Gaz Métro postpones Côte Nord pipeline

MONTREAL • Quebec’s largest natural gas distributor is postponing plans to extend gas pipelines to the province’s north, the latest company to shelve development plans because of weakness in global markets for iron ore.

Gaz Métro said Thursday that current global commodity market conditions, specifically for the steel-making rocks, make it “very difficult” to reach long-term agreements with major industrial clients in the Côte Nord region. It said it failed to reach a minimum level of volume demand from prospective customers and that it must defer plans for the 450-km natural gas pipeline extension toward Baie-Comeau, Port-Cartier and Sept-Îles.

“The project is still a desirable one in order to improve environmental performance and enhance the competitive edge of businesses in the area,” the company said, adding it will closely monitor the commodity markets and client needs. The region is the last industrial port zone in Quebec without access to natural gas.

Cliff ’s Natural Resources is among miners in the Labrador mining trough that have announced delays in their expansion plans amid increased volatility in iron ore pricing and lower North American steelmaking utilization rates.

Canadian National Railway Co. announced Feb.12 it was suspending preliminary planning work on an estimated $5-billion railway line to serve northern communities because of increased uncertainty on the timing of certain iron ore mining projects. CN and pension fund manager Caisse de dépot et placement du Québec had signed up six mining companies including Cliff ’s to help fund a feasibility study on the 800km rail link and a related terminal handling facility.

The study had been progressing steadily. But current mine construction schedules and diverging needs for each specific mining project made it difficult to obtain the critical volumes of iron ore needed to support the rail and terminal infrastructure, CN said.

Caisse president Michael Sabia characterized the development as a delay, saying he remains convinced Quebec’s natural resources will be developed.