Category Archives: uranium and nuclear
Private capital rotating into mining and metals
Jan 11, 2016
After four-plus years of declines, 2016 was a comeback year for natural resources and the oil and mining industries – with only a couple of exceptions, energy, metal and mineral prices rallied last year.
According to a new report by private capital tracker Preqin, the improving conditions of last year did not filter through to all sectors.
Overall fundraising for natural resources investment actually declined declined by a fifth in 2016 to the lowest since 2012.
Coming off a record 2015, 70 funds raised a total of $58bn for investment in natural resources in 2016 (a figure that could go higher as more information becomes available says Preqin).
In 2015 mining and metals made up a paltry 0.6% of funds raised
But mining and metals enjoyed a much better year. In 2015 mining and metals made up a paltry 0.6% of funds raised with just two funds closing on $400 million in 2015. Last year five funds managed to raise $2.1 billion.
That’s still small beer compared to the money going into oil and gas however. Of the top 10 largest natural resources funds that reached a final close in 2016, all 10 are focused on energy-related assets, and all but one focus on projects in the US.
Together, these 10 funds alone raised $38bn, two-thirds of all natural resources capital raised through the year according to the report. So called dry powder – money ready to be invested – for natural resources now total $173 billion. Dry powder destined for mining stood at around $7 billion last year.
In 2017, across natural resources 250 funds are look to raise just under $120 billion. Of those only 13 are primarily focused on metals and mining and are hoping to raise $10bn (although some of $2.9bn for diversified funds could go into mining). The biggest mining-focused fund is China’s Power Capital which is seeking $3bn to invest in Asia. Diversified US-based Energy and Minerals Group is looking for $4 billion.
Tom Carr, Preqin’s head of real assets products, says there is more diversity present among those funds that are currently in market: “In particular, large vehicles focused on
mining and agriculture may see these sectors account for a greater proportion of activity than in 2016.”
Private capital encompasses a range of investment vehicles and strategies including traditional private equity such as buyout, venture capital and turnaround funds, private debt including distressed debt and direct lending, and private real estate, infrastructure and natural resources funds.
A total of $602bn were raised by 1,228 funds across all strategies and sectors in 2016 according to Preqin data.
The petroleum and mining sectors should put their heads together for a good cause: their future
Published on January 15, 2017
President & CEO at JuneWarren-Nickle’s Energy Group
It’s interesting to watch two sectors that should be joined at the hip in defense of their joint futures and wonder why they’re not; at least not in any publicly or politically discernible way.
The beauty of my day job is this: I am privileged to be involved with two teams that provide essential information insights to Canada’s two most important resource sectors: energy and mining. The men and women associated with venerable business brands such as Oilweek, The Daily Oil Bulletin, The Northern Miner and Canadian Mining Journal provide context, analysis and intelligence insights to the diverse stakeholders that comprise the “energy” and “mining” sectors.
Collectively, the brands represent more than three centuries of sectoral service and have been binding tools through the diverse and complex (and often brutal) cycles through which these industries pass. The teams also provide research and analysis services, including insights into external forces that impact the sectors; thus the brands also afford a perspective on the things which have put energy and mining under fire.
Both sectors are under tremendous social and political assault, the roots of which have common origins in the increasingly binary ways many Canadians are thinking about the economy and the environment. Indeed, much of it has to do with a Canadian society more than ever disconnected from the realities of how Canada’s resource riches contribute to our standard of living.
Forget distinctions between hard rocks and soft rocks: let’s contemplate how two sectors working more collaboratively can tell Canadians more compelling and cogent stories. In the process, we help folks understand how far advanced these sectors are in terms of their environmental and social records; the things for which, paradoxically, they are most pilloried.
Take aboriginal action for example. A straw poll of ordinary Canadians would almost certainly produce the following predictable result: resource industries need to do way better by way of aboriginal communities. That’s because everyone reads the same headlines. Who gets the coverage? Communities negotiating through the mainstream media, of course. Those same communities have also effectively left footed politicians from all levels of government.
But both oil and gas and mining companies can point to pretty decent records of working with aboriginal communities and companies. But aside from occasional glossy advertising campaigns pointing this out (which are often too rose-colored to be credible) few people outside the sectors themselves realize this.
Instead, contrary mythologies are propagated and the norm becomes sectors too distant and uncaring to be bothered by the perceived sovereign, economic and environmental travails of aboriginal communities.
But consider the following quote from Fort McMurray #468 First Nation (FMFN) over the recent controversy sparked by Jane Fonda’s visit to Canada’s oilsands (although visit stretches the word’s semantically elasticity.) FMFN was trying to distance itself from the presence of a former councillor who appeared in photo with Fonda. After pointing out it had no part in the planning of the actor’s visit, FMFN had this to say:
“FMFN #468 does support responsible development of the oil sands, and is confident that our industry partners have the same vision. We have strong partnerships with many companies, and we are grateful for these partners for the significant role they have played in our efforts since 2011 to establish FMFN as a strong, economically self-sufficient First Nation.”
There are myriad sentiments like this from aboriginal communities across Canada. But they’re not headline fodder, nor are they simple for stretched journalists to contextualize. Most mainstream media outlets are so busy these days chasing their own social media tails that consequential journalism has fallen by the wayside.
And, for ordinary citizens in any case, labels like “inconvenient truths” are more emotively satisfying than things like “convenient realities”.
In the context of aboriginal communities described above, the oilsands sector is a good example, because such communities benefit from both mining and oil and gas activities and provide a suitable backdrop against which to consider better and more balanced storytelling that demonstrates what is real and what is possible.
But here’s a reality: both sectors are in states of profound flux and there’s growing realization that one transformative force is the new energy era into which we have embarked.
Given what we know will be required to support next-generation renewable energy infrastructure, much of it to be sourced from various mined resources (think lithium and other rare earth elements), it seems at least some stars are aligning for the sectors to begin chatting more strategically.
Many oil and gas companies are already making their own bold moves into alternative energy systems investments.
Perhaps the dawning of a new energy era will provide sufficient catalysts for the sectors to contemplate how they’re stronger together.
Other countries see Canada as an energy leader—so should you
By Bill Whitelaw
Jan. 9, 2017, 1:41 p.m.
Canadians pondering our energy future might do well to take into account how others see us.
It would give them comfort to know the sector is actually in pretty good hands—at least in the opinion of folks able to view things from a rational perspective.
As Canada celebrates its 150th anniversary, it’s important to remember that our energy sector’s roots actually predate Confederation.
For a relatively young country, we have an old (and honourable) energy history. But because we live with it daily, we’re perhaps not as acutely aware of how important that energy history is when rooted in a global context and viewed from the vantage points of other jurisdictions that see Canada as an international role model.
Simply put, for many folks outside of Canada, the things we as Canadians take for granted in terms of energy development are looked upon with something that borders on envy.
Canadians would do well as energy citizens to see—as others do—our energy record as something to be viewed with pride rather than disdain or even despair.
Those who believe mainstream media coverage might be tempted to believe that the Canadian energy record blots an otherwise sterling international reputation.
That’s because a small group of activist voices seem to exert a command-and-control dynamic over Canada’s news editors who (generally) are more caught up chasing the social media mewlings of activists rather than engaging in solid, contextual and literate energy journalism.
Talk to the men and women in other countries who are in charge of domestic energy development and an entirely different view of Canada’s competencies emerges.
Canada’s energy ethos
What’s the common linkage between Canada’s diverse capabilities? A unique characteristic perhaps best described as an energy ethos—ethos being the operative word.
Put simply, it’s the ethical approach Canadians take to energy development: one that keeps in balance environmental dynamics and economic realities.
On a recent energy tour of central European countries—Poland, Hungary and Croatia—discussions with a diverse range of energy stakeholders provided interesting perspectives on what Canada has to offer in terms of technical, safety, regulatory, educational and yes, even political experience and practice.
The tour was organized by Ottawa’s trade commissioner to showcase and heighten opportunities in both Canadian investment and trade.
Canada is an attractive trading partner and supplier of expertise, perspective and social conscience because of where we have evolved to in our domestic energy dynamic.
Energy “freedoms” are a major difference between our approach and the approach of others. Take our system’s transparency as but one example.
Most Canadians are largely ignorant of the transparency foundations on which our energy systems are built—foundations that contribute immeasurably to our quality of life.
Want to know what a energy company paid to lease Crown land? No problem. Interested in knowing who was issued a well licence yesterday? Again, no problem. Curious about a particular company’s hydrocarbon production volumes? Easy, peasy.
It’s all there in the public domain—and it makes for an incredibly vibrant and competitive industry. Such data availability to anyone with an interest is core to how many of our systems function, not for oil and gas companies or power generators in particular but for Canadian society as a whole.
That’s one dimension the Poles, Hungarians and Croatians deeply admire.
Why? Because the system works for the citizens who actually own the molecules.
And that system—actually a system of systems, provincially and federally—has been evolving and improving over decades. Data transparency actually creates robust, competitive and accountable markets.
Balancing energy and the environment
The ways and means we’re balancing energy development and environmental sustainability are also of great interest, as are the methods for consultation on major energy issues.
Canadians—again, those who only consume mainstream media—might be confused by this given all the white noise around perceived failures to consult around major pipeline projects. But citizens of central Europe would give their eyeteeth to be privileged to avail themselves of our processes.
The other area drawing attention is the way in which Canada is advancing its energy-systems mix; the balanced approach that recognizes no single energy system can be wholly independent in and of itself.
Whether this is driven by regulation or the market, Canada’s approach is eyed as a form of guidance as our country navigates the best way to use its vast and varied resource wealth.
One of the main drivers of central European interest in Canadian energy turns on a dynamic unknown to Canadians: being dependent on a less-than-dependable source for the bulk of domestic energy demand.
In this case, the 12 countries that form central Europe want to be less reliant on Russian natural gas from both pricing and security of supply perspectives. They’re making a variety of moves, independently and through the European Union, to become more energy self-sufficient as well as wean themselves off coal over the long-term.
Canada’s energy shift is about new market opportunities for our hydrocarbons and the products and services that drive their development across a broad supply chain spectrum.
The race with no finish line
This is not to suggest, of course, that Canada should rest on its laurels simply because others admire our systems and approaches. In fact, it’s a pointed reminder that being an energy leader comes with the burden of running a race that has no finish line.
But it is nice to know we’re well ahead of a large part of the pack.
It’s too bad more Canadians can’t see what’s in front of them.
The video interview is below.
Unemployment Rate Drops in December
Released on January 6, 2017
Saskatchewan recorded a 6.5 per cent unemployment rate (seasonally adjusted) in December 2016, down from 6.8 per cent in November 2016. There were 563,000 people employed in the province in December 2016. Year-over-year, there was a decrease of 7,900 jobs.
Over the same period, Alberta recorded a loss of 17,300 jobs, while Newfoundland and Labrador recorded a loss of 5,700 jobs. All three oil producing provinces recorded the highest job losses in Canada.
“We are pleased to see the unemployment rate drop for the second consecutive month,” Economy Minister Jeremy Harrison said. “It should be noted that the largest job losses recorded in 2016 were in the three oil producing provinces. This clearly indicates now is not the time for a job-killing carbon tax.”
Saskatchewan had the fourth lowest unemployment rate in the country, below the national average of 6.9 per cent (seasonally adjusted).
Other December 2016 highlights include:
- Major year-over-year gains were reported for trade up 5,200; professional, scientific and technical services up 4,500; public administration up 2,300.
- Off-reserve Aboriginal employment was up 4,600 for six consecutive months of year-over-year increases.
- Saskatchewan’s youth unemployment rate was 10.3 per cent (seasonally adjusted), second lowest among the provinces, behind British Columbia (8.5 per cent), and below the national rate of 12.6 per cent.
- Aboriginal youth employment was up 1,500 for eight consecutive months of year-over-year increases.
For more information, contact:
From Brad Walls Facebook Page
January 6th, 2017
Hey Saskatchewan – here is a reminder of how much you will contribute to Canada in the coming year.
In 2017, $18 billion in equalization payments will be provided to six provinces while four provinces, including Saskatchewan, receive nothing. That’s because, for the 10th year in a row, Saskatchewan is a ‘have’ province.
So Saskatchewan will contribute $580 million this year to equalization from our 1.16 million residents (about $500 from every man, woman and child). Over the past decade, that’s more than $5 billion from our province’s taxpayers while receiving $0 equalization dollars.
Just thought you should know, you are definitely doing your part.
What Mining Giants From Barrick to Teck Are Watching For In 2017
by Danielle Bochove
December 22, 2016, 4:55 AM CST December 22, 2016, 8:16 AM CST
It’s been a turbulent year for miners, with metal prices starting near multi-year lows as executives drew from a common playbook: slashing spending, costs and debt. Then came Brexit and the U.S. election and gold and base metals diverged.
What does 2017 hold? Bloomberg asked the heads of some of the biggest producers including Barrick Gold Corp., Newmont Mining Corp. and Teck Resources Ltd. Opinions vary, but there’s broad agreement that gold faces near-term headwinds from the Fed; that industrial metals have bottomed out but the dizzying 2016 rally may falter; and that miners will begin to spend more, possibly on deals, while keeping an eye on balance sheets.
Barrick’s Kelvin Dushnisky:
“If we see an opportunity to acquire something, to increase our margin, earnings, NAV, then we’ll consider it. But if it’s just a matter of adding to our production base, we’re not interested.”
* Global economic uncertainty and loose monetary policy are supportive of gold prices in 2017; volatility around Fed affects near-term prices
* Mid to longer term, supply-demand fundamentals bullish for gold
* Costs can be lowered further although “low hanging fruit has been harvested”
* May see more M&A activity, depending on valuations
* Gold below $1,000 an ounce could pose survival challenge for some miners
Barrick in 2017:
* Making “good progress” to drive all-in cost below $700 by 2019
* Looked at a number of acquisition possibilities in 2016 and will continue to act on acquisition “mandate” in 2017
* Any gold weakness could provide acquisition opportunities
* “We may do some increased exploration in 2017, both a combination of mine-ex around the existing mines and greenfield”
* Used $1,000 gold price for budgeting in 2016. For 2017, “I’ll be surprised if we’re not in that same range”
* Barrick shares are up 85 percent this year
Newmont’s Gary Goldberg:
“As I look at where we’re at today, it feels a lot like where we were a year ago with the Fed having just raised interest rates and the potential for other increases going forward.”
* Mid- and long-term fundamentals for gold are good
* Near term, prices could fall further before the market “finds its center”
* Pickup on buy side likely to support falling prices
* Biggest latent risk is under-investment during down cycle
* Past focus on the best quality ore amid low prices may “come back to roost in higher operating costs, cash costs, over the next year or so”
* Expects 6-7 percent decline in mine supply by 2021
Newmont in 2017:
* Positioned to perform well through all cycles; focus on internal projects
* Lower gold prices could provide asset-buying opportunities
* Higher prices would benefit shareholders through new dividend structure
* Recently cut price for 2017 budgeting to $1,100 from $1,200
* Newmont shares are up 75 percent this year
Agnico Eagle’s Sean Boyd:
“The next big cost item that needs to be taken out of the industry is overhead. There’s too many players for the number of good opportunities that are around.”
* Bullish on 2017 and beyond as market builds off average 2016 price around $1,140
* Rising global protectionism and financial-system debt, with only moderate rate increases in the U.S., will be supportive of higher gold prices: “I could see gold at $1,300, $1,350 in 2017 and that isn’t a stretch because nothing has really been addressed from a financial system risk perspective”
* If gold does fall below $1,100, sees more M&A as some miners still vulnerable
* Industry needs to see more M&A at asset and corporate level
* “The biggest challenge is the pipeline. Finding enough quality assets that not just sustain production levels but actually allow you to improve the quality of the business”
Agnico Eagle in 2017:
* Company can increase production by 400,000 to 500,000 ounces by 2020 or 2021 through internal projects; internal pipeline can supply growth for five to six years
* Would consider acquisitions that added to production profile after 2022
* Sees local currency weakness (CAD, Euro, Mexican Peso) supporting growth
* Using $1,200 for budget purposes
* Agnico shares are up 41 percent this year
Yamana’s Peter Marrone:
“Within the next couple of years to five years we will be seeing gold prices that are meaningfully higher than where they are today and where they were at their last highs several years ago.”
* Prices could be choppy in 2017 but mid- and long-term prognosis very strong
* Sees gold exceeding 2011 high of $1,900 in 2-5 years
* Global economic and geopolitical uncertainty, higher inflation supportive long term
* Still sees room for industry to cut costs further, find more efficiencies
* Industry can’t rush capex; projects and M&A depend on technical merits
Yamana Gold in 2017:
* Focused on developing Cerro Morro deposit and internal exploration projects
* Higher gold prices would allow cash buildup for internal investment beyond 2018
* If extra cash, “special distributions to shareholders are a good way to go”
* Likely to use gold price near 2016 average for 2017 budgeting
* Yamana shares are up 35 percent this year
Teck’s Don Lindsay:
“The zinc concentrate market is so tight that zinc smelters are going to run out.”
* Concentrate shortage means he’s bullish on zinc
* Metallurgical coal to be strong for at least first half
* Eventually, supply re-balancing to push down coal with $150 a ton “pretty safe” long term
* Copper could slip to $2-$2.25 a pound before strengthening as market moves into deficit in 2018 or 2019
* Continued focus on costs and productivity in the face of increasingly volatile markets
* Growing investment in technology to improve efficiency and environmental performance
Teck in 2017:
* Will consider changing dividend policy in April
* Priority is reducing debt to $5 billion or less in first quarter or shortly thereafter
* 2017 focus on internal pipeline, including Fort Hills
* Quebrada Blanca expansion well timed for higher copper prices
* Teck shares are up more than 400 percent this year
Lundin’s Paul Conibear:
“Everybody’s capex should be up. It’s not necessarily discretionary anymore.”
* Copper prices likely to slip; Lundin using $2.25 a pound for 2017 budget
* Zinc may soften slightly “but a good zinc price is here to stay”
* Nickel to be relatively weak for another 1.5 years
*“I would caution those who think we’re back in a bull market: we’re not”
* Strong Q4 earnings to flow through entire industry cost structure and “take some of the handcuffs off spending”
* Operating and capital expenditures to rise as companies reinvest in equipment, repairs
* For next 1-3 years, grades will drop, stripping increase, after miners “pushed their mines as hard as they could” during downturn
* Resurgence in exploration likely as miners hunt for new scarce production
* Slow reintroduction of dividends but share buybacks unlikely given share strength
Lundin Mining in 2017:
* Company’s assets all make money at current metal prices
* Will consider special dividend when receives proceeds from Tenke sale
* Hoping to do acquisitions but can be patient
* Lundin Mining shares up 77 percent this year
- 10 Dec 2016
- National Post – (Latest Edition)
- By Claudia Cattaneo, Geoffrey Morgan and Jesse Snyder
CANADA HAS TURNED INTO A CAN’T-DO NATION AS SURGING ACTIVISM STRAINS ECONOMIC GROWTH
Prime Minister Justin Trudeau had barely finished delivering his statement approving the Trans Mountain and Line 3 pipelines, and rejecting Northern Gateway on Nov. 29 when anti-pipeline activists erupted on Twitter.
“@ justintrudeau just approved the #Kindermorgan pipeline. Vancouver: Join us at the CBC building at 5 pm,” Stand.earth tweeted, along with a photo with protesters and the headline: IT’S TIME TO ESCALATE AGAINST KINDER MORGAN.
Greenpeace Canada took direct aim at Trudeau: “BREAKING: @JustinTrudeau approves #KinderMorgan and # Line3 pipelines, rejects #NorthernGateway,” illustrating it with indigenous protesters and the warning: “If Prime Minister Trudeau wanted to bring Standing Rock to Canada he succeeded.”
In its tweet, Oil Change International had a photo of Trudeau at the Calgary Petroleum Club with the headline: NOTE TO JUSTIN TRUDEAU: “CLIMATE LEADERS” DON’T. BUILD. PIPELINES, and the comment: “If approving massive new oil pipelines fits in Canada’s #climate plan, then Canada’s # climate plan is freaking awful.”
Anti- pipeline activists from these and other groups had devoted years of campaigning to stop all three projects through regulatory, political and legal means, before adopting a more “in your face” approach, in the vein of the ongoing uprising against the now stalled Dakota Access Pipeline in the United States, and in the tradition of the famous War in the Woods two decades ago against logging on Vancouver Island’s Clayoquot Sound.
Resistance to infrastructure projects has become the norm in Canada’s resource sectors. As part of a fourmonth investigation, the Financial Post identified 35 projects worth $ 129 billion in direct investment — mostly private money — that are struggling to move forward or have been sidelined altogether because of opposition from environmental, aboriginal and/or community groups. The downside is adding up: slower growth, lower Canadian oil prices, investment chill, less control over domestic resources, overreliance on the U. S. market, regulatory gridlock.
A $ 100- billion loss in direct investment is no drop in the bucket. It means an additional loss in value ( roughly equivalent to the rate of return on the investment) of at least $ 8 billion to $ 12 billion a year for the life of the resource projects, generally 40 years, or $ 320 billion to $ 480 billion, estimated Jennifer Winter, energy economics professor at the University of Calgary’s School of Public Policy.
Bitumen pipelines from Alberta have dominated the headlines, but other projects have also come under attack, including the Muskrat Falls hydroelectric project in Newfoundland, a uranium mine in Quebec, a wind power project in Ontario, liquefied natural gas development in B. C. and fracking in New Brunswick. The list goes on.
The reasons for resistance vary widely: at a local level, NIMBYism, often linked to fears about water and air safety, impacts on properties from noise and traffic; at a broader level, concerns over climate change, impacts on the environment, overreliance on fossil fuels; on a legal level, disputes between aboriginals and government over territorial rights and benefits.
Major incidents such as the Deepwater Horizon blowout in the U. S. Gulf and the oil pipeline spill in the Kalamazoo River validated fears that infrastructure projects aren’t as safe as developers or regulators claim. Previous governments didn’t do themselves any favours by dragging their feet on climate- change policy, or by failing to properly consult with indigenous communities. Developers have been slow to react to growing grassroots concerns and empowerment.
Now the common refrain is that the projects don’t have a “social licence.”
By approving the $6.8-billion Trans Mountain expansion of the Edmonton- toBurnaby pipeline and the $7.8-billion replacement and expansion of Line 3 from Hardisty, Alta., to Wisconsin, and rejecting the $7.9-billion Northern Gateway pipeline from Edmonton to Kitimat on the B. C. coast and banning oil tankers in British Columbia’s northern coast, Canada’s Liberal government is attempting a middleof-the-road solution.
It will approve some projects to support its economic and trade agenda, while ratcheting up environmental protection to manage risks, including a national carbon tax.
But many in the anti- development movement have made it clear that they aren’t in the mood to compromise.
Even before Trudeau’s announcement, groups such as Stand, 350. org and Greenpeace had been in preparation mode, including organizing training sessions to master tactics such as ducking under police tape and holding sit-ins at politicians’ offices, said Sven Biggs, climate and energy campaigner at Stand, formerly known as ForestEthics.
“There has been demand from our supporters and the general public, especially here in Vancouver, to escalate the campaign for a while,” he said. “We are providing support for folks.” About 300 people showed up for the “non- violent direct action” training sessions, mostly seniors and students.
In Edmonton last week, Natural Resources Minister Jim Carr said he welcomes peaceful dissent, but the federal government would ensure safety is maintained through its defence and police forces.
“We have a history of peaceful dialogue and dissent in Canada. I’m certainly hopeful that that tradition will continue,” he said. “If people determine for their own reasons that that’s not the path they want to follow, then we live under the rule of law.”
Natural resources developers welcomed Trudeau’s efforts to take back the natural resources a genda. Many have been left empty handed and with their reputations in tatters after spending large sums of money to win regulatory approvals. Resource focused economies such as those in Alberta, Saskatchewan and the Northwest Territories have underperformed because they can’t get their products to customers.
The anti campaigns have also demolished trust in agencies such as the National Energy Board ( NEB) and environmental review processes, and forced politicians to change the rules of economic development, promoting the perception that Canada is a can’t do nation.
Former NEB chair Roland Priddle said the dissent is bad news for Canada’s economic future.
“Natural resources have been the one consistent theme i n Canadian economic development from the 16th century onwards,” he said. “The cod fishery, the square-timber trade, the wheat economy that built the Prairie provinces, minerals in Quebec, Ontario and interior British Columbia, and since 1947, oil and gas, ( are) so important because they are one of the few sectors in which we have an international comparative advantage.”
Perrin Beatty, chief executive of the Canadian Chamber of Commerce, said Canada has in just a few years morphed from a nation of builders that saw great national projects as a means to improve the welfare of every Canadian, to an aggregation of individual interests that only allows projects no one objects to, which has led to a development standstill.
In Prince Rupert, a city on the northern B. C. coast that is home to four LNG proposals, uncertainty over the community’s growth has pit supporters and opponents against each other. In Quebec, a uranium mining industry has been prevented from developing. In the North, the potential for economic self- sufficiency from oil and gas has been destroyed. And the Ring of Fire, a massive mining development in Ontario that could transform the province’s northern economy, has been indefinitely delayed.
In Alberta, the absence of the Keystone XL and Northern Gateway pipeline projects is being blamed for exacerbating a harsh recession. Both were designed to be in operation today and would have contributed billions in additional revenue by reducing discounts on Canadian oil prices and higher- cost transportation for western Canadian crude oil by rail.
The U. S. has experienced similar resistance, but the movement against infrastructure there started about 20 years ago, according to the U. S. Chamber of Commerce. Canadian opposition only started escalating in 2010.
The game plan used by opponents in both Canada and the U. S. is similar, with co- ordinated efforts by major environmental groups to recruit people with roots in communities. They use the court system, regulatory system, protests and social media to delay and create anxiety over the potential impacts, said William Kovacs, senior vice- president for environment, technology and regulatory affairs at the U.S. chamber.
“They have the ability to use the courts to sue and delay a project for so long that they bleed the financing out of (it),” he said.
Ian Anderson, the president of Kinder Morgan
Canada who’s overseeing the Trans Mountain pipeline expansion, has noticed a shift in public sentiment between the time the expansion was proposed internally in 2006 and today.
In a recent speech, Anderson compared the new requirements for approvals to a radio dial that has lost a signal, and proponents are still struggling to find it. Kinder Morgan added tens of millions in costs to alter the right of way of the Trans Mountain pipeline to meet local demands. Anderson said he plans to start building the expansion in the second half of 2017, regardless of “obstacles.”
The situation in Canada has also been complicated by an alliance between activists and some aboriginal communities, which have unique legal rights and have leveraged resistance to resource projects to resolve disputes with Ottawa.
That alliance has not been without difficulties, and many aboriginal leaders are concerned about losing work and wealth if projects keep getting scrapped or delayed. They even held a conference in Calgary in October to improve the dialogue on pipelines and look for ways to support approvals.
Jim Boucher, chief of the Fort McKay First Nation in Alberta, which has become one of Canada’s wealthiest by providing services to the oilsands industry, said natural resources projects can alleviate poverty among First Nations because they are largely based where they live, in Northern Canada.
But many are angry that the federal government has failed to meet its obligations to protect them, their environment and their rights by handing off their duties to consult to project developers.
“They have completely ignored their constitutional obligations and the people are upset and if they don’t come out and respond to what people have been asking, then they will not find an accommodation to their projects,” Boucher said.
It’s not just aboriginal communities that are stepping up opposition to infrastructure projects. Peter Tertzakian, chief energy economist and managing director of ARC Financial Corp., said any community can now install itself as a rogue regulator, and, with the aid of social media, distribute all sorts of information to support its point of view.
“The broad issue in the western world is the erosion of trust in our democratic institutions that regulate the development of these things,” he said. “The reality is that these ( regulators) work very hard, have a lot of technical expertise, and come up with a judgment on whether or not projects should get built, and then all that effort becomes trivialized by somebody with a Twitter account and a regional rally cry.”
Tertzakian said there is a low probability that any company will propose a resources mega-project in Canada again since it faces 15 to 20 years of financial exposure due to extended years of planning, regulatory review and investment recovery.
“Why would I do that when I have all this aboveground uncertainty?” he asked.
In addition to the loss of investment and related economic activity, Tertzakian said there are other indirect effects on the economy: energy security risk; being hostage to U. S. economic/ environmental policies; and potentially debilitating consequences of not having more control over resources from coast-to-coast.
“I am hoping that the average Canadian will realize that all this stuff is leading to gridlock and stalemate and very little is getting built,” he said. “There has to be a wake-up call of some sort. I don’t want to see my democratic institutions eroded. There are capable people in government that can make good decisions, and they should be final and should be respected.”
Experience has shown that few shelved projects are ever revived. In the case of the oil industry, only 25 per cent are resumed. Once teams are disbanded and expertise lost, it’s hard and costly to regroup, Tertzakian said, especially when there are faster development alternatives elsewhere.
Many larger investors such as endowment funds and universities would rather not get in the middle of controversy, which has meant less capital for smaller companies, said Glen Schmidt, chief executive of junior oilsands company Laracina Energy Ltd.
Other investors are putting their money to work in other jurisdictions. Foreign investors with projects already under way complain about regulatory paralysis and that they would have never invested in Canada if they had known from the outset about the hostility they’d be up against.
“An unelected judicial system is interfering in things” and increasing the risk of deploying capital, said Seymour Schulich, the billionaire investor in oil and gas and mining. “All the regulations they have put in have slowed things down to a crawl. I am a Canadian and I hate to see what is going on in this country.”
Residents of the small town of Inuvik in Canada’s Arctic know what it’s like to be left empty handed. They heavily invested in infrastructure and skills development anticipating the Mackenzie gas pipeline project would go ahead, which would have promoted gas production and attracted other industries. Today, a number of underutilized new hotels and rows of idle heavy machinery are evidence of the high expectations never met.
The pipeline was the first, high- profile Canadian project to be sidelined — not once, but twice — following drawn-out, expensive regulatory processes rattled by aboriginal and environmental opposition. By the time the latest version was approved, U.S. shale had emerged as a more attractive alternative and the pipeline along with development of massive gas fields was put on the shelf.
Former Northwest Territories premier Floyd Roland, a member of the Inuvialuit nation, blames the project’s failure on interest groups based in “skyscrapers in Vancouver and Toronto” who “had no place in the Northwest Territories trying to dictate to us and to the rest of Canadians that this project shouldn’t happen.”
But it was Keystone XL that elevated activism to a new level.
Dennis McConaghy was the senior executive in charge of the project at Calgary- based TransCanada
- 29 Nov 2016
- National Post – (Latest Edition)
- Sunny Freeman, Financial Post
Miners go green in hunt for cost efficiency
Barrick Gold and Gold Fields early adopters
Mining companies are digging into renewable energy as a way to reduce costs and offset the impact of volatile conventional fuel prices as the world shifts to a low- carbon economy.
Industry executives gathered last week at the Energy and Mines World Congress in Toronto focused on how i nnovation in energy — which can comprise as much as one- quarter of operating expenses in remote locations — can make mines more cost- effective and environmentally sustainable.
“I think we will be surprised at the speed at which mining companies will start to adopt these things,” said Adriaan Davidse, mining innovation leader at Deloitte.
Amid rapid improvements in renewable technologies, wind and solar prices have fallen dramatically in recent years and are expected to keep dropping. In many parts of the world — especially in remote locations – the alternative energy solutions are becoming cheaper than conventional sources.
Meanwhile, a dearth of new mine opportunities is driving companies into more far- flung locations that are not connected to the electricity grid — resulting in dependency on diesel — an unreliable, costly and carbonintensive source of energy.
Some miners also see renewables as a way to maximize their social licence to operate by selling the benefits of renewables to surrounding communities: the switch can help end community reliance on diesel generators for decades after the mine’s life ends.
About US$ 6 trillion of investment capital is expected to be deployed into renewable energy by 2035 — more than three times the amount in conventional energy infrastructure, according to an Ernst & Young report.
However, in the current low conventional fuel price environment, many companies are missing the opportunity to invest in technology that will insulate them f rom f uture price hikes, Davidse said.
“Mining companies position themselves typically as waiting for technologies to be mature before they adopt them, but in this case the ability to integrate renewables depends on your ability to be adaptable,” he said.
Though commodity down cycles are nothing new, miners are also grappling with longer-term structural changes such as increasing pressure to adopt sustainable practices and carbon-pricing systems, he added.
“Renewables have a very significant role to play in addressing many of these issues — including support to the communities and the reduction of emissions,” he said.
Some of the world’s biggest miners, including Barrick Gold and Gold Fields Ltd., are early adopters, experimenting in locations where renewable power makes the most sense, such as in sub- Saharan Africa, where both communities and miners are all too familiar with rolling blackouts.
Miners have already realized energy savings of between 10 and 40 per cent from investing in renewables, innovative energy technologies and automating certain processes to reduce power use, according to Deloitte.
While much of the work so far has been done in southern climates where solar energy is abundant, miners are also experimenting with wind solutions in northern climates where solar is too unreliable.
Rio Tinto PLC aims to generate 10 per cent of its energy demand at the Diavik diamond mine in the Northwest Territories from a nearby wind farm, while Glencore Xstrata is partnering with Tugliq Power to have wind power meet half of its energy needs at the Raglan Mine.
Third- party partners, such as Tugliq, are making it easier for mining companies by stepping in to fund, develop and operate the systems in exchange for a longterm pricing commitment.
Stephen Letwin, chief executive of Iamgold Corp., which is using solar power as part of the energy mix at the Rosebel gold mine in Suriname, believes the biggest barrier to higher adoption of renewables is the high capital costs — which is what makes having a partner so attractive.
At Iamgold’s remote Essakane gold project in Burkina Faso, the company is in the midst of completing a partnership deal to have 10 per cent of power supply come from solar.
“Think of it as a toll road — what it’s like is a highway that you get to use without having to put up the huge amount of capital but over time you pay a toll for using the road and the people who put up the money get a return,” Letwin said.
The shift toward renewables is a way to hedge against both rising fuel costs and carbon emissions.
Michel Carreau, director of energy at Hatch Energy — which partnered on Diavik with Rio Tinto — senses there’s more opportunity to sell miners on renewables especially after the signing of the Paris Accord, which means industry will soon have to pony up for polluting.
“It’s going to cost them to do nothing,” he said, adding that a $50-per-tonne carbon tax — an amount some observers predict is needed to meet reductions set out in the Paris accord — could increase fossil fuel costs by 15 per cent.
However, in order for renewables to be considered as a meaningful part of the energy mix, a way to store wind and solar power in a battery is necessary — a challenge Carreau believes is close to being solved.
“Ten years from now there is not going to be a mining company that starts a project with a life of at least 10 years without putting in renewable power,” he said
Saskatchewan reaches deal to keep using coal-fired plants
REGINA — The Canadian Press
Published Monday, Nov. 28, 2016 11:38AM EST
Last updated Monday, Nov. 28, 2016 1:08PM EST
Saskatchewan says it has reached a deal with Ottawa that will allow the province to keep using coal-fired power plants in what it calls “a responsible manner” beyond 2030.
The federal government announced last week that provinces will have to phase out coal entirely and replace it with lower-emitting sources by 2030 or use carbon capture and storage technology.
Saskatchewan uses carbon capture at one of its coal-fired power plants, but hasn’t made a decision about installing the technology at other plants.
The agreement will allow the province to meet federal emission requirements over time on an electricity system-wide basis, as opposed to regulation of every coal-fired plant.
The deal also acknowledges Saskatchewan’s work in advancing carbon capture and storage and the province’s move to 50 per cent renewable energy generation by 2030.
Almost 50 per cent of the electricity generated in the province uses coal as a fuel source, but coal-fired units are among the largest sources of air pollution in the country.