Displaying items by tag: Quebec

USA/Canada: US Senator Sherrod Brown has urged the Obama Administration to protect the cement industry in Paulding County, Ohio and the thousands of local jobs that it supports.

In a letter to United States Trade Representative (USTR) Michael Froman, Brown called for the administration to crack down on Canada's attempt to 'illegally' subsidise the McInnis Cement plant in Quebec, which would specifically target the US market, hurting the ability of local manufacturers to compete. US cement companies would be affected, he claims, including Lafarge North America, which has a plant in Paulding County.

"Paulding County workers can compete with anyone when given a level playing field," said Brown. "But if countries like Canada illegally subsidise their industries and target the US market, it gives their products an unfair advantage. I urge the administration to investigate the nearly US$500m subsidy package proposed for the Quebec plant, which will directly compete with Lafarge North America's facility in Paulding. Actions must be taken in order to protect Paulding jobs and the economy of north-west Ohio."

The Canadian federal government and Quebec are seeking to offer almost US$500m to McInnis Cement to help its start-up in Port-Daniel-Gascons, Quebec. It is claimed that the size and nature of these subsidies could violate Canada's World Trade Organisation (WTO) obligations and give its cement industry an unfair advantage in the US market.

"Lafarge North America appreciates the inquiry to the United States Trade Representative to address a serious threat to US cement producers and their workers," said John Stull, president and CEO of Lafarge North America. "Given the excess cement capacity in Quebec, the McInnis Cement plant makes no economic sense. Lafarge believes that the plant would not be built without enormous support from the federal and provincial government. Lafarge joins Senator Brown in urging the US government to engage with the Canadian government regarding the provision of subsidies that appear to be prohibited by WTO rules and threaten material harm to the US cement industry."

Canada: Quebec's US$350m investment in a new cement plant from Bombardier's founding family in the job-starved Gaspé region is a 'terrible deal' that could end up being a 'financial sinkhole' for taxpayers, according to the Province's Coalition Avenir Québec (CAQ) opposition party.

CAQ has called on Quebec to renegotiate the agreement with McInnis Cement, which is owned by the Bombardier-Beaudoin family. The party said that it saw a copy of the confidential agreement and that private investors, notably the family, are only putting in US$62m of money to gain majority control of the project, while Quebec will contribute several times that amount but will only get a minority stake.

In January 2014 McInnis announced plans for a US$1bn cement plant in Port-Daniel-Gascons that would produce 2.2Mt/yr of cement, largely for export by ship to the US. The project was being billed as a saviour for the chronically under-employed Gaspé region because it will support 1500 construction jobs and provide work for 200 permanent plant employees.

CAQ said that Pauline Marois's Parti Québécois government had by-passed Investissement Québec, the province's investment arm and ordered that the money be disbursed without analysis by Investissement's board. Quebec confirmed that it would provide McInnis with an interest-bearing loan of US$250m and take a US$100m equity stake in the company.

The federal government also contributed US$100m to the project through split participation by Export Development Canada and the Business Development Bank of Canada. This is senior-ranking debt, to be repaid first in the event of a default, and part of a larger banking group that included National Bank.

"The federal government decided that it couldn't risk taking equity or subordinate debt like Quebec did," said CAQ economy and external trade critic Stéphane Le Bouyonnec. "The reason is simple; the industry is already in a situation of overcapacity. We predict that this transaction could become a financial sinkhole, a disaster for the government of Quebec."

A December 2013 study on the cement market by independent economist Colin Sutherland concluded that adding McInnis's capacity to the mix could delay the return of a healthy supply-demand balance in north-eastern North America well beyond the expected date of 2021. At the moment, Quebec has about 1.2Mt/yr of unused capacity while eastern Pennsylvania and New York have about 0.6Mt/yr, meaning many plants are operating well below maximum volume.

"The rationale for this deal is not sound," said Michael McSweeney, president of the Cement Association of Canada. "When this project goes ahead, it will just shift jobs from other parts of Quebec to the Gaspé."

Quebec Premier Pauline Marois defended the agreement, calling it a 'good project' in which the government is demanding a higher interest rate than normal because it understands the risk.

The McInnis Cement announcement of 31 January 2014 can be found here.