Integration of Quebec’s northern regions into US war economy

Canada’s strategic critical minerals: Who decides? | Fernand Deschamps

TML Weekly explained in February how Canada and Quebec are being further integrated into the U.S. imperialist economy and war machine through the Canada-U.S. Joint Action Plan on Critical Minerals Collaboration.[1] A recent Quebec government announcement reveals that the next step is to build infrastructure to guarantee a supply chain to ship these critical minerals to the United States.

Representatives of the Eeyou Istchee Cree First Nations and the Quebec government met in Montreal on February 17 to sign a memorandum of understanding (MOU). The office of the Premier of Quebec termed the MOU, “La Grande Alliance, [a] collaborative, long-term, balanced economic development in a spirit of respect for Cree values in the Eeyou Istchee James Bay Territory.”

Abel Bosum, Grand Chief of the Grand Council of the Crees (Eeyou Istchee) and Chairperson of the Cree Nation Government, signed the MOU on behalf of the Eeyou Istchee while Premier François Legault signed for the Quebec government.

The website of La Grande Alliance says, “La Grande Alliance is an agreement for collaboration and consolidation of socio-economic ties between the Cree Nation and Quebec government to connect, develop and protect the territory.”

The project will cover “Eeyou Istchee, the Cree land that represents nearly 30 per cent of Quebec (450,000 square kilometres).” It is “a comprehensive plan to extend the transportation network (rail, road, port and airport), improve living standards (housing, electricity and internet) and guarantee the long-term protection of the territory (protected areas).”[2]

The project is presented as “a 30-year infrastructure program” estimated at $4.7 billion to be carried out in three phases. The first phase begins in 2021 in the south around Matagami in Abitibi, extends north to Whapmagoostui and east to Schefferville to connect the Cree territory with the rest of Quebec. The project “aims at developing infrastructure to facilitate the transport of people and goods, increase the value of natural resources by reducing travel costs and ensuring protection of First Nations land by creating a protected corridor for flora and fauna.”[3]

As reported in a previous issue of TML Weekly, the protection of the natural environment is an issue of concern to the Cree people who oppose the further encroachment on their ancestral land, as many of them still depend on it for trapping and for their livelihood.[4]

Infrastructure for Extraction of Strategic Minerals

After the MOU signing ceremony, Premier Legault noted, “[Northern Quebec] is full of potential and presents possibilities in certain strategic minerals that are very attractive for the Americans and the Germans who, at present, are very dependent on China. Whenever there is a mining project, there must be acceptance on the part of the Indigenous communities. This Memorandum of Understanding proves that it is possible to work together on ambitious socio-economic development projects and take advantage of Northern Quebec’s vast mining potential for the benefit of both our nations, in a spirit of respect for the environment, the territory and Indigenous values.”

The Cree and the Legault government have agreed to share the costs of a feasibility study on Phase 1 of the Grande Alliance, valued at $1.5 billion. This entails the construction of a railroad from Matagami to Waskaganish, which is infrastructure needed to serve four lithium mining projects currently at the environmental assessment stage.

According to the World Bank and the Australian Institute for Sustainable Futures, global demand for minerals such as lithium, graphite, cobalt and nickel is set to explode by 2050, with expected increases ranging from 300 to 8,000 per cent, according to the various scenarios analyzed. Already the effect of this mineral boom is palpable in Quebec with a 50 per cent increase in mining investment for graphite and a 789 per cent increase for lithium between 2013 and 2018.

Map showing the location of potential mines and those already in production in relation to strategic and critical minerals (click to enlarge).

Quebec’s Ministry of Energy and Natural Resources acknowledged in a February 2020 statement,

“Critical minerals have significant economic importance in key sectors of the economy, present a supply risk, and have no commercially-available substitutes. Strategic minerals have strategic importance for states. They are needed to implement Quebec’s economic policies, such as the 2030 Energy Policy and the future 2020-2030 Electrification and Climate Change Plan.

[…]

“Quebec already makes a major contribution to the supply of critical and strategic minerals, since it produces nickel, niobium and graphite and has mining projects under development for lithium, vanadium, rare earth elements and tantalum.”[5]


Railway Network – Part of strategic minerals supply chain for U.S. war economy

Three-phase extension of road and railways in Northern Quebec under the Memorandum of Understanding (click to enlarge). (La Grande Alliance)

Phase 1 of the MOU includes the construction of a railway from Matagami to a deep-water port at Whapmagoostui 700 km north on Hudson Bay. CN rail currently serves the Abitibi region. It has a rail interconnection between Matagami, the gateway to James Bay and the territory of the Cree Nation, and the transcontinental railway that links Canada from coast to coast.

Transport Minister Marc Garneau introduced Bill C-49, the Transportation Modernization Act, in the House of Commons on May 16, 2017. The act contains measures to amend the Canada Transportation Act with regard to air and railway transportation. It was given Royal Assent on May 23, 2018.

TML Weekly pointed out in 2017:

“The Trudeau Liberal government said at that time the direction it wants to take ‘to grow Canada’s economy’ is to modernize it by introducing further deregulation and privatization. This direction is not new by any means, and was also the policy of the former Harper Conservative government. Bill C-49 consolidates the Harper government’s direction in the service of foreign monopoly corporations in the transportation sector. They profit from Canada’s network of transportation corridors that facilitate the international trade they dominate.”[6]

Bill C-49 created a new mechanism called long-haul interswitching (LHI) to replace the system of temporary extended interswitching, which is managed through regulations. According to Minister Garneau’s rationale, LHI was needed to provide a “competitive alternative” for captive shippers who have access to only one railway. This measure was clearly intended to further deregulate rail transport to benefit the railway monopolies operating mostly in the U.S., as it further expanded their access into the Canadian railway network.

An article in Workers’ Forum explained, “[S]hippers of products like lumber, iron ore, grain or consumer goods in Canada’s most remote regions, often served by only a single rail line, [are left] with few transportation options. With interswitching, the railway company picks up the cars from a customer and hands them off to another carrier that performs the line haul. The line haul includes the majority of the linear distance of the overall railway movement.”

Under the legislation prior to Bill C-49, interswitching was available to shippers located 160 km from a recognized interchange point. Bill C-49 extends this distance up to 1,200 km. “This deregulation measure favours the railway monopolies now operating mostly in the U.S., as it will increase their access to the Canadian railway network,” the article pointed out.[7]

Amending the Canada Transportation Act also brought a change affecting foreign ownership of airline and railway companies. The maximum percentage of foreign voting interests in Canadian air carriers increased from 25 per cent to 49 per cent with a single person able to control up to 25 per cent of the voting interests in that corporation, such as Air Canada and WestJet.

Specifically regarding the operation of the Canadian National Railway Co., an amendment to the CN Commercialization Act in 2018 increased the maximum voting shares that can be held by one person, from 15 to 25 per cent. Already in 2017, Microsoft oligarch Bill Gates was CN’s biggest shareholder, with 13.3 per cent through his holding company. He also controlled another 2.3 per cent through the Bill and Melinda Gates Foundation.

More Pay-the-Rich schemes to further integrate Quebec into U.S. war economy and supply chain

The evening before Legault signed the MOU with the Eeyou Istchee Cree First Nations, Pierre Fitzgibbon, Quebec’s Minister of the Economy and Innovation appeared on the Radio-Canada weekly talk show Tout le monde en parle. Fitzgibbon spoke excitedly about the Government of Quebec’s $30 million investment, through Investissement Québec, in a company based in France called “Flying Whales.” The French company plans to build airships capable of transporting payloads equivalent to those transported by two semi-trailer trucks.

Fitzgibbon said, “It is an airship that takes a 60-tonne payload. We could transport houses to the far north; we could extract minerals, rare earths. It is a French group, which includes the Paris airport, Boeing, large French companies. We are investing 20 million euros. We have the rights in the Americas. And the French will invest the equivalent of what we invest in research and development here in Quebec. Here, we have a very efficient industrial cluster in aerospace, artificial intelligence, [and] our engineers. We anticipate that the project will be operational in 2022-2023. We can think of places in the far North, the James Bay territory, where there are no roads and airships that can carry 60 tonnes are more useful than putting billions into the construction of roads and railways. These airships will be complementary to our strategy to develop northern Quebec. This system will complement the traditional transport system.”

Such airships have been available since the late 19th and early 20th centuries until the Hindenburg disaster undermined public confidence in them, and brought a definitive end to their “golden age.” The government of Canada with such vast northern territories has not seen fit to put them to use for the delivery of goods to the north until now when mining interests have a direct stake.

Taken together, the ensemble of reports reveals how the Canadian and Quebec economies are being prepped to participate in the increasingly vicious inter-monopoly and inter-imperialist competition over control of sources of raw materials, markets and spheres of interest. Canada’s transportation infrastructure, along with its human and natural resources, mainly serves the U.S. imperialist striving for domination, its war economy and insatiable demand to suck as much private profit as it can from wherever it is allowed to operate. But it also integrates the Europeans into the North American market, an advantage Quebec milks to the maximum when it comes to relations with France and the European Union. This disastrous path under the control of oligopolies and their cartels and coalitions which both collude and contend at one and the same time stands in opposition to building a self-reliant diverse economy under the control of the people and serving their needs and well-being and the necessity to humanize the social and natural environment.

The Cree and all Indigenous peoples are entitled as a birthright to a life they choose for themselves at the highest standard of living this modern age produces. Transporting goods to northern communities by airship whose payload is many many times greater than that of a plane should reduce the cost of food and all other things imported from the south many times over, but will it? 

The direction of the Legault and Trudeau governments must not pass. The people cannot and will not accept such a direction for the economy that is not under their control and inevitably leads to crises and war.

Notes

1. “No to Canada’s Integration into the U.S. Imperialist War Economy!” by Fernand Deschamps, TML Weekly, February 1, 2020.

2. La Grande Alliance

3. Ibid.

4. “Quebec Government Announces ‘Grand Alliance’ with Cree While Calling for Police Intervention to End Blockades,” TML Weekly, February 22, 2020.

5. “Discussion Paper: Review of Quebec’s Role in the Development of Critical and Strategic Minerals,” Energy and Resources Quebec,” February 2020.

6. “Privatization and Deregulation in Service of Financial Oligarchy and Empire-Building Is Not Modernization,” by Louis Lang, TML Weekly, June 3, 2018.

7. “The Real Aim of Bill C-49,” by Pierre Chénier, Workers’ Forum, September 28, 2017

(With files from Quebec Government, Radio-Canada, TML. Photos: TML, Grand Alliance. Quotations from Premier Legault and Minister Fitzgibbon translated from original French by TML.)


U.S. administration declares national emergency regarding minerals critical to war economy

U.S. President Donald Trump signed an executive order on September 30 declaring a national emergency regarding the mining and metallurgical industry. A copy of the ”Executive Order on Addressing the Threat to the Domestic Supply Chain from Reliance on Critical Minerals from Foreign Adversaries” was immediately sent to Congress.[1] A letter accompanied the order stating the President “issued an Executive Order declaring a national emergency to deal with the threat posed by our Nation’s undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries.”

In the same warmongering tone, Trump went on to say that the U.S. imperialists “cannot be dependent on imports from foreign adversaries for the critical minerals that are increasingly necessary to maintain our economic and military strength in the 21st century.”

In the 2,700-word Executive Order, Trump takes aim at the People’s Republic of China, blaming it for the present situation where the U.S. is dependent on China for rare earth elements (REEs). He sidesteps the whole issue of the imperialist world system and financial oligarchy that dominate the mining sector, profit from the exploitation of raw materials, control their world prices, and engage in fierce competition including war and preparation for war to organize global mining in ways that benefit U.S. imperialism, its war economy and particular monopolies and cartels.

The Executive Order reads:

“For 31 of the 35 critical minerals, the United States imports more than half of its annual consumption. The United States has no domestic production for 14 of the critical minerals and is completely dependent on imports to supply its demand. Whereas the United States recognizes the continued importance of cooperation on supply chain issues with international partners and allies, in many cases, the aggressive economic practices of certain non-market foreign producers of critical minerals have destroyed vital mining and manufacturing jobs in the United States.

“Our dependence on one country, the People’s Republic of China (China), for multiple critical minerals is particularly concerning. The United States now imports 80 per cent of its rare earth elements directly from China, with portions of the remainder indirectly sourced from China through other countries. In the 1980s, the United States produced more of these elements than any other country in the world, but China used aggressive economic practices to strategically flood the global market for rare earth elements and displace its competitors.”

To justify the declaration of a national emergency, the Executive Order repeats the argument that the United States is the indispensable nation:

“I therefore determine that our Nation’s undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries constitutes an unusual and extraordinary threat, which has its source in substantial part outside the United States, to the national security, foreign policy, and economy of the United States. I hereby declare a national emergency to deal with that threat.”

The Executive Order states that since December 2017, different departments of the U.S. government have identified “35 minerals that (1) are ‘essential to the economic and national security of the United States,’ (2) have supply chains that are ‘vulnerable to disruption,’ and (3) serve ‘an essential function in the manufacturing of a product, the absence of which would have significant consequences for our economy or our national security.’”[2]

The 35 critical minerals include, amongst others, “aluminum – used in almost all sectors of the economy; the platinum group metals – used for catalytic agents; rare-earth elements – used in batteries and electronics; tin – used as protective coatings and alloys for steel; and titanium” as well as uranium.[3]

Almost all of these minerals have military and civilian applications covering the aerospace, energy, telecommunication, electronics, and ground and marine transportation sectors. Of note is the mineral barite and the group of water-soluble potassium-containing minerals, commonly referred to as potash. Barite is singled out in the September 30 Executive Order because it plays an important role in the production of oil and gas. These two important energy commodities have been massively extracted in the U.S. through fracking and used to flood and capture world markets in the last decade. Fracked oil and gas are in part responsible for the dramatic drop in oil and gas prices witnessed in January and February of this year, even before the COVID-19 pandemic struck.

The Executive Order reads, “The United States also disproportionately depends on foreign sources for barite. The United States imports over 75 per cent of the barite it consumes, and over 50 per cent of its barite imports come from China. Barite is of critical importance to the hydraulic fracturing (‘fracking’) industry, which is vital to the energy independence of the United States.”

Like barite, potash is used in fluids for oil and gas drilling. However, 85 per cent of its usage in the U.S. is in the agricultural sector as a fertilizer. Saskatchewan is the main world producer of potash and a critical supplier of potash to the U.S., which imports 90 per cent of its potash needs.

Notes

1. “Executive Order on Addressing the Threat to the Domestic Supply Chain from Reliance on Critical Minerals from Foreign Adversaries,” The White House, September 30, 2020.

2. ”Draft Critical Mineral List – Summary of Methodology and Background Information – U.S. Geological Survey Technical Input Document in Response to Secretarial Order No. 3359, Open-File Report 2018 – 1021, U.S. Department of the Interior & U.S. Geological Survey, 2018.”

3.”Interior Releases 2018’s Final List of 35 Minerals Deemed Critical to U.S. National Security and the Economy,” U.S. Geological Survey, 2018.


Canada’s role in guaranteeing supply chain of critical minerals using pay-the-rich schemes

Canada and the U.S. announced on January 9 that they had finalized the Canada-U.S. Joint Action Plan on Critical Minerals Collaboration as part of Canada’s Integration into the U.S. imperialist war economy, as reported in TML Weekly on February 1,[1] Of the 35 critical minerals identified by the U.S. government agencies, Canada is considered by the United States as its “top supplier” of seven critical minerals: aluminum, cesium, rubidium, indium, potash, tellurium and uranium, while it also supplies six other critical minerals.

Even though the Trudeau government’s September 23 Throne Speech is silent on the Joint Action Plan on Critical Minerals Collaboration Canada that signed with the U.S. in January, the Plan is one of many pay-the-rich schemes that the Liberal government insists “create jobs” through the neo-liberal “trickle-down effect.”

The Throne Speech says, “[T]he Government will launch a campaign to create over one million jobs, restoring employment to previous levels. This will be done by using a range of tools, including direct investments in the social sector and infrastructure, immediate training to quickly skill up workers, and incentives for employers to hire and retain workers.”

As well, the government vows to secure supply chains through structural changes in federal, Quebec and provincial relations, freeing them of any “encumbrances”:

“Now, more than ever, Canadians must work together – including by eliminating remaining barriers between provinces to full, free internal trade – to get the economy back up and running and Canadians back to work.”

As indicated in the 2018 United States Geological Survey document on critical minerals, many of the elements found in Canada have military and civilian applications. Aluminum is used in many civilian and military ground, marine and aerospace applications such as vehicles, naval vessels, airframes and plane and rocket fuselages. Cesium and rubidium are indispensable elements in global positioning satellites (GPS), rocket guidance systems, military infrared devices (night vision), cellular phones and fibre optics, to name just a few.

Indium is used for aircraft windshields, military infrared imaging, flat panel displays for computer and TV screens and for nuclear applications, amongst many other uses. Various rare earth elements (REEs) are used in jet engines; in military guidance, laser, radar and sonar systems; and to make permanent magnets. Tellurium has military applications in infrared devices (night vision) and semiconductors for telecommunication and electronic devices. Uranium has many applications for space missions, nuclear propulsion of military vessels and nuclear power stations.

Of the 35 critical minerals, many others are also extracted in Canada, such as cobalt (in Ontario), niobium, scandium and titanium (in Quebec). Plans are in place for others to be mined, such as chromium (Ontario’s Ring of Fire), vanadium (from the tar sands in Alberta and Quebec’s Lac Doré complex), lithium (in the James Bay area, Quebec) and REEs (in northern Saskatchewan). In all these cases, Quebec and provincial governments across Canada are providing all sorts of handouts to the rich in the form of infrastructure projects (building of roads, railways, power lines, and research and development facilities) and bailouts.

A recent example is the September 23 announcement by the Saskatchewan Research Council (SRC), a Crown corporation of the Government of Saskatchewan, of the start of construction of a $35 million REE processing facility in Saskatoon that will establish a provincial supply chain for REEs. “The Facility, a first-of-its-kind in North America,” will be a commercial processing plant of monazite sands. Monazite is “a source of mainly so-called light REEs (especially cerium, lanthanum, praseodymium, neodymium) which are some of the critical elements for the permanent magnets used in clean technologies. SRC will work with the mining industry to secure this feed stock from across Saskatchewan, Canada and internationally.”

Note

1. “No to Canada’s Integration into the U.S. Imperialist War Economy!” by Fernand Deschamps, TML Weekly, February 1, 2020. 

(With files from TML; Governments of Canada, Saskatchewan and Quebec; U.S. Geological Survey; Globe and Mail; Mining.com. Photos: TML.)


Bailouts of private mining and metallurgical ventures

Other examples of bailouts by governments and handouts to rich private interests are the case in point of lithium, another critical mineral, and industrial diamonds. During July 2019, the world commodity market price for lithium carbonate came to a low value of less than $10/kg because of “an ongoing avalanche of lithium supply, coming mostly from Australia.” This forced many start-up mining projects to go belly up, as was the case for Nemaska Lithium which owned a spodumene mine bearing lithium in the James Bay area of northern Quebec and a processing plant to produce high grade lithium concentrate in Shawinigan, Quebec.

After putting $80 million of public funds in the Nemaska Lithium private mining and metallurgical venture in May 2018, the Quebec government again came to the rescue of the company, which filed for bankruptcy in December 2019.

On August 20, Minister of Economy and Innovation Pierre Fitzgibbon announced that the Quebec government was buying back Nemaska Lithium along with two other private firms: Orion Mine Finance Group, Nemaska’s biggest secured creditor, and Pallinghurst, a UK-based mining and metals private equity firm. The Quebec government will pay a huge portion of the $146.5 million in liabilities owned in part by Orion. Many small investors who had put their life savings into this venture lost everything. The Quebec government will also put in another $200-300 million of public funds in order to keep Pallinghurst as a “partner” in the rescue package.

To justify these huge handouts, Minister Fitzgibbon said in a statement: “The Nemaska Lithium project is a strategic project for Quebec and could contribute to economic recovery,” adding that the development of batteries for electric vehicles is at the heart of the government’s priorities. “It is essential to establish as many links as possible in the value chain, ranging from the extraction of minerals to the manufacture of batteries, so that Quebec can reap the maximum benefits.”

This is the same Orion Mine Finance that partnered with Blackstone in 2015 to acquire part of Stornoway’s Renard diamond mine in the James Bay area of Quebec that filed for bankruptcy in November 2019, at a time when the world market price for industrial diamonds plunged to new lows. This came after the former Marois PQ government and the former Couillard Liberal government authorized the spending of $300 million of public money to build the 143 km access road to the mine and used $122 million of public money to buy 26 per cent of the shares of Stornoway, making it the biggest single investor in the Renard mine project.

(With files from Government of Quebec; Globe and Mail; Mining.com.)

TML Weekly, October 24, 2020 – No. 40

1 Comment

Filed under Canada

One response to “Integration of Quebec’s northern regions into US war economy

  1. Pingback: Canada’s role in supplying critical minerals to the US war economy | Tony Seed's Weblog

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