Sitting on a gold mine might not be as sweet as the expression sounds, as Martin Ferron has learned during his 11 years as mayor of Malartic, a mining town in northern Quebec that is grappling with the golden handcuffs of the intensifying search for the precious metal.
Ferron serves as mayor of the 3,500 residents in a town where Toronto-based Agnico Eagle, located at 145 King St. W., plays a large role. This is especially prescient as its gold mining operation is expanding with prices for the hard commodity hitting new highs. Last month, gold prices jumped to a record of approximately $3,846, or nearly 2,760 U.S. dollars per ounce, as investors bought it amid geopolitical tensions in the Middle East and the uncertainty surrounding the United States presidential election that was settled Tuesday.
This is putting pressure on the small town’s housing and infrastructure resources, according to public officials.
Despite the wealth that's dug out from the ground, Ferron complains that only “3 or 4 million” of his town’s annual $12 million budget trickles into city coffers from the gold mine, as much larger amounts are sent to the province.
“We get no help from the provincial government,” Ferron said in an interview. “There are billions of dollars generated here but they invest almost nothing back.”
Agnico Eagle’s Canadian Malartic Mine, one of Canada's largest open-pit gold mines, hands over roughly $150 million in royalties to the provincial government, while mines in the larger Abitibi region send about $400 million a year to provincial authorities, Ferron notes.
When Ferron was first elected to City Council in 2009, mining officials were busy purchasing and demolishing 205 homes in order to expand the existing open pit mine.
The high value of gold has intensified the mining operations, and Agnico Eagle’s latest venture, the underground Odyssey mine being dug three kilometres east of Malartic, has become a major preoccupation for Ferron’s administration.
1,500 employees en route
The Odyssey mine is slated to welcome roughly 1,500 employees when it peaks in 2029. The company's plan is to dig 1,800 metres deep and collect 500,000 ounces of gold per year until 2042, according to the Agnico Eagle website. Toronto-based Agnico Eagle declined to offer further details, instead redirecting CoStar News to its website.
The ever-intensifying quest for gold has put pressure on the limited housing available in the area, and the town is grappling with the challenge of installing new infrastructure and homes for the newcomers who will need places to live in the area.
The task is made harder because the Abitibi area of Quebec is rich in minerals but poor in political clout, according to Ferron. The mayor said political leaders can afford to ignore his town due to its low population and dearth of political representatives in the provincial National Assembly.
The job of attracting developers ready to deliver needed buildings and infrastructure at a reasonable price has proven a nearly impossible task, he said.
“It is very expensive to build here, costs are 40% to 50% higher than big cities,” said Ferron. “Sometimes we issue calls for tenders and have to cancel them. We always have to find ways to get lower prices.”
Due to the housing shortage in Malartic, many homes are occupied by temporary lodgers. The improvised housing style does little to encourage residents to get rooted in town activities, as many mining employees fly or drive in and out of Malartic on two-week on-and-off work rotations.
Government help
Ferron’s administration has prevented short-term rentals from gaining a foothold in the town, but it cannot stop people from renting rooms and now almost all available beds in town are filled at night with mine workers. Many mine employees opt instead to live in Val D’Or but Mayor Ferron considers Malartic the better option.
“The mine is in the heart of the city. There is no traveling required and we have a lot of services, a recreational centre, a theatre, arena, pool,” Ferron said in a phone interview while he was driving the eight-hour trek back home from Quebec City.
Mining towns are no longer inhabited by soot-covered men in helmets and overalls wielding pickaxes, as at least half of the jobs are in the technical category and filled by highly-trained engineers and other mining professionals who earn in the range of $150,000 annually after completing specialized training courses from regional colleges in the same Abitibi region and elsewhere.
Many of the workers can expect to stay in Malartic for the long haul, as Agnico Eagle's Odyssey mining project has an unusually long window of operation, Ferron said. Many employees coming to the new operation may remain there for entire careers, unlike other mining endeavors that often require workers to stay only 10 to 15 years.
Some new residential projects have begun in Malartic to house the new arrivals but at a pace that might prove insufficient, Ferron concedes.
“The challenge is to build new areas [for development] and bring water and electricity and prepare all of the infrastructure,” he said. “But we have to do it in small steps. We don’t have the big funds of a larger city, we can do one street and then start on another phase.”
The prospects of keeping up with growth brightened after Quebec provincial authorities removed restrictions preventing northern mining towns such as Malartic from expanding beyond current city borders.
“In the past they made it very expensive and the approvals took many years,” Ferron said. “We made a lot of pitches and presentations and the government is now authorizing us to take the lands we need. We are happy and our work paid off."
"There are good and bad sides to a government, but that’s a good one.”