EDITORIAL — An unfair advantage

Almost every major discovery in the past decade — from the Eskay Creek gold deposit in British Columbia and diamonds at Lac de Gras to the Voisey’s Bay nickel-copper-cobalt deposit in Labrador — has triggered a stampede of mining companies hoping to find more of the same.

Sometimes, these rushes translate into more discoveries, such as those near Lac de Gras; other times, they do not. At the very least, the work carried out in a region surrounding a major discovery contributes to our geologic knowledge and may lead to new finds at a later date, including ones unrelated to the original target.

For these reasons, it is difficult to understand the Quebec government’s decision to remove from staking a large area northeast of Sept-Iles, surrounding a nickel showing found by a team of government geologists. At the same time, the government staked the immediate area covering the showing itself. These moves are so unusual that, already, the showing has been cynically dubbed “the people’s deposit of

Quebec.”

At this stage, the significance of the showing is not known. However, with values of more than 2% nickel and 2% copper, the target clearly warrants further work. In this case, the next stage of work, to include geophysical and geochemical programs, will be carried out by government geologists. At some undefined point in the future, the property will be optioned, or otherwise transferred, to a resource company. The possibility also exists that the government will give the discovery to its own exploration company, Soquem. Eventually, claimstaking will be permitted in the 800-sq.-km area, but no timetable has been set, and no one appears to know whether, in the meantime, the government will explore this area and lock up whatever it finds.

Government officials admit that while withdrawing the land from staking was “unusual,” it was done in the “public interest.” This does not sit well with companies exploring in Quebec, particularly those active on the North Shore.

These companies would have preferred that the government announce the discovery and leave the area open for staking immediately thereafter. As one company official said, “It’s the normal rules of the game, where it becomes a matter of who reacts most quickly.”

These companies say the government’s decision to stake the showing and freeze staking effectively nullifies any advantage they might have had in securing ground in the region. Others describe the government’s action as a disincentive for capital investment in the mining sector, which has always been an important contributor to Quebec’s economy.

In any event, the government’s next step will be closely watched by mining companies. If the project is turned over to Soquem, the government runs the risk of alienating the private mining sector. If it is auctioned off, smaller companies will complain that they cannot compete with larger players with deeper pockets. And even if the showing is found to be uneconomic, the government’s actions may lead to questions about the proper role of the province’s geological survey and mines ministry.

The best solution would have been to announce the discovery and allow a staking rush that would bring in new exploration dollars and stimulate the economy of the North Shore. Instead, we have a staking moratorium that may well prompt companies to direct their exploration efforts elsewhere.