This speech was given by The Honourable Joe Oliver, P.C., M.P. Canada’s Minister of Natural Resources at the Toronto Board of Trade, Toronto, Ontario, October 13, 2011
Check against delivery
Thank you, Carol, for your kind introduction. Good morning, ladies and gentlemen.
I am pleased to be back at the Toronto Board of Trade, which has been such an important organization in representing and generating ideas for the business community in the GTA and beyond. Toronto is an economic engine with a world-class capital market and banking industry that finances our abundant natural resources and related industries right across the country. The relationship between our resources and the economy is – not surprisingly – what I want to talk to about this morning.
This summer and fall, I have traveled across Canada and the United States. I co-chaired the federal-provincial Conference on Energy and Mining in Kananaskis. I attended the APEC Conference of Energy and Transportation Ministers in San Francisco a few weeks ago and met with business leaders, legislators and government officials in Sacramento, LA, New York and Washington. Last week, I visited Washington and Calgary again.
Everywhere I go, my message is the same. Canada is a market-based, responsible and reliable supplier of natural resources and we are open for business.
On the world stage, Canada has a strong record of economic leadership.
With help from our Government’s Economic Action Plan, our sound banking fundamentals and our continued commitment to trade and investment liberalization, the Canadian economy has shown remarkable resilience during the global economic downturn.
Our economy has delivered more than 650,000 new jobs since 2009. And international bodies, such as the International Monetary Fund, predict Canada will continue to be a leader in economic growth.
Forbes magazine this month said Canada is the best place in the world to do business. If this tries the soul of a modest and diffident nation, can we also handle being an emerging energy superpower? I hope so, because it is happening, and that is good news for everyone across our great country.
Natural resources are an immense and diversified portfolio – directly linked to our economic health and prosperity.
Energy, forests, minerals and metals.
These sectors have a huge impact on Ontario’s economy and of course all of Canada.
In 2010, the energy, mining and forestry sectors accounted for $140 billion in real GDP, supporting hundreds of thousands of jobs in communities right across the country.
The importance of mining
Today, Canada is one of the largest mining nations in the world producing more than 60 minerals and metals. Canadian mining companies are now located in more than 100 countries, involved in more than 10,000 projects, with assets outside of Canada worth over $109 billion in 2009.
In 2010 the mining and mineral processing industries generated over $35 billion in GDP, over $12 billion in capital investment and $18 billion in trade surplus.
During the same period, more than 308,000 Canadians are directly employed in mining, exploration and mineral processing, with many more in related industries.
The Government has taken concrete steps to support the mining industry in Canada, including extending the Mineral Exploration Tax Credit for another year, supporting the Targeted Geoscience Initiative and Geo-mapping for Energy and Minerals program. As well, we are working to significantly improve our regulatory system for major projects to move towards one project, one review.
This support for the industry attracts investment and sharpens our global competitiveness.
As an example, for every dollar we spend on public geoscience, the industry invests, on average, five dollars in new exploration.
The exploration and mineral investment climate in Canada is on a positive trend and this is expected to continue as a result of increasing global demand for minerals and metals driven by the emerging economies, such as China and India.
We will continue to work closely with Canada’s mining sector to boost competitiveness and support mining communities.
The importance of forestry
Now, just like the mining sector, forestry represents the backbone and lifeblood of so many communities even though it has been particularly hard hit by the global downturn.
So our Government is making unprecedented investments to help transform Canada’s forest sector towards higher-value activities and global markets.
We’re seeing good return on our Government’s investments in initiatives such as Canada Wood and Wood First. These have contributed to huge growth in exports to China, which now represent the second largest destination market for Canadian wood products.
With the research and programs that this government has supported, Canada has put itself at the global forefront in developing and implementing the game changing technologies that will open up large new bioeconomy opportunities for Canada’s forest sector and the hundreds of forest communities that depend on it.
Our growing energy economy
But where I really want to focus my remarks is on energy, because the energy sector is a cornerstone of our national economy.
It is a dynamic industry with the right resource base, workforce, innovative spirit, leadership, and it’s in the right environment to thrive like it never has before.
In an energy-hungry world, our country is the second-largest producer of uranium. We are the third-largest producer of natural gas and hydroelectric power. Canada is the world’s sixth-largest producer of oil.
We also have a growing portfolio of renewable energy, including solar power, tidal energy, biofuels and wind.
The energy sector is the single largest private investor of capital, representing over 20% of total new capital investment at $81 billion. It accounts for about 7% of our gross domestic product.
Energy has always been identified with opportunity in Canada – connecting workers with good-paying jobs and products with markets. In 2010, total direct employment was 271,000. It also supports hundreds of thousands of jobs in other sectors across the country, such as construction, manufacturing and financial services.
In short, we have enormous energy assets that are generating enormous economic wealth right across the country.
Economic Benefits of the oil sands
Most Canadians don’t realize that we are blessed with 174 billion barrels of oil reserves, the third-largest proven oil reserve in the world. Only Saudi Arabia and Venezuela have more. Of these, 170 billion barrels, or more than 97%, are from the oil sands in Western Canada. With the advent of new technological breakthroughs, that number could go up to over 315 billion barrels of oil.
When most Canadians think of the oil sands, they think of Alberta. But the benefits of this vast resource extend well beyond Alberta’s borders – and well into the future.
Over the next 25 years, the oil sands are expected to support on average, every year, 480,000 direct, indirect and induced jobs and pump about $2.3 trillion into Canada’s economy according to the Canadian Energy Research Institute. And that does not include the impact of some major pipeline projects, which I will discuss in a moment.
Investing in our clean energy future
At the same time we are positioning Canadian industry to lead through innovation. Today, Canada is a world leader in the development of clean energy technologies.
Since 2006, the Government of Canada has invested more than $10 billion to reduce greenhouse gas emissions and build a more sustainable environment. This includes investments in green infrastructure, energy efficiency, clean energy technologies and the production of cleaner energy and fuels.
However, it is important to realize that non-hydro renewable sources of electricity, such as wind power, biomass and solar photovoltaic, only generate about 3% of electricity in Canada and globally. The International Energy Agency estimates that in 25 years, 80% of global energy demand will be met by fossil fuels.’ So we must to keep tapping our traditional sources of energy including hydrocarbons, hydro-electricity and nuclear.
Growing Ontario’s economy
Closer to home, our abundant resources are helping to grow Ontario’s economy.
In the past few years, oil sands operators have sourced billions of dollars worth of technologies, products and services from Ontario suppliers. Over the next 25 years, Alberta’s oil sands industry is expected to buy about $65 billion worth of goods and services from companies in Ontario. That economic activity is creating thousands of jobs and benefiting hundreds of companies here in Ontario.
Right now, there are about 35,000 people working in Ontario in jobs supporting the oil sands industry. Over the next 25 years, oil sands development could support an additional 10,000 jobs per year as more projects are developed and come on stream.
By 2035, it’s estimated that about 7% of the total jobs related to oil sands will be right here in Ontario. Cancard Inc., Aecon Industrial, Aberfoyle Metal Treaters Ltd., Felton Brushes Limited. These are just a few of the hundreds of companies that are helping to develop Alberta’s oil sands and strengthen Ontario’s economy.
Not only that but over the last 5 years, on average, annual oil and gas industry payments to governments (royalties, corporate income taxes, lease payments) were about $22 billion. That money directly supports Canadians’ quality of life by building roads and schools, supporting healthcare and funding cutting-edge research.
The strength of our natural resources economy
As many of you know the TSX and the TSX Venture Exchange are home to more of the world’s public oil and gas companies than any other exchange in the world.
Petroleum companies make up roughly 30% of the value of all shares traded on the TSX and Toronto Venture Exchanges.
That means that millions of Canadians are affected by the growth of the petroleum industry — either through employment or by owning shares of companies in their mutual funds, pension funds or RRSPs.
But it’s not only the petroleum industry. Last year, over half of the world’s equity financing for mineral exploration and mineral development was raised in Canadian stock exchanges. Exploration and mining companies accounted for 31% of the value of shares traded on the TSX and Toronto Venture Exchanges year to date. The Exchanges raised 60% of the world’s mining equity capital. They are home to 58% of the world’s public mining companies.
With our strong economic fundamentals, Canada is also creating an attractive and positive market for foreign investment.
Here’s another impressive statistic. The stock of foreign direct investment in the natural resource sectors has increased from $82 billion in 2001 to $198 billion in 2010. And Toronto is the hub of this flurry of investment activity in these industries.
Our growing export market for natural resources
Canada is one of the fortunate countries that benefit from both a modern industrial sector and a strong commodity sector.
So understandably we strongly believe in free trade and open markets. We eliminated tariffs on a broad range of machinery and equipment, and will eliminate the remaining tariffs on manufacturing inputs by January 1, 2015. This will make Canada the first tariff-free zone for industrial manufacturers in the entire G-20.
In Canada, we have a full range of economic assets that has allowed us to tap into key export markets. Today, Canada is the third largest exporter of forest products in the world. In 2010, minerals and metals accounted for 21% of Canada’s total exports. They were Canada’s leading export to China, accounting for 35% of Canadian exports to that country. According to Export Development Canada, Canada’s mining industry is “poised to enjoy another record-breaking year of export growth in 2011.”
We are a leading supplier of important minerals and metals, such as uranium, nickel, salt, and zinc. Last year, we produced $5.7 billion worth of potash and $5.0 billion worth of iron ore. And we also have future prospects for rare earth metals, which are critical for the energy sources of the future.
We are also the Number One supplier of all forms of energy to the United States.
Indeed, Canada’s vast energy resources hold the key to North America’s energy security. More than 20% of U.S. oil imports – about 2.5 million barrels a day of crude oil and petroleum products – already comes from Canada. This makes us America’s biggest supplier of crude oil and petroleum products. And this will only grow as Canadian oil production expands.
Our long-term supply of oil is critical in a world where supply risks are growing due to unstable geopolitics, declining production and uncertainties in key oil-producing regions. On the other hand, demand for oil in countries like China and India is growing rapidly.
Diversification of markets and Keystone XL
So the opportunities are immense, but to achieve our full potential we have to make major investments in infrastructure. In other words, we must increase production and get our product to market.
You do not need to be reminded that the global economy remains fragile. That’s why it’s critical that we work together with industry to secure new export markets.
An example is the Keystone XL pipeline which our Government strongly supports. It would allow Canada to increase its penetration of the U.S. market and yield higher netbacks for producers. Once completed, this pipeline would stretch nearly 2,000 miles from Alberta to Texas, transporting up to 700,000 barrels a day of Alberta crude to refineries on the Gulf of Mexico and the energy-hungry U.S. market.
The U.S. State Department recently released its positive final Environmental Impact Statement and confirmed that pipelines remain the safest, most efficient way to move energy products in Canada and the United States. In fact, this pipeline will be the safest pipeline ever built in the United States according to the EIS.
In spite of the noise, we are making significant headway in conveying the considerable advantages of Keystone to the US in terms energy security, jobs and economic growth. We are also presenting facts about the science and the environment that are dispelling myths and misinformation.
If approved, the oil sands product carried through Keystone XL would support over 140,000 additional jobs per year in Canada, and over $600 billion more in economic activity over the next 25 years.
Our Government respects the American permit process and looks forward to a final decision by the end of the year.
Tapping international markets
However, because the US is basically our only customer, tapping international markets is also essential as we continue to grow our status as a global energy superpower. Currently, most Canadian crude oil production is transported by pipeline to markets in Ontario, Western Canada and the central U.S that are experiencing lower crude oil prices. Crude oil prices are significantly higher in markets served by tanker ships, such as coastal markets in Europe, Asia, and even North America – for example, the U.S. Gulf Coast. Furthermore, emerging markets in Asia are becoming increasingly important. Just recently, China surpassed the U.S. as the world’s largest consumer of energy.
So it is strategically important for Canada to create infrastructure to diversify its customer base and supply refiners that are not currently supplied by Canadian oil.
It is clear that the strength of economy is directly linked to our natural resources sectors. They are of great importance to our financial markets and play a vital role in our trade and exports.
That’s why, in just a few days, I will be traveling to London to talk to international investors about why they should have confidence in Canada’s natural resources sector. I will also be heading to Paris for the International Energy Agency Ministerial Meeting, to meet with world energy ministers and discuss such important issues as sustainability and energy security. Later, I plan to take to international investors about opportunities in forestry, mining and energy and opening doors to more trade and exports.
Everywhere, I will continue to send a clear signal to the world that Canada is a safe, responsible and reliable supplier of energy and resources.
Ladies and gentlemen, we have huge resources that can ensure continued prosperity for across Canada.
We all stand to benefit enormously when we develop them in a socially and environmentally responsible way. But develop them we must.