$1B Quebec cement plant in peril as rivals launch legal action

MONTREAL—The company building a cement plant in Quebec’s Gaspe region says the $1.1-billion project is at risk if it is forced to suspend work to conduct what it calls unnecessary environmental hearings.

“A suspension of work at this advanced stage…not only puts the project in peril, but will certainly cause considerable financial losses,” McInnis Cement wrote in response to a lawsuit.

Lafarge Canada and two non-profit groups mounted a legal challenge last summer after Quebec Environment Minister David Heurtel authorized the project without an environmental assessment hearing. They have asked the Quebec Superior Court to quash that decision.

McInnis said the project is subject to old environmental rules in place when it was first proposed more than 20 years ago.

Successive provincial governments have confirmed many times that the project is not subject to current rules that require such hearings, it added.

McInnis said more than $435 million will have been spent on the project as of December, employing hundreds of workers.

Annual capacity of the plant will start at 2.2 million tonnes and could reach more than 2.5 million tonnes. It is slated to open in the fall of 2016.

During the construction phase, more than 2,300 jobs per year will be created, including up to 700 at the plant. More than 400 direct and indirect jobs are promised once it reaches full production.

Over 20 years, McInnis said the Quebec government will receive $359 million in tax revenues, including $87 million during the construction phase.

McInnis Cement was formed by members of the family that founded Bombardier Inc. and its spinoff, Ski-Doo maker BRP Inc.

Former premier Pauline Marois announced last January that the Quebec government would provide a guaranteed loan worth about $250 million. The province’s investment arm will invest $100 million and the Caisse de depot pension fund manager will also invest $100 million as equity partner in the Beaudier Group, the investment arm of the Beaudoin family.

The Liberals affirmed their support for the project after taking office in April.

The location in the community of Port-Daniel-Gascons, with a population of 2,600, was selected because of its rich limestone formations and proximity to maritime shipping that will carry 95 per cent of annual production.

The plant was welcome news for many in an area of Quebec that suffers from an unemployment rate exceeding 16 per cent. A survey conducted by Leger Marketing found that 92 per cent of the region’s population supports the project, McInnis said.

But rivals in the cement industry have said government funding will threaten jobs elsewhere in the province, with the Cement Association of Canada criticizing the government for supporting a project that will add unneeded supply.

Lafarge Canada, which operates a cement plant near Montreal that employs more than 100 workers, has said it threatens jobs there and at other plants across the province.

The company, a subsidiary of Lafarge North America whose parent is headquartered in France, is partially owned by Quebec’s Desmarais family.

McInnis has said the market in the east coast of the U.S. isn’t oversupplied, growing at about eight per cent a year. The plant is also targeting to replace 300,000 tonnes a year that is imported into the province.

The company also defended the plant’s environmental footprint, saying it will be Canada’s only cement plant that will conform with the most restrictive air emission standards in North America, which are upwards of 15 per cent more severe than the current standard in Quebec.

Although it could also produce two per cent of Quebec’s greenhouse gas emissions at full production, and 6.9 per cent of its industrial emissions, those numbers would gradually be reduced as biomass replaces up to half of the fuel burned, the company said.