The cement industry reacted with “anger, even fury” Friday after Pauline Marois confirmed Quebec would invest $350 million in a $1-billion cement factory in Gaspésie.
But Laurent Beaudoin, the driving force behind the McInnis Cement project, said in a telephone interview that “it’s because these guys are in the markets we’re targeting (in the U.S. northeast), and they don’t want to see us around. We’ve done a lot of work on efficiency (for the future plant) and it’ll be one of the most modern and productive in the world. And they haven’t invested in their facilities in 40 years.”
Beaudoin is chairman of aircraft and rail manufacturer Bombardier Inc. and the principal in personal investment firm Groupe Beaudier, which controls McInnis Cement.
The industry and unions representing the four existing cement kilns in Quebec said they were gobsmacked by the announcement of the funding for McInnis Cement, which announced it would go ahead with the vast industrial project that will start construction this spring. At completion, slated for 2016, it would produce 2.2 million tons of cement powder annually, with a possible 15 per cent increase subsequently.
Michael McSweeney, president of the Cement Association of Canada, said in a telephone interview that “our members are feeling anger, even fury” that the vast sum of taxpayer money Quebec is spending would harm his four members, whose businesses were built with private financing. The four Quebec plants received a total of about $7 million in funding for various projects from Quebec over the last 25 years, he said.
The project is not only unnecessary, McSweeney argued, but would seriously exacerbate the cement overcapacity that is expected to last for another decade.
“We are operating at probably 60 per cent of our capacity, there are people laid off, we have never been sold out since the Montreal Olympics (in 1976), and we are still in a recession. And the U.S. northeast (where McInnis says it will export most of its output) is in a disastrous recession.”
“I think the Quebec government is doing this for political points coming into an election. This project has been talked about for many years, it’s been on the drawing board for 25 years. And I don’t know why anybody who takes a minimal amount of time to understand the cement fundamentals could think that this plant could work, especially in the next 10 years.”
He said there is an unused capacity of about 1.2 million tons annually in Quebec, plus another 600,000 tons in Pennsylvania and New York.
McSweeney also urged environmental groups to “hold (McInnis’s) feet to the fire” on environmental permits for the project.
One of the previous management groups that weighed the project obtained an environmental permit for clearing the land.
“But if Quebec is going to invest $350 million,” said McSweeney, “they should have to apply for every permit required — water, land, greenhouse gases, construction. Like we had to do.”
But Beaudoin dismissed that.
After Groupe Beaudier bought the quarry with 450 million tons of limestone that is to serve as feedstock for the plant for about a century, “we asked if we had to go to the BAPE (Bureau d’audiences publiques sur l’environnement) and the Quebec government said no. We had the (initial land clearing) permit and all we have to do is upgrade it.”
The plant will surpass stricter environmental norms that will come into effect in the U.S. in 2015, Beaudoin said.
McSweeney said “it sounds like Quebec could have the tendency to look the other way.”
He said he was astounded that Quebec would devote $350 million in a project that should be privately financed “when we need a Champlain Bridge, we need all sorts on infrastructure things.”
In a telephone interview, Investissement Québec president Mario Albert swatted away suggestions the project was not viable and was an electoral ploy for votes in Gaspésie, which has one of the highest unemployment rates in Quebec.
“Laurent Beaudoin is not in business to lose money. And they did a very serious analysis with the Caisse (de dépot et placement du Québec). These are serious people and it’s a viable project.”
He said that the oversupply is “theoretical.”
“True, at full capacity there would be an overcapacity, but these are very old plants, as are the U.S. ones, and they don’t operate nearly at full capacity.”
“Currently, Quebec manufacturers actually import cement.”
Beaudoin said that his plant would supply that roughly 300,000 tons of cement the four currently import from South Korea — in addition to the U.S. Northeast.
The Quebec government will provide guaranteed loans totalling $250 million and will take an equity stake worth about $100 million “to have our say in the project in future,” said Albert.
Groupe Beaudier and the Caisse will form an as-yet unnamed joint venture that will have a 51-per-cent stake in the project. It will be presided over by Christian Gagnon, whom Beaudoin said has 35 years’ experience in the cement industry around the world.
The Caisse is injecting $100 million while Groupe Beaudier is investing $150 million.
Beaudoin said that other “smaller, well-heeled investors,” many of them Quebecers, also agreed to invest. He would not name them but said some are well-known.
The National Bank of Canada is managing the group investment but is not investing itself, said Beaudoin.
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