Author Archives: prosperitysaskatchewan
Sask. government ‘slowing’ potash royalty review in response to weak prices
Alex MacPherson, Saskatoon StarPhoenix
Published on: July 15, 2016 | Last Updated: July 15, 2016 2:20 PM CST
A five-month production shutdown and 330 layoffs at Mosaic Co.’s Colonsay potash mine aren’t expected to cut into the province’s bottom line, but weak prices led the government to put the brakes on its ongoing royalty review.
“The royalty review will continue to go forward, but we’re certainly slowing it down right now. We don’t think that any changes in the royalty structure would be a good idea given where we’re at in the marketplace,” Economy Minister Bill Boyd said Friday.
On Wednesday, Mosaic said its decision to “idle” its Colonsay operation for the rest of the year and rely instead on its lower-cost Esterhazy and Belle Plaine mines was based on lower demand and weaker prices.
With potash mired below US$300 per tonne and forecast to dip even lower, the Plymouth, Minn.-based company became the latest potash miner to announce cutbacks this year.
In January, Potash Corp. of Saskatchewan announced its intention to reduce its production costs by permanently closing its Picadilly, N.B., mine. A month later, the fertilizer giant implemented temporary production halts at its Allan and Lanigan mines.
Earlier this month, Canpotex, the international marketing arm of PotashCorp, Mosaic and Agrium Inc., abandoned plans to build a $775-million export terminal at the Port of Prince Rupert due to “economic and commercial considerations.”
Announced in last year’s budget by former finance minister Ken Krawetz, the royalty review is intended to examine and potentially change how the government collects royalties on potash mined in the province.
Under the current system, the province takes two cuts from producers: A Crown Royalty, which applies to potash mined on Crown lands, and a production tax on all potash extracted in Saskatchewan.
In his 2015-16 budget, finance minister Kevin Doherty said the government expects to earn $420.4 million in potash revenue this year, down more than $340 million from its previous projection of $796.0 million.
Boyd said that while the government’s latest revenue projection has “quite a bit of caution” built in to account for the possibility of further price erosion, there is “no timeline” on the completion of the royalty review.
“When we see prices recovering and volumes improving, then perhaps we can move forward. But at this time, we just don’t think that’s the right move to make,” he added.
In January, PotashCorp president and CEO Jochen Tilk told the Saskatoon StarPhoenix he hoped the project wasn’t a priority for the government given underlying market conditions.
“I think, quite frankly, that we’re all in this together. Saskatchewan and PotashCorp and our peers in the industry, we all need to be competitive right now,” Tilk said.
Mosaic said this week that it expects to recall the laid-off workers on Jan. 3 and that it has no plans to permanently shutter the Colonsay mine 60 kilometres east of Saskatoon.
Market conditions likely made Mosaic’s “difficult” decision to idle the mine and lay off 330 miners unavoidable, but the government isn’t concerned about a trend developing among Saskatchewan potash producers, Boyd said.
“We’ve always seen volatility in potash markets — prices and volumes — and I think here in Saskatchewan, people understand that prices go up (and) they certainly go down as well,” he said.
“The market is challenged right now but we’re expecting that these layoffs will be relatively temporary and that workers will be called back at some point in time. And we’re optimistic that markets will recover, but it may take some time.”
The report by Ken Coates can be downloaded here
The report, First Nations Engagement in the Energy Sector in Western Canada by Ken Coates, says that, while the conventional view sees First Nations often protesting resource development, there is another side to the story.
“The second, much less well-known story, captures images of thousands of aboriginal people working in the industry, First Nations’ equity investments in oil and gas fields, hundreds of indigenous-owned service and supply companies, and long but typically successful negotiations of impact and benefits agreements with indigenous companies,” explains Coates. “Canada struggles to reconcile these two apparently contradictory realities.”
Bin-busting Canada wheat, canola crops raise pile-up fears: poll
WINNIPEG — Reuters
Published Friday, Jul. 15, 2016 12:57PM EDT
Last updated Friday, Jul. 15, 2016 12:59PM EDT
Canadian farmers are growing some of the biggest crops in recent memory, according to a Reuters survey of 12 analysts and traders, raising fears of another grain pile-up.
Greenhouse-like weather in the west has fueled expectations for the second-biggest wheat crop in 25 years and second-largest canola harvest ever for the major grain exporter.
“It’s going to be above-average for sure,” said Alberta farmer Chad Bown, who has a new bin on order to store his next harvest.
Traders and analysts on average estimate all-wheat production at 30 million tonnes, up 9 per cent from last year, mainly because of greater durum output.
Canola production looks to increase 4.5 per cent to 18 million tonnes.
Western Grain Elevator Association, whose members include Richardson International and Cargill Ltd, took the unusual step of urging Canadian National Railway Co and Canadian Pacific Limited in late June to ensure enough capacity to move large crop shipments to ports and North American buyers.
The record-smashing 2013 harvest, followed by severe winter weather, slowed grain movement and crimped farmers’ incomes.
The Agricultural Producers Association of Saskatchewan also warned of potential for repeating 2013’s “logistical nightmare” for farmers unless railways and grain companies prepare now.
“All of us will benefit if the Canadian grain supply chain moves as much as possible over the coming months … thereby lowering the total volume to move during the peak,” CP Chief Executive Officer Hunter Harrison told federal ministers on June 28.
CN is “fully prepared” to quickly transport crops, spokesman Mark Hallman said.
Big harvests of lentils and of durum, the wheat used in pasta production, would be welcome news for processor AGT Food and Ingredients Inc, while robust production of canola, used to make vegetable oil, would stock Canada’s expanding crushing industry, including Bunge Ltd and Archer Daniels Midland Co.
“Wheat supplies are almost overwhelming (globally),” said PI Financial Corp futures adviser Ken Ball. “It’s a real buyers’ market.”
Another big canola crop would be offset somewhat by smaller leftover supplies from last year, he said.
Statistics Canada satellite images as of Sunday showed that vegetation growth across most of the Canadian Prairies ranged from similar to much higher than normal.
Recent storms have trimmed crop potential, although forecaster Lanworth said on Thursday that heavy rains would shift north of Canada’s wheat and canola areas through late July.
Statscan will issue production estimates on Aug. 23.
First Nations must lead specific evidence to show “directly and adversely” affected under Alberta’s Responsible Energy Development Act
Aldo P. Argento and Kaitlin Long
Norton Rose Fulbright is a global law firm. We provide the world’s pre-eminent corporations and financial institutions with a full business law service. We have 3800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.
The Supreme Court of Canada recently denied the O’Chiese First Nation leave to appeal the Alberta Court of Appeal’s (ABCA) decision in O’Chiese First Nation v Alberta Energy Regulator, 2015 ABCA 348, which refused to overturn a standing decision made by the Alberta Energy Regulator (AER). In the ABCA decision, the court held that the O’Chiese First Nation could not appeal the AER decision as the appeal was a question of mixed fact and law, had no merit, and did not satisfy the “directly and adversely affected” test.
In 2014 and 2015, Shell Canada Limited made a number of applications to the AER for approval of natural gas pipelines, pipeline agreements, and a surface lease over land located within the O’Chiese First Nation Consultation Area.1 Prior to submitting the applications, Shell received approval from Alberta’s Aboriginal Consultation Office that either Shell’s previous consultation with the O’Chiese First Nation was sufficient or that further consultation was unnecessary under the circumstances. Shell submitted its consultation logs to the AER, which indicated that no site-specific information regarding impacts was provided by the O’Chiese First Nation.
After Shell’s first two applications were submitted, the O’Chiese First Nation filed a statement of concern with the AER raising general concerns.2 The AER determined these statements contained insufficient information to demonstrate how approval might “directly and adversely affect” the O’Chiese First Nation. As a result, the AER approved Shell’s applications without conducting a hearing, in part due to the lack of specific concerns demonstrating how the O’Chiese First Nation would be directly and adversely affected.
The O’Chiese First Nation then filed requests for the AER to conduct a regulatory appeal of the approvals. In denying these requests, the AER concluded that the O’Chiese First Nation was ineligible to appeal the decisions, as it did not satisfy the factual requirements of the “directly and adversely affected” test by virtue of having adduced no specific evidence. This decision was appealed to the ABCA.
The application for leave to appeal
An AER decision may be appealed to the ABCA on a question of jurisdiction or on a question of law, pursuant to s. 45(1) of the Responsible Energy Development Act (REDA). For leave to be granted, the question of jurisdiction or law must raise a serious arguable point, which requires the court to consider whether an appeal is prima facie meritorious.
Under the REDA, an internal regulatory appeal of an AER decision can only be instituted by an “eligible person,” which is defined as “a person who is directly and adversely affected by a decision.” The O’Chiese First Nation argued it fell within the definition of “directly and adversely affected,” despite having not led specific evidence demonstrating the same. Instead, the O’Chiese First Nation argued it satisfied the direct and adverse requirement simply due to the fact that the land approvals under the applications were located within their consultation area, and that any development within this area automatically affected the O’Chiese First Nations’ treaty and Aboriginal rights.
Decision by the Alberta Court of Appeal
The ABCA held that the AER applied a legal standard, the “directly and adversely affected” test, to a set of facts; as such, this was a question of mixed fact and law and not an appealable decision under the REDA.
The ABCA further determined that the O’Chiese First Nation’s argument that it was directly and adversely affected by any development within the consultation area was without merit. This was especially the case given that the O’Chiese First Nation did not judicially review the Aboriginal Consultation Office’s decision with respect to the satisfaction of Crown consultation, such that Crown consultation was not at issue in the appeal. By arguing it was directly and adversely affected as a matter of law due to a restriction of treaty rights, the O’Chiese First Nation conflated the duty to consult with the strict appeal requirements of the REDA.
Having chosen not to adduce any evidence to demonstrate it would be directly and adversely affected by the approvals, the O’Chiese First Nation could not now appeal the AER’s decision to the ABCA.
As leave to appeal has been denied by the Supreme Court of Canada, the ABCA decision stands as good law and confirms that:
- The Aboriginal Consultation Office is the arm of the provincial Crown responsible for discharging the duty to consult. Any assessment made by the office is subject to judicial review and not a later appeal of a regulatory approval by the AER;
- An AER decision can be appealed by a party such as a First Nation that is “directly and adversely affected,” but this determination must be made on the basis of evidence before the AER;
- The test for being “directly and adversely” affected is not automatically engaged simply because a regulatory approval is located within a First Nation’s consultation area or because a First Nation is involved;
- A First Nation will fail on appeal under the REDA if it has not led evidence of specific impacts on its treaty or aboriginal rights and it cannot rely simply on the development being located within its consultation area.
The authors thank Etienne Godel, summer student, for his assistance with this legal update.
1 This area was established by the Government of Alberta for the purpose of helping the Crown discharge the duty to consult.
2 The O’Chiese First Nation did not file a statement of concern to Shell’s third application.
- 15 Jul 2016
- Calgary Herald
- JENNIFER GRAHAM
- The Canadian Press
Carbon-capture plant expects prosperous, penalty-free future
The head of SaskPower says the corporation expects revenue of $15 million to $20 million a year from its carbon-capture plant if it keeps operating well.
SaskPower paid $7.3 million in penalties to Cenovus Energy last year because the plant wasn’t operating enough to deliver all the captured carbon dioxide promised to Cenovus.
“In 2015, there were … shortfall payments made to Cenovus because of our inability to meet the contractual amount,” SaskPower president and CEO Mike Marsh said Thursday while releasing the utility’s annual financial report.
“We still earned revenue in 2015 … and the revenues more than offset the shortfall payments.”
Marsh says SaskPower made $15.1 million in revenue from CO2 sales in 2015-16.
The report notes that the carbon-capture facility, located at the Boundary Dam coal-fired power plant in Estevan, “faced technical and mechanical issues due to design and construction deficiencies, which prevented the plant from achieving an acceptable level of reliability and performance.”
It was forced off-line several times in 2015, including for nearly all of September and October.
However, Marsh said the facility is “operating well” and on track to capture 800,000 tonnes of carbon dioxide this year.
“And we don’t expect to be paying any shortfall penalties as long as the plant continues to operate,” he said.
Saskatchewan relies heavily on coal for power. Forty-six per cent of the province’s fuel came from coal in 2015.
SaskPower announced plans last November to have up to 50 per cent of power come from renewable sources by 2030.
A proposed wind farm near Chaplin, about 200 kilometres west of Regina, is not part of that 50 per cent target. The private company looking to build the facility is being told by the Ministry of Environment to find another location.
The proposed site was near a migratory bird route and sanctuary.
It was announced Thursday that SaskPower will build and operate a new natural gas power generation facility in Swift Current.
Carney says carbon plan could open door for financial-sector profits
The Globe and Mail
Published Friday, Jul. 15, 2016 9:50AM EDT
Bank of England Governor Mark Carney took his message on climate change to Canada’s financial community Friday, arguing that a uniform framework for corporate disclosure of carbon exposure and strategy could open a new door for financial-sector profits.
Speaking to a large breakfast audience a Toronto Region Board of Trade event, Mr. Carney noted that global carbon reduction commitments imply “somewhere in the area of $5– to $7-trillion a year” in clean infrastructure needs. “The question is, how much of that is going to be financed by the capital markets?”
He said that if there is a “global standard” established for green-infrastructure bonds, it would create “a core mainstream fixed-income opportunity” – noting that China in particular could offer relatively high-yielding products.
He also argued that a uniform global system of corporate disclosure on carbon – something he has been championing, in his role as chairman of the international Financial Stability Board – would better allow equity markets to price in relative risk into company valuations.
“The relative value opportunity in equities is considerable.”
Mr. Carney’s appearance in Toronto came just a day after the Bank of England decided against a widely anticipated interest-rate cut, in its first rate decision following the Brexit vote, and a day after he sat down with Britain’s new finance minister for the first time. He didn’t field any questions on monetary policy or the Brexit result, and didn’t talk to reporters after the event.
Not all First Nations oppose oil and gas development
Special to The Globe and Mail
Published Friday, Jul. 15, 2016 5:00AM EDT
Tom Flanagan is professor emeritus of political science at the University of Calgary and a former campaign manager for conservative political parties.
The Federal Court of Appeal recently overturned the federal government’s approval of the Northern Gateway pipeline because of insufficient consultation with First Nations. This decision dramatizes the dilemma of Canada’s oil and gas industry.
Opposition to pipelines and tanker traffic, particularly by First Nations, threatens to strand Canada’s enormous hydrocarbon resources, cutting them off from international markets where they can be priced at their full value. From reading the news headlines, it sometimes seems that all First Nations are opposed to all oil and gas development.
The true situation, however, is much less one-sided. The Indian Resource Council has announced its concern over “pipeline gridlock” and will hold an October conference in Calgary to discuss possible solutions. The IRC is an organization of 174 First Nations interested in oil and gas development.
At the present time, when many wells are shut in due to low prices, only 29 of them are producing oil and 37 natural gas, but the other IRC members have produced in the past or may wish to produce in the future. Beyond the royalties from production, thousands of First Nations and Métis people are employed in the industry, especially, though not only, in the oil sands.
The IRC started as an advisory group to Indian Oil and Gas Canada, the Crown corporation that supervises exploration and production on reserves. Historically, IOGC’s approach was paternalistic, leaving First Nations as passive recipients of royalties rather than active entrepreneurs. But the IRC is now working with IOGC to upgrade First Nations participation, to make them active investment partners.
First Nations received $163-million in royalties and fees from IOGC in the 2014-15 fiscal year, which is not trivial, but the returns can be potentially much greater if First Nations become partners in owning drilling and well-service companies, pipelines and refineries.
That helps to explain why the IRC is speaking out now. Most of their members are not located in trendy urban areas where they can make money by opening casinos and building condominiums. These are small and remote rural communities whose best opportunity for improving their standard of living is development of their natural resources. It would be ironic in the extreme if they were to be permanently frustrated by other First Nations and green activists.
Members of the IRC undoubtedly remember what happened to the Mackenzie Valley natural gas pipeline. After 30 years of environmental reviews and aboriginal title negotiations, most First Nations in the Mackenzie Valley were ready to support the pipeline. Like the 26 First Nations who are ready to take an equity share in Northern Gateway, they saw it as a way to improve their standard of living without endangering the natural integrity of their homeland.
But there was one holdout group; and, like the coastal First Nations who have challenged Northern Gateway, they went to the Federal Court of Canada, alleging inadequate consultation. This last delay proved fatal and the Mackenzie Valley pipeline was never built, because natural gas prices had fallen in the meantime.
Perry Bellegarde, the National Chief of the Assembly of First Nations, recently said that more than 130 First Nations are categorically opposed to petroleum development. Even if that statement is accurate (and he did not give any source for it), about 500 First Nations remain open-minded on the subject. Yet once again, some First Nations are blocking potential prosperity for others.
Recent court decisions and political trends have given First Nations something close to a veto over major pipeline projects. The IRC’s challenge will be to reach out to the open-minded First Nations, to persuade them that responsible development of oil and gas can be profitable while respecting environmental values. Maybe they can have greater success where corporations and governments are failing.
Historic MOU Signed for Work on Energy East
Canada’s Biggest Infrastructure Project
OTTAWA, ONTARIO–(Marketwired – July 14, 2016) – News Release – TransCanada Corporation (TSX:TRP) (NYSE:TRP) (TransCanada) along with the senior representatives of the four major pipeline unions and the Pipe Line Contractors Association of Canada (PLCAC) have come together to sign a historic Memorandum of Understanding (MOU) for work on the Energy East Pipeline Project. The MOU ensures that thousands of the skilled pipeline trade jobs required to build the project will be awarded to members of the PLCAC and the four union partners, including: the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada (UA), Labourers International Union of North America (LiUNA), International Union of Operating Engineers (IUOE) and Teamsters Canada.
The organizations came together to reinforce the fact that the work needed to construct the privately financed, $15.7 billion crude oil pipeline means thousands of quality jobs for their members. It also further ensures the pipeline will be built to the highest safety standards. Additional unions across the country will also be engaged to complete this work.
“This MOU signing is very significant for TransCanada,” said Russ Girling, TransCanada’s President and Chief Executive Officer. “We are committed to hiring the best workers this country has to offer for the over 14,000 jobs Energy East will create annually across Canada during the nine years it will take to develop and build the pipeline. And above all, we are committed to ensuring Energy East is built safely.
“Pipelines remain the safest and least GHG-intensive way of transporting the crude oil Canadians need. Energy East gives our country the ability to use Canadian oil in its refineries rather than continuing to import the 700,000 barrels of foreign oil we import every day,” concluded Girling.
“This country’s vast pipeline network has improved Canadians’ quality of life for generations, and those pipelines were proudly put in the ground by the organizations that are together here today,” said Lyall Nash, Chair of Canadian Pipeline Advisory Council. “The opportunity to work on the country’s largest pipeline project builds on that solid foundation to ensure that quality of life continues for generations into the future and the project will be built to the highest safety standards.”
“We are proud to sign this MOU ensuring our members will have a role to play in this important nation-building project, just as they have for over 60 years on pipeline projects across the country. It goes without saying that pipelines are the safest way to move the oil products currently transported by rail and truck. Add that to the fact that we import so much of the oil Canadians need, building this pipeline just makes sense. It’s the safest, most efficient and most environmentally responsible option,” said Neil Lane, Executive Director of PLCAC.
“We have represented people in the pipe trades for over 125 years. By the time they reach their accreditation through a rigorous training and apprenticeship program, these tradespeople can work on the most sophisticated systems anywhere, and have a thorough knowledge of the scientific principles required to complete this work safely. We are proud to bring that skillset to the Energy East Pipeline Project,” said John Telford, International Vice-President of UA.
“From being the safest and most environmentally responsible option for transporting oil, to providing layers of economic benefit including tax revenues that pay for things like schools, roads and hospitals, this pipeline makes sense for the future of this country. I’m so proud to be here today for this historic step for the benefit of Canadians and the Canadian middle class,” Telford concluded.
“Pipeline construction work requires a large number of highly skilled workers, which in turn creates high paying jobs for Canadians,” said Joe Mancinelli, International Vice-president of LiUNA. “A project of Energy East’s magnitude can generate the annual income for a worker and his or her family. This MOU to work on Energy East provides our members across the country and across the pipeline route with an opportunity to contribute to a monumental project for this country that will help restore the strength of the middle class.”
“Beyond the significant number of jobs this project will create through its first few years, there are over 3,300 direct and indirect jobs that will be created annually during the first 20 years of operations. These jobs can’t be ignored and they ensure a basis for strong work opportunities for our membership decades into the future. I am proud IUOE’s signature is on this MOU,” said Lionel Railton, Canadian Director for the IUOE.
“The direct employment created by this project doesn’t even take into account the vast number of ‘spin-off’ jobs that will be needed to support building this project. Work across our membership such as trucking and transportation, construction materials, manufacturing, food services, airlines, hotels, automotive and communications will all benefit from the construction of the Energy East project. That means more good paying jobs and that’s why we’re here today proudly signing this MOU,” said Gary Kitchen, National Representative for Teamsters Canada.
Energy East by the numbers:
- Energy East is a 4,500 kilometre pipeline that will safely transport about 1.1 million barrels of oil per day from Alberta and Saskatchewan to Eastern Canadian refineries in Québec and New Brunswick.
- Since the project was announced in 2013, TransCanada has already spent $800 million to develop Energy East across Canada.
- According to the Conference Board of Canada, Energy East will generate over 14,000 direct and spin-off jobs annually across Canada during nine years of development and construction, and support 3,300 direct and spin-off jobs annually during the first 20 years of operation.
- The Conference Board of Canada report also states Energy East will generate $10.3 billion in tax revenues for provincial and federal governments over 20 years, and add an additional $55 billion in GDP to the Canadian economy.
- We are committed to open, honest engagement on this project. To date, we have held 1,700 meetings with municipal representatives, emergency responders and other community representatives in these municipalities and have received 170 signed letters of support from municipalities and municipal organizations across the country. As well, well over 9,000 registered guests have attended 120 open houses across the project route.
- Energy East has held more than 2,500 meetings with 166 Indigenous communities and organizations across Canada since the launch of the project in 2013.
- In 2015, TransCanada generated $170 million in work for Indigenous businesses or their joint-venture partners in Canada and the U.S. for goods, contract services and employment on TransCanada projects and operations.
- So far, Energy East and TransCanada have donated $1,506,277 to communities along the project route. In 2015 alone, TransCanada donated close to $15 million in funding and in-kind donations to over 1,400 North American non-profit organizations.
- Pipelines are the safest way to transport oil over long distances and TransCanada has an industry-leading safety record. Our top priorities are incident prevention and safe operations. To date, we have met with representatives from 366 first responder organizations along the pipeline route to begin developing the emergency response plans for Energy East.
With more than 65 years’ experience, TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure including natural gas and liquids pipelines, power generation and gas storage facilities. TransCanada operates a network of natural gas pipelines that extends more than 90,300 kilometres (56,100 miles), tapping into virtually all major gas supply basins in North America. TransCanada is the continent’s leading provider of gas storage and related services with 664 billion cubic feet of storage capacity. A large independent power producer, TransCanada currently owns or has interests in over 10,500 megawatts of power generation in Canada and the United States. TransCanada is also the developer and operator of one of North America’s leading liquids pipeline systems that extends over 4,300 kilometres (2,700 miles), connecting growing continental oil supplies to key markets and refineries. TransCanada’s common shares trade on the Toronto and New York stock exchanges under the symbol TRP. Visit TransCanada.com and our blog to learn more, or connect with us on social media and 3BL Media.
FORWARD LOOKING INFORMATION
This publication contains certain information that is forward-looking and is subject to important risks and uncertainties (such statements are usually accompanied by words such as “anticipate”, “expect”, “believe”, “may”, “will”, “should”, “estimate”, “intend” or other similar words). Forward-looking statements in this document are intended to provide TransCanada security holders and potential investors with information regarding TransCanada and its subsidiaries, including management’s assessment of TransCanada’s and its subsidiaries’ future plans and financial outlook. All forward-looking statements reflect TransCanada’s beliefs and assumptions based on information available at the time the statements were made and as such are not guarantees of future performance. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this news release, and not to use future-oriented information or financial outlooks for anything other than their intended purpose. TransCanada undertakes no obligation to update or revise any forward-looking information except as required by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from the anticipated results, refer to TransCanada’s First Quarter Report to Shareholders dated April 28, 2016 and 2015 Annual Report on our website at www.transcanada.com or filed under TransCanada’s profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission at www.sec.gov.
1 514 982 8403 or 1 800 608 7859
TransCanada Investor & Analyst Enquiries:
David Moneta / Stuart Kampel
1 403 920 7911 or 1 800 361 6522
New China deal casts dim light on Canadian potash sector
MINING REPORTER — The Globe and Mail
Published Thursday, Jul. 14, 2016 4:58PM EDT
Last updated Thursday, Jul. 14, 2016 5:00PM EDT
A new deal to sell potash to Chinese buyers at a price dramatically lower than last year is being taken as good news by investors in Canadian potash stocks – a sign of just how far expectations for the sector have fallen.
Belaruskali, the major Belarusian producer, signed a contract to deliver potash to Chinese buyers for $219 (U.S.) a tonne, according to several industry observers on Thursday.
Although the reported price is nearly one-third less than the $315 a tonne that was agreed upon last year, it is better than analysts had feared.
Still, the size of the decline demonstrates how much the market for the crop nutrient has deteriorated in recent months. It also underscores concerns about whether Potash Corp. of Saskatchewan Inc., one of this country’s most-followed dividend stocks, will be able to maintain its generous payout.
Potash isn’t traded on public commodity exchanges, so deals between large potash producers and Chinese buyers serve as key indicators of buying trends.
The Chinese contracts are usually signed at the beginning of each year and set the tone for other negotiations around the globe. The long delay in coming to terms this year demonstrates the size of the potash glut and the reluctance of key buyers to lock themselves into contracts.
Other producers, including Canpotex Ltd., the export consortium of Saskatchewan potash miners, will probably now follow in the footsteps of Belaruskali and settle their contracts at the same $219-a-tonne price, according to Joel Jackson of Bank of Montreal.
The big discount in the Belarusian contract “is not surprising considering the price declines over the past year,” and could be considered a slight positive for potash stocks, Mr. Jackson wrote in a note Thursday. He had been expecting a price closer to $210 a tonne.
He noted, however, that no details about the volumes of potash involved have been made public. The ultimate impact could be either positive or negative depending on which producers gain or lose market share.
Other observers also said the price was slightly better than they expected, although not enough by itself to signal a turning point.
“We think the contract settlement will be a near-term catalyst for potash equities as the headline price is likely at the high end of market expectations and could be viewed as setting the stage for a price recovery,” Andrew Wong of Royal Bank of Canada wrote Thursday.
“However, we note that the price netback for North American producers would result in below-consensus earnings, and if the contract does not result in improved spot prices through [the third quarter], then the near-term equity gains may be short-lived.”
One big factor in determining the outlook for share prices is likely to be producers’ attitudes toward dividends.
Potash Corp. cut its payout for the first time earlier this year, but “another dividend cut is prudent to preserve the balance sheet,” Jacob Bout of Canadian Imperial Bank of Commerce wrote in a note Thursday.
At its current dividend level, the potash producer will wind up paying out more than it is likely to earn this year and next, he estimated.
Mr. Bout said the bearish outlook for fertilizer producers shows few signs of brightening in the second half of the year. He lowered his price target on Potash Corp. to $18 a share from $20, and on Mosaic Co. to $23 from $24. (All share prices in U.S. dollars.)
Potash Corp. of Saskatoon, Mosaic of Minneapolis and Agrium Inc. of Calgary are the owners of the Canpotex consortium, which sells Saskatchewan potash outside North America.
Shares of all three companies advanced on Thursday.
Canada’s Best Places for Business 2016: Top 25
We scoured the country to find the cities with the best balance of moderate costs, growing markets and business-friendly governments
PROFIT Staff, July 14, 2016
More information on all 219 rated municipalities go here
How do you go about picking the country’s best place to do business? Every company will have its own criteria for a desirable location, after all. A retail outlet dependent on a local clientele will do best in a community with high incomes and a rising population. An exporter, by contrast, will favour cost advantages such as cheap space and power. Organizations requiring specialized skills may need to be near a big city or university, or offer an appealing lifestyle. All enterprises, though, benefit from access to appropriately qualified workers, moderate taxation and a minimum of red tape.
Our Best Places for Business survey highlights the Canadian cities that strike an optimal balance between prosperous markets, reasonable costs and business-friendly taxation and regulation. Using a combination of public and proprietary market data and survey responses from some 60 municipalities with populations of 15,000 or more, we awarded each city scores on factors such as the cost of office space, the speed of processing a building permit and the percentage of residents holding a university degree.
In addition to listing the overall winners, we’ve broken out sub-lists of the Most Affordable cities (those with the lowest costs, such as rents and electricity), the Most Business-Friendly (those with amenable local government) and the Most Lucrative (which have well-off and growing populations). The chart-toppers are just the start, though. For business owners and managers looking for the next place to hang out their shingle—or hold their existing location(s) up to comparative scrutiny—we’ve collected a wealth of information on 219 communities, which you can access here.
Here are Canada’s Top 25 Best Places for Business in 2016:
1. GRANDE PRAIRIE, ALTA.
|Population: 67,993||Annualized population growth: 3.41%||Avg. household income: $116,401|
|Avg. general lease rate: $17.80 psf/yr||Corporate income tax rate: 27.0%||Adults with bachelor’s degree: 77.89%|
Why you should locate there: “Grande Prairie’s trading area of over 280,000 provides exceptional opportunities”
2. EDMONTON, ALTA.
|Population: 961,016||Annualized population growth: 2.59%||Avg. household income: $102,954|
|Avg. general lease rate: $25.44 psf/yr||Corporate income tax rate: 27.0%||Adults with bachelor’s degree: 65.74%|
Why you should locate there: “Take a risk in a city that has your back: Edmonton supports innovation”
3. SASKATOON, SASK.
|Population: 306,794||Annualized population growth: 2.58%||Avg. household income: $101,628|
|Avg. general lease rate: $22.40 psf/yr||Corporate income tax rate: 27.0%||Adults with bachelor’s degree: 69.08%|
Why you should locate there: “Saskatoon provides an affordable lifestyle and cost competitive business environment”
4. LETHBRIDGE, ALTA.
|Population: 119,995||Annualized population growth: 1.79%||Avg. household income: $86,514|
|Avg. general lease rate: $19.28 psf/yr||Corporate income tax rate: 27.0%||Adults with bachelor’s degree: 70.5%|
Why you should locate there: “Lethbridge boasts an entrepreneurial, integrated science and engineering environment and plenty of food expertise”
5. HIGH RIVER, ALTA.
|Population: 15,984||Annualized population growth: 3.56%||Avg. household income: $90,732|
|Avg. general lease rate: $21.82 psf/yr||Corporate income tax rate: 27.0%||Adults with bachelor’s degree: 68.72%|
Why you should locate there: “Canada’s freshest downtown plus a workforce filled with ingenuity equals nothing but possibility”
6. WINNIPEG, MAN.
|Population: 796,364||Annualized population growth: 1.32%||Avg. household income: $85,562|
|Avg. general lease rate: $20.81 psf/yr||Corporate income tax rate: 27.0%||Adults with bachelor’s degree: 66.26%|
Why you should locate there: “Winnipeg ranks No. 1 as the lowest-cost location for select businesses in the U.S. and Canada.”
7. WHITBY, ONT.
|Population: 133,973||Annualized population growth: 1.29%||Avg. household income: $111,057|
|Avg. general lease rate: $21.09 psf/yr||Corporate income tax rate: 26.5%||Adults with bachelor’s degree: 67.09%|
Why you should locate there: “Location, location, location—come to the crossroads”
8. VAUGHAN, ONT.
|Population: 322,525||Annualized population growth: 1.68%||Avg. household income: $120,631|
|Avg. general lease rate: $18.33 psf/yr||Corporate income tax rate: 26.5%||Adults with bachelor’s degree: 61.29%|
Why you should locate there: “Vaughan is home to the Vaughan International Commercialization Centre, helping local small- and medium- sized enterprises adapt technology from abroad for local application, and helping local companies prepare products for export”
9. MOOSE JAW, SASK.
|Population: 36,976||Annualized population growth: 0.90%||Avg. household income: $86,634|
|Avg. general lease rate: $21.33 psf/yr||Corporate income tax rate: 27.0%||Adults with bachelor’s degree: 74.72%|
Why you should locate there: “Moose Jaw is #2 among the Top 15 Small Cities in Canada to Live In”
10. BURLINGTON, ONT.
|Population: 192,294||Annualized population growth: 1.23%||Avg. household income: $111,527|
|Avg. general lease rate: $21.94 psf/yr||Corporate income tax rate: 26.5%||Adults with bachelor’s degree: 64.93%|
Why you should locate there: “For the fourth consecutive year, MoneySense named Burlington the #1 mid-sized city to live in”
11. JOLIETTE, QUE.
|Population: 50,480||Annualized population growth: 1.29%||Avg. household income: $59,595|
|Avg. general lease rate: $17.87 psf/yr||Corporate income tax rate: 26.9%||Adults with bachelor’s degree: 73.43%|
Why you should locate there: “Labor in Joliette is available and qualified, and the geographical position of the city is ideal”
12. HALIFAX, N.S.
|Population: 416,070||Annualized population growth: 0.67%||Avg. household income: $81,627|
|Avg. general lease rate: $27.12 psf/yr||Corporate income tax rate: 31.0%||Adults with bachelor’s degree: 65.26%|
Why you should locate there: “Halifax offers TLC: talent, location, and cost”
13. CHATHAM-KENT, ONT.
|Population: 106,115||Annualized population growth: -0.11%||Avg. household income: $70,048|
|Avg. general lease rate: $9.13 psf/yr||Corporate income tax rate: 26.5%||Adults with bachelor’s degree: 67.18%|
Why you should locate there: “Prices in Chatham-Kent, Ont. remain the most affordable in Ontario”
14. GRANBY, QUE.
|Population: 80,425||Annualized population growth: 0.70%||Avg. household income: $65,587|
|Avg. general lease rate: $10.66 psf/yr||Corporate income tax rate: 26.9%||Adults with bachelor’s degree: 68.67%|
Why you should locate there: “Granby is the most important industrial city in Quebec”
15. SQUAMISH, B.C.
|Population: 20,137||Annualized population growth: 2.25%||Avg. household income: $96,569|
|Avg. general lease rate: $19.13 psf/yr||Corporate income tax rate: 26.0%||Adults with bachelor’s degree: 60.02%|
Why you should locate there: “The quality of life, vibrant outdoor community, and strong entrepreneurial spirit”
16. BARRIE, ONT.
|Population: 205,572||Annualized population growth: 1.30%||Avg. household income: $91,565|
|Avg. general lease rate: $20.99 psf/yr||Corporate income tax rate: 26.5%||Adults with bachelor’s degree: 65.64%|
Why you should locate there: “Barrie has the second=lowest business costs in the northeast U.S. and central Canada according to KPMG”
17. VANCOUVER, B.C.
|Population: 657,146||Annualized population growth: 1.11%||Avg. household income: $86,099|
|Avg. general lease rate: $41.03 psf/yr||Corporate income tax rate: 26.0%||Adults with bachelor’s degree: 63.21%|
Why you should locate there: “Vancouver is Canada’s most innovative, creative and sustainable community”
18. SPRUCE GROVE, ALTA.
|Population: 31,612||Annualized population growth: 3.13%||Avg. household income: $122,100|
|Avg. general lease rate: $23.76 psf/yr||Corporate income tax rate: 27.0%||Adults with bachelor’s degree: 78.83%|
Why you should locate there: “Spruce Grove is within Edmonton Capital Region, offering quick access to major routes and attractive industrial land prices”
19. ST. JOHN’S, NFLD.
|Population: 209,555||Annualized population growth: 0.73%||Avg. household income: $88,185|
|Avg. general lease rate: $33.40 psf/yr||Corporate income tax rate: 30.0%||Adults with bachelor’s degree: 64.29%|
Why you should locate there: “St. John’s has a uniqueness and vibe that makes the city different and distinct”
20. RICHMOND, B.C.
|Population: 207,549||Annualized population growth: 1.28%||Avg. household income: $85,117|
|Avg. general lease rate: $23.12 psf/yr||Corporate income tax rate: 26.0%||Adults with bachelor’s degree: 68.74%|
Why you should locate there: “Richmond is the gateway city to Asia-Pacific, with Canada’s largest port, the best airport in North America, and highway access”
21. MILTON, ONT.
|Population: 99,698||Annualized population growth: 2.66%||Avg. household income: $115,327|
|Avg. general lease rate: $26.23 psf/yr||Corporate income tax rate: 26.5%||Adults with bachelor’s degree: 65.55%|
Why you should locate there: “Milton is the fastest-growing community in Canada, with a young, highly-educated workforce”
22. OAKVILLE, ONT.
|Population: 202,299||Annualized population growth: 1.46%||Avg. household income: $147,646|
|Avg. general lease rate: $27.67 psf/yr||Corporate income tax rate: 26.5%||Adults with bachelor’s degree: 62.57%|
Why you should locate there: “Oakville is THE location of choice for over 300 national and international corporate headquarters”
23. VICTORIA, B.C.
|Population: 85,332||Annualized population growth: 0.71%||Avg. household income: $64,416|
|Avg. general lease rate: $27.80 psf/yr||Corporate income tax rate: 26.0%||Adults with bachelor’s degree: 62.68%|
Why you should locate there: “Victoria is Canada’s best city for a well-balanced and successful lifestyle”
24. CAMBRIDGE, ONT.
|Population: 138,557||Annualized population growth: 1.18%||Avg. household income: $87,868|
|Avg. general lease rate: $15.88 psf/yr||Corporate income tax rate: 26.5%||Adults with bachelor’s degree: 65.12%|
Why you should locate there: “Cambridge provides central and efficient access to all of southwestern Ontario and the US border region”
|Population: 334,137||Annualized population growth: 0.36%||Avg. household income: $75,245|
|Avg. general lease rate: $15.57 psf/yr||Corporate income tax rate: 26.5%||Adults with bachelor’s degree: 59.23%|
Why you should locate there: “Windsor-Essex is a winning mix of centrality, unhindered crossing and access to market”
The Canadian Business Best Places for Business ranking is based on public and proprietary market data and survey responses from some 60 municipalities with populations of 15,000 or more. Municipalities were awarded scores on factors such as the median cost of office space, the speed of processing a building permit and the percentage of residents with a university degree. Leading cities were those with the highest cumulative scores out of a possible 200.