GUIDE FOR THE PREPARATION

OF A SCOPING AND MARKET STUDY

FOR PROCESSING IN QUÉBEC
Production

Ministère de l’Énergie et des Ressources naturelles

Secteur des mines
5700, 4e Avenue Ouest, D 327
Québec (Québec) G1H 6R1
Phone: 418-627-8658
Fax: 418-634-3389
Email: [email protected]

This document is available only on the website:

www.mern.gouv.qc.ca/english/mines/publications/index.jsp

Cover photos

Chagin / Dollar Photo Club

Minalliance

© Gouvernement du Québec
Ministère de l’Énergie et des Ressources naturelles
Legal deposit – Bibliothèque et Archives nationales du Québec, 2018
ISBN 978-2-550-81873-1 (PDF)
 Guide for the preparation
of a scoping and market study
for processing in Québec
A scoping and market study for processing in Québec is required for all projects
for which a mining lease must be obtained or renewed, and for mining concessions.

March 2018
Photo: Mining industry human resources council
 Preamble
The Mining Act (chapter M-13.1) was amended in December 2013 and now includes new conditions for the granting
and the renewal of mining leases that also apply to mining concessions. Among other things, the lease application
must be accompanied by a scoping and market study for processing the mined substance in Québec. The study must
be presented in the form of a single document, and must contain the elements described in this Guide. It will be
considered acceptable if it meets the requirements and complies with the instructions set out in this Guide. Appendix 1
contains an overview of the study content.
The Ministère de l’Énergie et des Ressources naturelles (MERN) does not require companies to include the figures,
process diagrams and detailed production timeframes used to calculate the information presented in the study, but
it does reserve the right to request these details if necessary.
The study submitted with the first lease application can be re-submitted with additional applications, provided its
content and conclusions are still pertinent. The MERN may request additional information at any time. A study must
also be submitted when a mining lease is renewed. The same requirements apply to mining concessions.
Under section 215 of the Mining Act, all documents obtained from holders of mining rights for the purposes of the
Mining Act, including the study, are public. Accordingly, while promoters must provide the MERN with a document
that meets all the requirements of this Guide, they must bear in mind that the information will be published. It
is therefore up to them to make sure the details they provide will not be prejudicial to their company or harm its
ability to compete.
Readers should be familiar with the relevant sections of the Mining Act, which may be found in Appendix 3 to this Guide.
The Mining Act and its associated regulations can be consulted by clicking on the following link:
www.mern.gouv.qc.ca/lois/lois-mines.jsp
Photo: Minalliance
 Ore treatment
and primary processing
Ore treatment
Most mining companies treat their ore in Québec. The ore that is mined is then subjected to physicochemical treatment
in order to obtain a concentrate. This is known as ore treatment. The substance remains in mineral form throughout
treatment, the aim of which is to concentrate the substance of value by removing as much gangue1 as possible. Ore
treatment is not considered to be “processing”.

Primary processing
Primary ore processing takes the substance from mineral form to raw metal. This process – the production of primary
metal – can be divided into several steps. Primary metal is not a finished product, but must be re-processed. Again,
re-processing may take place in several steps. The following diagram illustrates the main steps in processing, from
ore extraction to finished product. Table 1 on the next page provides examples of some common types of primary
processing that could take place in Québec.

FIGURE 1 – METAL PROCESSING

Extraction
Ore

Ore treatment Exemples:

Concentrate Crushing, milling, concentration,
Metal waste boulettage

Primary metal production Exemples:

Primary processing ingots, slabs, billets, anodes
and cathodes ...

Metal processing Exemples:

plates, sheets, channels, bars, wires,
tubes, Pipes …

Manufacturing and assembly Exemples:

Bridges, reservoirs, boilers, towers,
vehicles, generators, wind turbines, etc.

Recycling/elimination Waste

Note: The above process illustrates the path from ore to finished metal product. The notion of recycling has been included because it is an intrinsic
part of the metal industry. Metal waste generated at each step is put back into the process that generated it. The same applies to products that
have reached the end of their useful life. Anything that is recyclable is recycled. The rest is treated as garbage, for elimination.

1 - Gangue: the worthless portion of an ore vein.

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TABLE 1 – EXAMPLE OF MINERAL SUBSTANCES THAT COULD BE PROCESSED IN QUÉBEC
Substances Primary processing products
Apatite* Fertilizer
Clay* Alumina
Copper Copper cathodes
Iron Steel billets or bars, steel powder, metal pellets or briquets (direct reduced iron, hot briquetted iron), pig iron, iron
powders
Lithium* Lithium hydroxide, lithium carbonate
Magnesium* Pure magnesium bars, magnesium oxides and salts (sulfates, chlorides)
Nickel Ferronickel, very pure nickel metal
Niobium Ferroniobium, niobium oxide (see Appendix 2 for a more detailed example)
Gold and silver Gold and silver bricks, refined gold ingots, refined silver ingots
Rare earths Rare earth elements in different chemical forms (oxides, carbonates, phosphates, etc.)
Titanium Slag, titanium pigments (titanium dioxide), cast iron, steel
Zinc Zinc ingots

* Mineral substances that are not yet mined in Québec but for which there are projects at the deposit appraisal phase.

The scoping and market study

A scoping and market study is the first step in assessing a processing or development project2 for the main substance
extracted by a mine. It considers the current status of the market, and also examines the competition, plus any
problems issues or opportunities, the project’s location, the mined substance, the production process, the economic
and financial aspects of the project, and any existing or potential markets.
This type of study is intended to provide estimates only (level of accuracy ± 50%), to help with decision-making, and
is not required to give accurate data. However, the data on which it is based must be reasonably up-to-date.
Ultimately, the study identifies and explores segments of the processing market in which a processing or development
project could be implemented for a mineral substance mined in Québec.
Engineering consultants or specialist marketing or market survey firms are all capable of carrying out a scoping and
market study.
Briefly, a scoping and market study constitutes the preliminary phase of a project, and helps in understanding the
market and identifying opportunities for growth in light of the sector’s economic context, in order to reduce the
strategic risk when making decisions.

Its goal
The scoping and market study allows the Government to see whether or not it would be possible to process the mined
substance in Québec, and to understand the promoter’s intentions in this respect.

2 Some mineral substances (including industrial metals) cannot be processed in the technical sense of the term. In this case, an additional step
is required to add value – for example, cutting and polishing diamonds, producing spheroidal graphite, etc. In the case of precious metals,
processing possibilities are limited and they cannot in fact, structurally speaking, be processed in Québec. In these cases, promoters are still
required to produce a study, but its scope is extremely limited. (see appendix 2)
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Its scope
To identify business opportunities, it is important to start by considering world economic and technological trends.
The next step is to identify which of the potential products is the most promising. A distinction must be drawn between
the technological aspect of the project and its financial viability, in order to show its promise based on real figures.
Information must be obtained from primary sources (surveys, interviews with potential customers), and can also be
obtained from secondary sources (statistics, existing market surveys). All this information is then analyzed. The end
goal of the study is to collect the data needed to make informed operational decisions regarding the relevance of a
processing or development project.
The study must present the types of processing that would be possible, based on the characteristics of the ore.
However, it should focus mainly on the processed product for which the conditions appear to be most favourable.
It must also examine different scenarios. The authors should be able to provide an idea of the investments required,
along with a preliminary financial analysis. They should also give preliminary construction and operating cost estimates,
as well as a preliminary estimate of the potential financial outcome. The following diagram situates the study with
respect to the subsequent steps in the evaluation of a primary processing project.

Scoping and market study Pre-feasibility study Feasibility study

Its content
The scoping and market study must clearly identify the strategic issues, advantages and limitations of processing
the mineral substance mined in Québec. The elements mentioned in this section are therefore those that are likely
to become issues for any future processing project.
A list of the information required can be found in Appendix 1 of the Guide.

Market
The promoter must provide a brief description of the market, review existing research findings (available market
analyses and statistics for both supply and demand), examine the value of sales in the sector in the last three years,
provide growth estimates and give an estimate of market size.
The promoter must also provide a summary profile of the target customer group: the products it currently uses, the
demand for new or replacement products, the price buyers are willing to pay, and how the product could be marketed.
This section can contain both primary data (e.g. data based on survey responses or taken from interviews with potential
customers) and secondary data (e.g. sector-based statistics).
It should provide answers to the following questions:
>> What are the main elements that influence demand?
>> Where is it situated, geographically speaking?
>> What are the short, medium and longer term prospects for growth?
>> What are the factors that influence growth of demand?
>> Are there any existing substitute products for this demand?
>> What impact does the current supply/demand situation have on prices?
>> How have prices evolved over the last ten years?
>> With regard to the supply/demand prospects described earlier, how are prices likely to change in the short,
medium and longer terms?
>> At what price level does the project become viable?

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>> At what critical concentrate volume level does the project become viable?
>> Is the amount of concentrate produced sufficient to support construction of a processing plant, or would an
outside supply source be needed in addition?

Competition
The promoter must also provide a profile of other suppliers and potential competitors.
This involves estimating their market shares and examining changes in supply. Some sectors have “entry barriers”:
for example, very high starting capital requirements or regulations preventing market access. Where this is the
case, the promoter must analyze the impact of these barriers and propose a strategy to address them (e.g. forming
a strategic alliance).
This section should provide answers to the following questions:
>> What is the current level of production for this market?
>> What are the short, medium and longer term prospects?
>> Are there any plans for expansion or construction of new facilities that may affect the supply in the short,
medium and longer terms?
>> Where are the main producers located?
>> Which of the existing producers are the market leaders? What are their market shares?
>> Which of them are considered potential direct competitors?
>> Will strategic partnerships be needed? If so, what are they?

Investment and financing

The promoter must provide information on the investment and financing required, and on the need for financial
assistance or a Government contribution.
This section should provide answers to the following questions:
>> What level of investment does the promoter feel is required for this type of project?
>> Are there any financing constraints?
>> Would Government aid or a Government contribution allow the project to go ahead?

Location
The promoter must identify the potential locations in Québec for a project of this type, and state whether they are in
competition with other locations outside Québec. In this case, the following questions should be answered:
>> What are the potential locations in Québec?
>> Are they able to compete with other potential sites outside Québec?

Supplies
The promoter must state its supply needs, in particular for strategic inputs, and its energy needs:
>> Is the supply chain secure?
>> What strategic inputs are required, and can they be obtained in Québec?
>> What are the energy supply needs (electricity, natural gas)?
>> Is energy a strategic issue?

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Other elements
If possible, the promoter must state its labour and training needs.
It must also state whether or not road, rail or maritime infrastructures are required, and at what cost (estimated).
It must identify any research and development needs, especially for pilot projects, in particular if a new process or
new technology will be required.
It must also identify its service and subcontracting needs and list the consulting or engineering firms whose expertise
is required.
Depending on the location of the project, and the anticipated inputs and processes, the promoter must also identify
any environmental and social acceptability issues that may arise.

Its conclusions
The study must analyze the information collected and then take a stance concerning the possibility of processing the
mineral substance in Québec.
In the conclusion, to ensure that the study is acceptable, the company must clearly state its intentions with respect
to processing its ore concentrate in Québec. The conclusion must take one of the following two stances:
A. The study shows that there is potential for processing the ore in Québec.
▪▪ Describe the main elements justifying this conclusion.
▪▪ Describe the next steps required in order to collect the data needed to refine the information in
the study and add other relevant elements (e.g. preliminary economic study, pre-feasibility study,
feasibility study).
B. The study shows that there is no potential for processing.
▪▪ Describe the main elements justifying this conclusion.
▪▪ Explain how processing may become viable.
▪▪ List the prerequisites for processing in Québec.

For information
Centre de services des mines Office hours
Phone: 418 627-6278 Monday, Tuesday, Thursday and Friday: 8:30 a.m.
Toll-free: 1 800 363-7233 (toll-free in Canada) to midday, 1:00 p.m. to 4:30 p.m.
Fax: 418 643-1815 Wednesday: 10:00 a.m. to midday, 1:00 p.m. to 4:30 p.m.
Email: [email protected]

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Minalliance
 APPENDIX 1
INFORMATION REQUIRED IN THE SCOPING AND MARKET
STUDY.
Description of the company
□□ Contact information
□□ General description of the company
□□ Structure and management team (organization chart)
□□ Number of employees
□□ Type of company (private or public)
□□ Main shareholders
□□ Capitalization
□□ History
□□ Location of head office, mines and plants in Québec and elsewhere in the world
□□ Nature of operations (products and production levels)
□□ Partnerships/Economic agreements (e.g. off take agreement)
□□ Facilities and infrastructures

Description of mining project

□□ Location of the project
□□ Substances mined
□□ Past and future investments
□□ Anticipated life of the mine
□□ Mine operating method, ore treatment and annual production
□□ Infrastructures required for the project

Processing market and prospects

Supply
□□ Potential processed products from the mined substance
□□ The current supply and economic prospects for primary processing products
□□Current world production level
□□ World prospects in the short, medium and longer terms
□□ Description of the main producers, their production capacity and the locations of each of their
production units
□□ From the list of main producers, the market leaders and their market shares
□□ The names of companies that may potentially be direct competitors
□□ Expansion plans or proposed new constructions that may affect the supply in the short, medium or longer
term
□□ Level of market integration
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Demand
□□ Current demand and future prospects for the market
□□ Main elements influencing the demand
□□ Geographic location of target market
□□ Demand growth prospects in the short, medium and longer term
□□ Factors influencing growth of the demand
□□ Availability of substitute products and their impacts on demand

Prices
□□ Impacts of the current supply/demand situation on prices
□□ Evolution of prices in the last ten years
□□ Potential price changes in the short, medium and longer terms
□□ Viability of processing (threshold price, production)
□□ How prices are set

Competitive benefits, constraints and strategic issues

□□ Investment and financing
□□ Promoter’s estimate of investment required for processing
□□ Financing constraints
□□ Financial package
□□ Critical concentrate volume (critical production threshold required for processing)
□□ Strategic partnerships (existing or required)
□□ Potential sites for processing in Québec and elsewhere
□□ Energy supply needs (electricity, natural gas) and strategic issues
□□ Supply chain, essential strategic inputs and inputs available in Québec
□□ Labour and training needs
□□ Road, rail and maritime infrastructures to be built
□□ Process development and pilot project needs
□□ Social and environmental issues

The firm’s stance with regard to processing in Québec

□□ The study shows potential for concentrate processing in Québec.
□□ The study shows that there is no potential for or benefits from processing in Québec
▪▪ Main elements justifying the conclusion
▪▪ Prerequisites for processing in Québec

The conclusion should include a clear statement of the lease applicant’s intentions regarding ore concentrate
processing in Québec.

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 APPENDIX 2
COMPANIES ALREADY ENGAGED IN PROCESSING OR THE
EXTRACTION OF SURFACE MINERAL SUBSTANCES3
Companies that are already engaged in processing extracted substances, or whose activities are connected with
surface mineral substances, must provide a document containing the following information:
>> A description of the company, including the information listed on page 7, adapted as required;
>> A description of the project, including the information listed on page 7, adapted as required;
>> The percentage of the substance extracted that is processed in Québec, the target uses for the products and
their destination, excluding the information listed in the section «Processing market and prospects».
The following examples illustrate the activities targeted by this section:
>> A gold mine that, using its own concentrate, casts gold bars for refining.
>> An operation that extracts surface mineral substances as aggregates for use in construction materials.
>> An operation to extract blocks of granite for use in making funeral monuments.
>> An operation that extracts blocks of marble for the manufacture of tiles or countertops.

3 In general, surfwace mineral substances are not processed.

Photo: Stornoway diamonds

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 Appendix 3
MINING ACT (CHAPTER M-13.1)
101. The Minister shall grant a lease in respect of all or part of a parcel of land that is subject to one or more claims
if the claim holder establishes the existence of indicators of the presence of a workable deposit, meets the conditions
and pays the annual rental prescribed by regulation.
The lease cannot be granted before the rehabilitation and restoration plan is approved in accordance with this Act,
and the certificate of authorization mentioned in section 22, 31.5, 164 or 201 of the Environment Quality Act (chapter
Q-2) has been issued.
Despite the second paragraph, the Minister may grant a lease if the time needed to obtain the certificate of authorization
is unreasonable.
The Minister shall make public the rehabilitation and restoration plan as submitted to the Minister for approval and
register it in the public register of real and immovable mining rights for public information and consultation purposes
as part of the environmental impact assessment and review procedure provided for in the Environment Quality Act.
An application for a mining lease must be accompanied by a survey of the parcel of land involved, unless it has already
been entirely surveyed, a report describing the nature, extent and probable value of the deposit, certified by an engineer
or a geologist who meets the qualification requirements determined by regulation, and a project feasibility study as
well as a scoping and market study as regards processing in Québec.
At the Minister’s request, the holder of the mining right shall provide the Minister with any document and information
relating to the mining project.
The Minister may subject the mining lease to conditions designed to avoid conflicts with other uses of the territory.
101.0.2. When granting a lease, the Government may, on reasonable grounds, require that the economic spinoffs
within Québec of mining the mineral resources authorized under the lease be maximized.
104. The term of a mining lease is 20 years.
The Minister shall renew the lease, by mere notice, for a period of 10 years, not more than three times, provided the
lessee
(1) applies therefor before the sixtieth day preceding the expiry of the lease or, failing that, within 60 days preceding
the expiry of the lease on payment of an additional amount prescribed by regulation;
(2) has submitted a report establishing that he has performed mining operations for at least two years in the last 10
years of the lease;
 (2.1) has provided the Minister with a scoping and market study as regards processing in Québec;
 (3) has paid the annual rental prescribed by regulation;
 (4) has complied with this Act, the Mining Tax Act (chapter I-0.4) and the regulations throughout the previous term
of the lease;
 (5) has complied with any other renewal requirement prescribed by regulation.
Notwithstanding the foregoing, after the third renewal of the lease, the Minister may grant five-year extensions.
118.1. Before beginning mining operations and every 20 years after they begin, a grantee shall send the Minister a
scoping and market study as regards processing in Québec.

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119. Before mining operations begin, and 20 years after they begin, the Government may, on reasonable grounds,
require the maximization of the economic spinoffs within Québec of mining the mineral resources authorized under
the mining concession.
126. The grantee of a mining concession who has begun mining exploration work on 10 December 2013 must send the
Minister a scoping and market study as regards processing in Québec within 3 years after that date, and subsequently
every 20 years.
215. The documents and information obtained by the Minister from holders of mining rights for the purposes of this
Act are public. The Minister makes such documents and information public in the manner the Minister sees fit.
However, the work reports required under section 72 involving amounts beyond the allowances that may be claimed
under the Mining Tax Act (chapter I-0.4) remain confidential for five years after the date of the work.
The following are made public once a year for each mining lease, mining concession and lease to mine surface mineral
substances:
(1) the quantity and value of the ore extracted during the previous year;
(2) the royalties paid during the previous year; and
(3) the overall contributions paid by the holder.
The following are also made public:
(1) the rehabilitation and restoration plan approved by the Minister; and
(2) the total amount of the financial guarantee required.
However, the data contained in an agreement entered into between a holder of a mining lease or a mining concession
and a community with respect to the contributions or benefits the community receives is not made public and may
only be used for statistical purposes.
This section applies subject to the restrictions on rights of access prescribed by section 28 of the Act respecting
Access to documents held by public bodies and the Protection of personal information (chapter A-2.1).

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