Canada: competitors annoyed at government funding of cement project

Canada: competitors annoyed at government funding of cement project
Published: 03 February 2014


The Quebec government has drawn criticism regarding its CAD250m (US$225m) guaranteed loan for the new McInnis Cement plant at Port-Daniel-Gascons. The McInnis project is scheduled to produce 2Mta of cement and will employ about 2,400 workers during the construction phase — and about 400 people directly and indirectly by 2016, when the plant should be fully operational.

However, rivals in the cement industry say government funding will threaten other jobs in the province.
A top Lafarge executive wrote Marois in September that her government’s “alarming potential intervention” would harm the four other players – Lafarge, Colacem, Holcim and Ciment Québec.

Lafarge, which is partially owned by Montreal-based Power Corp, has said it would be forced to cut jobs at its plant in St-Constant, if it can't maintain its activities because of a further surplus of production capacity.

Meanwhile, the Canadian Cement Association criticised the government, however, for supporting the project that will add unneeded supply.

Association president Michael McSweeney said the new plant would compete directly with Quebec producers at a time when 60 per cent of their capacity sits idled.

"The government's financial participation in the project jeopardises jobs and existing plants," he said before the announcement after reports surfaced late last week.

McInnis Cement, a company formed by members of the family that founded Bombardier Inc and its spinoff, BRP Inc. Bombardier's founding family is partnering with Quebec's government and two provincial agencies to invest CAD1bn in the new cement plant in the Gaspé region. The province's investment arm will invest CAD100m and the Caisse de dépôt, Quebec's pension manager, will invest an additional CAD100m.

The investment is one of the biggest industrial projects in recent years in Quebec — and on the periphery of the most contentious sector of Quebec’s economy. The Charbonneau Commission has been holding hearings for months on an ever-widening corruption scandal in the province’s construction industry.

The location in the community of Port-Daniel-Gascons was selected because of its rich limestone formations and proximity to maritime shipping that will carry 95 per cent of annual production. McInnis Cement is sitting on a huge 450Mt deposit of limestone in Port-Daniel that would be long-term feedstock for the plant.

The idea of a cement plant in the region dates back more than 20 years. Planning for the project began in 1998 but was postponed for a few years due to the lack of financial support.

The cement plant promises to be among the industry's most fuel-efficient and lowest emitters of greenhouse gases on the continent.

It will initially burn petcoke, a refinery product and may add biomass from logging and sawmills.

"Ultimately, the production of the project's cement plant will replace that of older plants," said a November report by engineering firm Genivar, now WSP.