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How would you sum up 2007?

The past year blew hot and cold, bringing with it difficulties in petrochemicals, stability in aluminum and development in mines. We’re in the thick of globalization and the strategic issue of resources. The challenges are many, but so are the business opportunities. We must analyze trends carefully to make the right investments.

Québec’s traditional petrochemical industry has been hit hard by the rising price of oil,
which topped $100 a barrel early in 2008, and by the surging Canadian dollar, which reached parity with the U.S. dollar in the fourth quarter of 2007.

At the same time, growth in emerging markets played a significant role in sustaining the expansion of our mining sector and the metals industry generally.

With the increase in the price of gold, certain projects that we thought were impossible only a few years ago are now potentially quite profitable.

But, in the most spectacular development of 2007, diamonds were found in rock samples mined in Québec. The Ungava project, a joint venture owned equally by SGF and Stornoway Diamond, is responsible for this breakthrough, and analysis conducted in Europe has confirmed the quality of the deposits. Québec has taken a big step toward its first diamond mine.

“In 2007, we paused to assess the impact of the fundamental changes occurring in the vast resources sector, to determine the most promising sectors and to refine our investment strategies for the years to come.”

How do you see SGF’s portfolio?
Our portfolio reflects both the difficulties and potential of the market.

Our partner Pétromont announced early in 2008 that it would shut down its operations for an undetermined period, starting on April 30, 2008. This development will of course have an impact on the return on the petrochemical portfolio.

Our investments in mines and metals have the wind at their back, however. For example, SGF owns 13% of the Alouette aluminum smelter in Sept-Îles, and we're confident that aluminum is a highly promising metal.

What does 2008 hold?
The traditional petrochemical industry will continue to struggle, but could offer solid investment opportunities in the development of certain plastics.

Expansion will continue in the mining sector. Strong growth is taking place, and SGF has the tools to take part and derive benefit from it.

As for metals, we are striving to foster the production of new alloys and we intend to become more involved downstream from production by sustaining the growth of industries that use metals such as aluminum and titanium, which will increase SGF’s presence in areas such as aerospace and transportation. 

The federal and Québec governments have adopted regulations on the use of ethanol and biodiesel in conventional fuels. This development will create business opportunities, especially in the development of cellulose ethanol, which is more ecologically acceptable than corn-based ethanol. This is a promising area in Québec, given the amounts of biomass available.

The growing environmental concerns are also creating a favourable context for companies that manage residual materials. We intend to support the growth of equipment manufacturers and to contribute to the consolidation required to ensure the recovery and recycling industry becomes a key player in Québec’s sustainable development.

SGF’s Mines, Materials, Energy, Environment Group is active in a vast sector that is growing rapidly. It has effectively targeted the niches of the future and intends to move ahead in 2008.



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