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Competitiveness threatened by carbon tax

  • 22 Dec 2016
  • Saskatoon StarPhoenix
  • GEOFFREY MORGAN Financial Post

Climate change policies key for ‘economic growth’

Environment linked to Canada’s long-term well-being, Trudeau says

CALGARY U.S. president-elect Donald Trump’s policies may make drilling and investing in the U.S. more competitive in the short term, but climate change policies are still necessary long term, given both global trends and state level legislation in the U.S., Prime Minister Justin Trudeau said Wednesday.

“We know that this is the way the world is going, and maybe there’s potential for short-term benefit by not engaging in the environment as strongly, but we also know that in the medium term and long term, economic growth and the wellbeing of our citizens is going to be linked to figuring out better ways to do things,” Trudeau told the Calgary Chamber of Commerce.

It was Trudeau’s first appearance in Calgary since he approved Enbridge Inc.’s Line 3 pipeline replacement project and Kinder Morgan Canada’s Trans Mountain pipelines expansion project late last month. He called those approvals “a major win for Canadian workers, Canadian families and the Canadian economy,” and said that he supported the construction of TransCanada Corp.’s Keystone XL pipeline to the U.S.

While the audience applauded his comments on those pipeline projects, the prime minister was challenged on whether his policies and plan for a national carbon tax would make Canada’s and Alberta’s economies less competitive relative to the U.S. given Trump’s statements on climate change.

“Regardless of what might or might not happen at the federal level in the coming years, at the state level, at the municipal level, at the business level across the United States there’s been tremendous investments, initiatives and forward movement on fighting climate change and being more responsible,” Trudeau said.

Still, attendees expressed their concerns about competitiveness following the speech.

Calgary Chamber of Commerce president and CEO Adam Legge said the federal government needs to be wary of investment flowing to the U.S. if costs are significantly lower than in Canada.

“The reality is that if the United States doesn’t move forward with a climate change agenda or some of the carbon taxations, we have to be careful with our agenda,” Legge said. “We’re not saying ‘Don’t move forward,’ but be very careful of our competitiveness.”

Canadian Association of Petroleum Producers president and CEO Tim McMillan said he was encouraged that the government included competitiveness as one of its eight principles it would consider when developing a framework for a national carbon price.

“In Canada, we’re looking at a global marketplace and we don’t just need to be competitive with the U.S., we need to be competitive with Saudi Arabia and Nigeria and Venezuela and we have to do that in a way that balances environmental performance and the economy,” McMillan said.

Calgary Mayor Naheed Nenshi questioned whether the carbon levy in 2017 will make the country uncompetitive. “It’s probably not at a level where that will happen,” he said. “As this continues with the federal government’s mandate to go to a $50 per tonne price on carbon, how are we going to figure that out in a way that makes us most competitive.”

Nenshi and Legge also echoed comments by Trudeau and said Canada could attract clean tech investment and talent if the United States “takes a step back” on pollution legislation.

“We know that this is the way the world is going and if the United States wants to take a step back from them, then quite frankly I think we should look at that as an opportunity to draw in investors where jobs and opportunities are going to be 10 years from now and 20 years from now,” Trudeau said.

 

 

 

Mosaic secure Vale’s Kronau Project in deal

Mon Dec 19, 2016 | 7:53am EST

REUTERS

Vale agrees $2.5 billion sale of fertilizer business to Mosaic

Vale SA agreed to sell part of its fertilizer business to Mosaic Co for $2.5 billion, in a move aimed at helping the world’s largest iron ore producer cut debt and focus on core mining activities.

Vale will receive $1.25 billion in cash and $1.25 billion in newly issued shares of U.S.-based Mosaic, a roughly 11 percent stake in the firm, the Rio de Janeiro-based company said in a Monday securities filing.

After the deal closes by late 2017, Vale will have the right to pick two members of Mosaic’s board, the filing said.

On June 17, Reuters was first to report on the Mosaic’s talks with Vale to reach a deal to buy the latter’s fertilizer unit.

According to the filing, Vale will retain control of its nitrogen and phosphate fertilizer assets in the city of Cubatão, in southeast Brazil but expects to sell them in 2017. Sources with knowledge of the deal told Reuters in October that Vale was also in talks with Norway’s Yara International ASA to sell some of its fertilizer assets.

Mosaic will acquire the rest of Vale’s phosphate assets in Brazil, Vale’s stake in Peru’s Bayóvar mine and Canada’s Kronau potash project. Mosaic has yet to decide whether to include the Rio Colorado potash project in Argentina in the acquisition.

Mosaic may pay an additional $260 million depending on future earnings of the fertilizer unit, the filing said. Vale will not be allowed to sell Mosaic shares for two years.

Analysts at Banco BTG Pactual estimate Mosaic is paying 8.6 times the fertilizer division’s earnings before interest, taxes, depreciation and amortization, a gauge of operational profit.

“This is an attractive multiple for Vale”, the analysts said in a client note.

Vale shares edged up slightly in choppy early trading.

Vale, the world’s largest iron ore miner, is disposing of assets to help meet a $10 billion debt-reduction target by next year. The plan was devised by Chief Executive Murilo Ferreira to help protect the mining company against lower iron ore and nickel prices, after losing a record $12.1 billion last year.

Vale said it will use the funds raised with the sale to cut debt, while continuing its divestment program.

Preferred shares in Vale have advanced 140 percent so far this year to 24.33 reais, surpassing a 35 percent rally in Brazil’s benchmark Bovespa stock index.

(Reporting by Bruno Federowski, Tatiana Bautzer and Roberto Samora; Editing by Guillermo Parra-Bernal and W Simon)

KXL and Canada’s oil sector – saved by Trump (not Ottawa nor Edmonton)

  • 13 Dec 2016
  • Calgary Herald
  • CLAUDIA CATTANEO
  • Financial Post

With Trump’s blessing, likely KXL revival near

The Keystone pipeline, you’re going to have a decision fairly quickly … And you’ll see that.

Much like the rejection of Keystone XL by U.S. President Barack Obama was about climate change symbolism, president-elect Donald Trump is going out of his way to make the revival of the Alberta-to-Texas pipeline project symbolic of his back-to-business and energy security priorities.

He spoke about the proposed oilsands pipeline during his election campaign, right after his election and again while putting together his transition team, which could include none-other than KXL supporter Rex Tillerson, the former CEO of Exxon Mobil Corp., as his secretary of state.

In his latest plug for KXL, in an interview Sunday with Fox News, Trump suggested — unprompted — he’d move quickly on Keystone XL after taking office, after being pressed on whether his fossil fuel-friendly administration would remain in the Paris climate agreement.

“The Keystone pipeline, you’re going to have a decision fairly quickly,” Trump said. “And you’ll see that.”

Dennis McConaghy, the former TransCanada Corp. senior executive who just completed a book, Dysfunction, about the KXL saga under Obama, said it’s no surprise Trump is enthusiastic about the 800,000 barrels-a-day pipeline linking Alberta’s oilsands to refineries in the U.S. Gulf.

“This is going to be $10 billion of infrastructure investment that the federal government doesn’t have to pay for,” said McConaghy.

In his book, McConaghy writes that Obama’s KXL’s rejection was “a triumph of symbolism over substance and reasonable expectation of due process” that occurred after becoming “a highly politicized emblem for the American environmental movement.”

Calgary-based TransCanada, the proponent of KXL, is saying little publicly about a revival of KXL while the transition in Washington is underway.

The energy company had to take a $3 billion writedown following Obama’s rejection after a sevenyear review and followed up with a challenge against the U.S. government under the North American Free Trade Agreement to recoup US$15 billion in damages.

But behind the scenes, TransCanada’s legal and commercial teams are likely working overtime to assess whether KXL still has shipper support and on what terms it could go ahead, McConaghy said.

McConaghy, who retired from TransCanada in mid-2014, said the company is likely looking at what a revival could look like from a regulatory and legal perspective, while waiting to see who is appointed by Trump to oversee the project.

The company’s legal team would want to ensure a revived KXL is insulated from litigation, he said.

“Don’t underestimate, when this thing moves forward toward approval, the U.S. environmental movement will do everything it can to legally challenge that,” McConaghy said. “You can count on that.”

TransCanada would also have to resolve outstanding litigation in Nebraska. The fight against KXL started in the state, where landowners were concerned about its impact on the Ogallala aquifer.

A further hurdle is that the company would have to re-assemble the team responsible for KXL, which was likely re-assigned after its rejection, McConaghy said.

If Tillerson gets the top job at the State Department, which was responsible for KXL’s review, it would be a bonus for the pipeline.

Tillerson is said to be the frontrunner for the job, although blowback due to his ties with Russia could scuttle that.

TransCanada did not reveal which companies made commitments to ship on KXL, but in his book McConaghy said many were U.S.-controlled.

Exxon Mobil’s Canadian affiliate, Imperial Oil Ltd., is one of the top developers of oilsands leases in Alberta, which would make Tillerson very familiar with the oilsands and the KXL debacle. In 2008, Tillerson called the oilsands “a tremendous resource opportunity to meet our energy needs.” Indeed, if Tillerson gets the secretary of state appointment, Canada’s oil and gas sector would find itself with more support in Washington than in either Edmonton or Ottawa, where governments are more concerned about reducing oilsands impacts.

KXL opponents have expressed outrage that Trump might bring KXL back from the dead. But having launched other oilsands battlefronts following the KXL defeat — in the West against Kinder Morgan’s now-approved TransMountain expansion; in the East against TransCanada’s Energy East; on the coasts against oil tankers — they are the ones looking like they are under siege.

 

 

Why Canada’s resource wealth should fuel the new economy

Why Canada’s resource wealth should fuel the new economy

SCOTT VAUGHAN AND ROBERT SMITH

Special to The Globe and Mail

Published Wednesday, Dec. 07, 2016 5:00AM EST

Last updated Wednesday, Dec. 07, 2016 6:24AM EST

 

Scott Vaughan is president of the International Institute for Sustainable Development. Robert Smith is a Senior Associate with the Institute and Principal of Midsummer Analytics.

 

 

The federal government’s decision to approve two pipelines last week raises a number of issues, but there is one we haven’t really heard in the debate so far: How should revenues earned from resource extraction be used? For us, this is a central question and one that touches directly on Canada’s well-being.

We believe a greater portion of resource revenues needs to be re-invested in creating the new economy Canada will need going forward. There are several ways we could do this, all of them well-tested.

Canada could start by following Norway’s lead and using a portion of resource revenues to create national or provincial wealth funds. Such funds could then be used to invest in the innovative Canadian companies that will create the jobs of the future. Norway’s wealth fund is worth about $860-billion (U.S.). That money will come in handy when its North Sea resources are depleted.

If wealth funds aren’t seen as desirable, governments could use increased resource revenues to give them the fiscal room to provide incentives for companies to expand in new areas, or to fund universities to improve education and undertake new research.

One way or another, the country needs to think hard about how it manages resource revenues in the future. Pumping oil out of the ground is like taking money out of the national savings account. It’s fine so long as the account is flush. But if we don’t keep an eye on the bottom line, we might find we’re in for a surprise one day. And the reality is that governments aren’t keeping as close an eye on the bottom line as they should. We know this from new research released last week.

In one of the first reports of its type ever, the International Institute for Sustainable Development took a close look at Canada’s “comprehensive wealth.” The findings offer a sobering assessment of how well we’re managing our wealth.

Put simply, comprehensive wealth is the value of all the assets Canadians rely on to make the economy work. This includes obvious things such as factories and roads. But it also includes our natural resources and ecosystems, our skilled and educated work force and the value of the trust and co-operation that are the foundations of our economy and society. Taken together, this portfolio of assets is what allows Canadians to enjoy their high level of well-being. If the value of the portfolio is allowed to decline, well-being will inevitably follow suit. Just like spending an inheritance faster than it grows will eventually end the party.

Our findings suggest Canada is not managing its comprehensive wealth portfolio as well as it should. Looking at the data from 1980 to 2013, long enough so that the normal swings of the economy wouldn’t obscure the trends, we found that comprehensive wealth has barely grown. Real per capita comprehensive wealth grew by less than 0.2 per cent a year over the period. Human capital, the biggest component of wealth, didn’t grow at all. Natural capital declined by a startling 25 per cent. Produced capital was the bright spot, growing by about 73 per cent, though most of this was in housing and oil and gas infrastructure.

At the same time, real per capita consumption has been growing quickly. This is a circle that’s hard to square. The country can’t go on consuming at a rapidly growing rate with the other side of the ledger looking as shaky as it does. Especially when the future holds so much risk. Climate change, oil prices, new sources of fossil fuels and renewable energy, the push toward a low-carbon economy, growing protectionism. All of these are reason for long-term concern.

Canada will be best poised to take on these risks with a solid comprehensive wealth balance sheet in hand. Right now, we think the country’s account is out of balance. Investing more of our resource revenues to help build up our human, natural and produced capital would be a move in the right direction. Of course, that’s not all that needs to be done to bolster the balance sheet. But given that the government has decided to approve pipelines, now seems to us like the right time to be talking about it.

 

 

 

Best presentation this year – addressing misinformation in the media about oil

Here it is, Oil Respects presentation on addressing misinformation in the media about oil  Oil Respect Presentation.  This is their website.

oil-respect

#TrudeauEulogies = Hilarity, Perspective, Shame, and Stupidity of Statements

See https://twitter.com/hashtag/trudeaueulogies?src=hash&ref_src=twsrc%5Etfw 

Saskatchewan manufacturing increase more the 5-times the national average

Manufacturing Sales Jump in September

Released on November 16, 2016

Saskatchewan’s manufacturing sales took a leap in September from a year ago, increasing by 8.2 per cent, the highest rate among the provinces and more than five times the national average.  On a month-over-month basis, manufacturing sales were up 1.0 per cent, the third best among the provinces.  Manufacturing sales in September were $1.24 billion.

“Manufacturing is one of the mainstays of the Saskatchewan economy and the impressive year-over-year growth is good news,” Economy Minister Jeremy Harrison said.  “Our provincial manufacturers are innovative, competitive-minded and are meeting the needs of global markets with made-in-Saskatchewan solutions.”

sk-manu-sales-nov-2106

On a year-over-year, seasonally-unadjusted basis, sectors that saw significant growth included food manufacturing, which increased by 34.3 per cent, machinery manufacturing which was up by 16.8 per cent and wood products which increased by 31 per cent.

About 26,200 people work in Saskatchewan’s manufacturing sector, which posted total sales of $14.1 billion in 2015.

-30-

For more information, contact:

Deb Young
Economy
Regina
Phone: 306-787-4765
Email: deb.young@gov.sk.ca

 

 

Mosaic to resume production at Colonsay in January

 

  • 9 Nov 2016
  • Saskatoon StarPhoenix
  • ALEX MACPHERSON

Colonsay miners ‘enthusiastic’ about getting back to work

Mosaic Co. to resume production at site following shut down in July

They’re enthusiastic about being back, there’s no two ways about that.

Blaine Bracke spent more than three months struggling to scrape together enough money to cover his bills after he was temporarily laid off from his job at Mosaic Co.’s Colonsay potash mine in July.

The 50-year-old potash industry veteran landed a retail job three weeks ago, but it pays less than half his wage at the mine — so he was happy to learn last week that he could resume his 60-kilometre commute to Colonsay on Dec. 5.

“It’s going to be a whole different atmosphere at the mine, (but) I’m more than willing to give it a chance and do my job, same as I did before,” Bracke said Tuesday.

He is one of about 330 unionized miners who lost their jobs on July 13 when Mosaic decided to “idle” the mine amid what a company spokeswoman called “really challenging” market conditions.

Oversupply has caused potash prices to crumble from about US$900 in 2008 to less than US$200 today. Companies have responded by slashing production and cutting costs, while the government halted its planned potash royalty review.

The economic impact of weak potash, uranium and oil prices has been felt across the province. Over the last 12 months, Saskatchewan shed about 10,000 full-time jobs, Statistics Canada reported last week.

Mosaic Colonsay employees were told in July that work would resume in early January. That timeline is still in place as overseas buyers work through stockpiles, the Plymouth, Minn.-based company’s president and CEO said last week.

“We’re believing that it will probably be necessary for us to be starting up Colonsay in the early new year,” Joc O’Rourke said on a conference call. Production will resume in January, a company spokeswoman confirmed on Tuesday.

United Steelworkers (USW) local 7656 president Barry Moore said that while some employees were more successful than others at finding work over the last four months, most are excited about returning to the mine.

“They’re enthusiastic about being back, there’s no two ways about that,” Moore said, adding only about 10 of the roughly 330 laid-off workers have confirmed that they won’t return to the mine.

At the same time, many of the returning staff are wary of the “unpredictability” inherent in the potash industry, Moore said. Bracke, who said he plans to keep his second job as a form of insurance against another shutdown, is one of them.

“I’m not going through the unemployment situation again,” Bracke said.

When the Colonsay miners return to work, they will do so with a new contract. After voting down a proposed deal one week before the layoffs, USW local 7656 approved a contract in a Sept. 28 vote that at least one miner said was unfair.

Union officials and miners have said previously that the company’s timing felt suspect, and alleged that Mosaic was using the layoffs as a negotiation tactic — a charge the company vigorously disputes.

Industry analysts have suggested Mosaic won’t need the Colonsay mine to meet its production commitments until the end of 2017, but the company said last week it expects a “more stable operating environment” next year.

 

 

 

Saudis support oil price floor for several reasons

OPEC decision means Saudis will abandon push to win market share: Commodity strategist

Play video HERE

helima-nov-2016

Play video HERE

Helima Croft, global head of commodities strategy at RBC Capital Markets breaks down her geopolitical analysis of oil leading up to the November OPEC meeting.

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