The Quebec government said on June 29, 2016 that it would not pour any more money into the McInnis Cement plant on the Gaspé Peninsula following cost overruns.Jacques Gratton/The Globe and Mail
The Quebec government says it is has no plans to pour more money into the massively overbudget new cement production plant on the Gaspé Peninsula.
Dominique Anglade, the province's Economy Minister, said on Wednesday she's confident the $1.1-billion project by McInnis Cement will be profitable and there will be no further investment on the part of the government.
Key investors, including the Bombardier-Beaudoin family and the Caisse de dépôt et placement du Québec, are confronting cost overruns of between $400-million and $450-million, according to people familiar with the situation.
The development raised concerns in political circles that the Quebec government would be asked to pony up more money to keep the work on track ahead of a planned launch of full commercial operations in the spring of 2017.
Caisse official Christian Dubé told The Globe and Mail on Tuesday that he believes additional public money will not be necessary and that the other investors can absorb the difference.
The government took action to ensure the cement facility remains viable immediately upon learning of the "magnitude of the cost overruns associated with the project," it said in a news release Wednesday.
Quebec is a major equity partner in the project with a $100-million investment; it also provided a $250-million loan on commercial terms.
Among actions taken to protect its investment after learning of the cost overruns, guarantees were secured regarding the financing package needed in the short term to ensure completion of the project, the government said.
Certain other, unspecified, "additional conditions" were attached to the government's financial contribution, it said.
The Caisse has also demanded changes to ensure sound management of the project, Ms. Anglade said.
"With the efforts being deployed today and the financing solution that McInnis Cement will propose, the success of this project – which is already creating significant economic benefits for the Gaspé-Îles-de-la-Madeleine – will be ensured," she said.
The Caisse will weigh how much it wants to invest in the project beyond the initial $100-million it put in, as well as the conditions it wants met, Mr. Dubé said on Tuesday. Negotiations are to take place between shareholders and lenders in the weeks ahead, he said.