New Brunswick

Proposed Belledune iron ore project already a recipient of taxpayer help

The company that Premier Brian Gallant welcomed to Belledune last week has been trying to get its iron-ore processing plant up and running for three years. It’s also been receiving money from New Brunswick taxpayers for almost as long.

Maritime Iron got $625,000 from province over past 2 years for 'pre-feasibility' studies

Premier Brian Gallant said the $1 billion processing facility in Belledune would create 1,000 short-term jobs and more than 200 permanent jobs. (Serge Bouchard/CBC)

The company that Premier Brian Gallant welcomed to Belledune last week has been trying to get its iron-ore processing plant up and running for three years.

It's also been receiving money from New Brunswick taxpayers for almost as long.

Public records show Maritime Iron Inc. has received a total of $625,000 from the province in the last two years, even though it lost a potential investor in the Belledune plant in 2015.

Gallant held a news conference last Thursday to announce the company wants to start building the plant next year and start production in 2022, depending on feasibility studies.

He said construction would create 1,000 jobs and the company would employ more than 200 people when it is running.

Gallant described the province as a "partner" in the project, though company chairman Greg McKenzie was cagey in an interview about what that entailed.

"The government has certain programs that are available to a project such as this," McKenzie said.

"Especially when you're going to be partnering or working with public institutions, it makes sense that everybody's interests are aligned. We believe it makes sense for the government to be aligned with us and be a partner in the funding as well."

Maritime Iron’s executive chair Greg McKenzie, seated next to Gallant, has not been specific about what it means to have New Brunswick as a partner in the project. (Serge Bouchard/Radio Canada)

Government spokesperson John McNeil said Monday that there is "no financial commitment" from the province, but that could happen in the future.

Public accounts documents listing government grant recipients and suppliers show the province paid Maritime Iron $250,000 in 2015-16 and $375,000 in 2016-17.

The province says that was for "pre-feasibility" studies, not the "feasibility" studies still on the way.

Opposition Progressive Conservative MLA Bruce Fitch questioned why people are only hearing about Maritime Iron now.

"If this thing had been floating around in 2015, don't you think somebody would have been talking about it back then?"

'Lots to do'

At last week's announcement, Gallant said the need for an environmental review and for community and Indigenous consultations means "there is still lots to do" before the project is a sure thing.

That appears to be an understatement. McKenzie said the company has not put any financing in place because it's too early.

"You don't finance the construction before you've completed a bankable feasibility study and before you've got environmental permitting and you've done your consultations with First Nations and community groups," he said.

He said the plant will be the first significant producer of pig iron in North America and will fill a market niche. The location near major shipping lanes is also a plus, but "all of those details have to be studied out in the feasibility study," he said.

Green Party Leader David Coon raised an eyebrow at the timing of the announcement, considering how few details are available. (Joe McDonald/CBC)

Green Party Leader David Coon said the lack of detail in the announcement, made just three months before a provincial election, was worrying.

"Is this serious, or is this just electioneering?" he said. "The details are slim."

Earlier deal fell through

While McKenzie said it was too early to pursue financing, Maritime Iron did sign a deal with a potential investor three years ago — only to see it fall through.

Vancouver-based EastCoal Inc. said in September 2015 it would invest in the project. The company said in a news release at the time that Maritime Iron was was "completing a feasibility level study and related processes" to build the plant.

But three months later EastCoal announced it was "unable to complete the required funding" to make the investment.

Obviously, any industrial development will have an environmental footprint.- Greg McKenzie, Maritime Iron chairman

McKenzie said that's in part because Maritime Iron hadn't yet adopted the specific processing technology it now says it will use in Belledune.

"That deal didn't happen in 2015, and we're here in 2018, more than three years later, or almost three years later," he said. "And we think what we have on the table today is an exciting step forward."

Korean technology is new

Maritime Iron plans to use a processing technology called Finex, owned and licensed by Posco, a major Korean company.

He said the 2015 study mentioned by potential investor EastCoal was actually the "pre-feasibility" study.

"It's the same location, same idea, but different process. There's many different process and many different technologies that can be used to upgrade iron ore into pig iron."

Asked if the Finex system makes the business case better than what the company had in 2015, McKenzie pointed out he wasn't the company chair then.

"Look, it's different," he said. "I don't want to keep referring back to what was going on in 2015. That's not my frame of reference."

Silent on emissions

McKenzie was similarly tight-lipped on what impact the proposed plant would have on New Brunswick's greenhouse gas emissions — a key issue as the company prepares for an environmental impact assessment.

"I wouldn't just throw numbers around," he said. "I think that's not responsible."

Gallant claimed last week the project would have a "lower environmental footprint" because of the Finex technology, which will send a gas byproduct from the iron refining to NB Power's Belledune generating station.

NB Power's Belledune generating station would be able to burn a gas byproduct of the iron ore plant, according to Gallant. (Environment and Climate Change Canada)

That will reduce the station's use of coal, cutting emissions from 2.8 megatonnes to one megatonne a year, Gallant said last week.

The premier also said the project would "significantly reduce overall global GHG emissions" because iron ore now shipped from Quebec and Labrador to China would instead be sent to Belledune, reducing the emissions of freighter ships.

But the plant will itself generate emissions, the company acknowledged.

"Obviously any industrial development will have an environmental footprint," McKenzie said.

He wouldn't provide the company's estimate of those emissions, though. He said the assessment will look at "those precise details."

Provincial goal at risk

New Brunswick has legislated an objective of lowering greenhouse gas emissions to 10.7 megatonnes by 2030. Any increase would make that goal harder to achieve, and the reduction from ocean freighters would not count toward the province's total.

Gallant has also claimed that he's been able to avoid a new carbon tax on gasoline because the province has hit the federal emissions target — but that, too, would be in jeopardy if the iron ore plant creates a net increase.

Coon said a reduction in coal use at Belledune "would be quite positive" but if the iron plant creates a net emissions increase, "obviously deeper reductions would have to be made elsewhere in the economy."

McKenzie also avoided specifics on whether Maritime Iron had shopped its proposal to other provinces in the region.

"Look, I think a project like this is possible to build in different locations," he said. "It's part of the reason why, earlier in the history of the company, we did do site reviews of other locations.

"Belledune is always mentioned as an industrial site. If you're going to do an industrial development project, this is one of the locations that makes sense to do it."

Maritime Iron's website lists no other company operations other than the development of the Belledune project.

With files from Shane Magee

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