a $47 billion investment in new hydro power capacity over 25 years will help lure companies from resource- poor nations. New investors would join Swiss miner Xstrata Plc. (XTA) and ArcelorMittal, world’s largest steelmaker, in developing operations.

“The Chinese are very interested,” and mostly in iron ore, Charest said. “China Investment Corp. has an office in Toronto and there is an opportunity to work with them also,” he said, referring to the nation’s sovereign wealth fund.

ArcelorMittal (MT) said May 20 it will spend C$2.1 billion ($2.1 billion) to expand operations at a Quebec iron ore complex, and Xstrata earlier this month pledged to invest a further $510 million in its nickel mine in the province.

Quebec’s regional plan, the so-called “Plan Nord”, will add 3,000 megawatts of hydro power and at least 500 megawatts of renewable capacity including wind over the 25-year time frame. The government will also help companies build roads, rail and ports to access mining projects that can only be reached by air at present.

Equity Stakes

Quebec has set aside $500 million over the next five years to purchase equity in new mining projects, Charest said. It would not seek controlling holdings, he said.

The province, which discovered deposits of rare earths about five years ago, could become a production center for the metals used in electric cars and laptops within three years, according to Charest’s estimate. Japanese electric auto makers are also looking for lithium for the batteries these cars use, he said.

“We will encourage them to invest in processing, not only extraction,” Charest said “That for us is very important and we are ready to support that.”

Japan’s biggest makers of autos, home appliances and high- technology equipment are scrambling to secure supplies of rare earth metals after China cut deliveries last year and there were diplomatic tensions between the two countries. Asia’s largest economy plans to slow exports of rare earths to keep more of the metal for domestic use, according to Molycorp Inc. (MCP), a U.S. rare- earth company.

Japan is the biggest importer of rare earths while China accounts for more than 90 percent of the global exports.

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