Canada’s ‘dig and deliver’ economy – by Robert McGarvey (Troy Media – June 10, 2014)

http://www.troymedia.com/

There has been a shocking collapse in Canada’s secondary economy

EDMONTON, AB, Jun 10, 2014/ Troy Media/ – The Ontario election is entering the home stretch: all three party leaders are in there pitching, offering the electorate ‘visions of sugar plums’ or variations on the theme. But none of the leaders dares address the most important issue: where are we going as a nation?

Political discourse in Canada these days is confined to the soothing and the trivial. It seems Canadians will tolerate only comforting noises. Meanwhile the country is on autopilot, rapidly being marginalized, reduced to a ‘dig and deliver’ Canada.

Economists have joined this soothing choir. On the surface, they assure us, the economy is fine. Canada is solidly middle-of-the-pack. Regrettably, a quick look beneath the covers reveals a very different, very troubling story of decline.

Consider the trade figures. On the surface figures vary month to month, but range within acceptable limits. On the other hand, beneath the surface, the figures reveal a frightening collapse in export trade. Doug Porter, BMO’s chief economist did us all a favour when he stripped out energy sector exports from the Canadian trade numbers. The results were shocking. Porter’s numbers have exposed a shocking collapse of Canada’s secondary economy.

According the Canadian Centre for Policy Alternatives, the collapse of Ontario’s secondary economy, its manufacturing sector, is systemic.

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Regulators should get out of takeovers – by Adrian Myers (Globe and Mail – June 12, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Can an endangered wild animal determine the fate of a hostile takeover bid? In Canada, the answer seems to be “yes.”

On May 22, an ocelot was spotted on the site of Augusta Resource Corp.’s Rosemont copper project and speculation is that this wildlife sighting could be a boon for HudBay Minerals Inc.’s hostile bid for Augusta. The U.S. Fish and Wildlife Service will now have to conduct further analysis of the project site, which means Augusta will likely not receive final development permits until the third quarter.

While this delay may seem minor, it may have a major effect on the outcome of HudBay’s bid by putting final permitting on the wrong side of the British Columbia Securities Commission’s (BCSC) arbitrary poison pill cease-trade deadline.

This reveals a fundamental issue with Canadian securities regulation: Regulators, not shareholders, are the ones who determine whether a hostile takeover succeeds or fails. By forcing companies to abandon takeover defences after arbitrary periods of time, regulators leave shareholders vulnerable not just to hostile bidders but to unexpected turns of fate, feline or otherwise.

Such deadlines mean that the most powerful voice in the debate over the fate of Augusta may not be the shareholder’s proxy ballot, but a dwarf leopard’s meek roar.

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RoF development likely to get C$1bn boost as Wynne takes majority – Henry Lazenby (MiningWeekly.com – June 13, 2014)

 http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – Infrastructure development in the prospective Ring of Fire (RoF) mining camp in Ontario’s far north is likely to get a C$1-billion boost after the Ontario Liberal Party took a majority win in provincial polls held on Thursday.

At the end of April, the then minority Liberal-lead provincial government announced a massive $1-billion set aside in its failed budget to develop strategic all-season industrial and community transportation infrastructure in the RoF.

Former Minister of Northern Development and Mines, Michael Gravelle, beseeched the federal government to match its contribution and throw its weight behind the development of what had been billed as a “project of national significance”.

However, with no formal plan in place, how the money was to be spent remained unclear, and the private sector was backing opposing modes of transport to reach the undeveloped mine camp, and transport the minerals to market.

In their campaign platform, the Liberals have promised to establish a development corporation within 60 days of being re-elected.

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Hillcrest: Canada’s forgotten disaster – by Valerie Berenyi (Calgary Herald – June 13, 2014)

http://www.calgaryherald.com/index.html

 100 years ago 189 died in the depths of an Alberta coal mine

They say you don’t go
Say you don’t go down in the Hillcrest Mine
‘Cause it’s one short step

You might leave this world behind
And they say you don’t go
Say you don’t go down in the Hillcrest Mine

—James Keelaghan’s ballad Hillcrest Mine

Coalminer Charles Elick may have thought himself a lucky man. He survived the Frank Slide in 1903 when a massive rockslide buried part of the little town of Frank in southwestern Alberta. He and co-workers at a nearby mine were trapped by the rubble, but managed to free themselves after digging for 13 frantic hours.

Charles then relocated his growing family to the nearby mining town of Hillcrest and went back underground. His luck ran out on the sunny morning of June 19, 1914, when he said goodbye to his wife Julia, pregnant with their fifth child, and went off to work at the Hillcrest Mine. Two hours after the morning shift began, a methane gas and coal dust explosion ripped through the mine, killing Charles and 188 other men.

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Northern Gateway vs. Crowd science – by Peter Foster (National Post – June 13, 2014)

The National Post is Canada’s second largest national paper.

Novice Natural Resources Minister Greg Rickford, while expressing the Federal Cabinet’s infinite concern for a balanced appraisal of the Northern Gateway pipeline, which is due by next Tuesday, managed to leave the impression in New York this week that the decision might be delayed, even as he was also quoted as saying that it was “relatively straightforward.” Officials were left to unfuzzify his remarks.

This is hardly the time for communications cock-ups, particularly given that the Harper government is coming under predictable pressure as it prepares — presumably — to approve the proposed $6.5-billion pipeline from the oil sands to the coast of B.C. Why would the Cabinet want any delay? Is Stephen Harper aspiring to look like President Odithers on Keystone XL?

Northern Gateway is at least as politically fraught for Mr. Harper as Keystone XL is for Mr. Obama, but in economic terms the Enbridge proposal is of far greater economic significance for Canada than Keystone XL is to the U.S.

Liberal Opposition leader Justin Trudeau called upon the Prime Minister this week to “do the right thing and just say no” to the pipeline, which in turn gave Mr. Harper the opportunity to conjure up the ghost of Mr. Trudeau’s father, Pierre, perpetrator of the 1980 National Energy Program, and suggest that opposition to the oil industry might be in the Liberals’ DNA.

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Kathleen Wynne will have to show what kind of premier she really is – by Adam Radnowski (National Post – June 13, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Kathleen Wynne has achieved what even many of her fellow Liberals doubted was possible.

A year-and-a-half after inheriting from Dalton McGuinty what seemed to be the flaming wreckage of a decade-old government, Ms. Wynne’s party entered this campaign just hoping to cling to power. Instead, their rookie leader won them back a majority.

Now, having proved herself a remarkably successful campaigner, Ms. Wynne will have to demonstrate what kind of premier she really is. And the big catch is that the way she won back office, by rallying the centre-left (and a whole lot of unions) behind her in opposition to Tim Hudak’s Progressive Conservatives, has set up expectations she is going to have a hard time meeting as she returns to the cold realities of a government deep in deficit.

It may take a little while, for both her and her supporters, for those realities to sink in. Ms. Wynne has vowed to reintroduce promptly the budget the Tories and NDP rejected to kick-start the election, which means she will get to make good on her promises to launch a new provincial pension plan, increase spending on social programs, invest in infrastructure, and try to stimulate economic growth through direct business investment.

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Comment: How to break the resource deadlock – by Bill Gallagher (Financial Post – June 13, 2014)

The National Post is Canada’s second largest national paper.

Aboriginal communities right across the country will have likely won 200 legal rulings in the resources sector by the end of this year. This unprecedented winning streak has become the central plank in the native empowerment ‘toolbox’ and it outclasses the toolboxes of governments and industry, both of whom now seem to accept resource project delays as an economic fact of life.

Indeed the cumulative negative impact on our resources future is the biggest under-reported business story of the decade. Over the past year, I have been promoting a series of recommendations at resource symposiums to reverse this unhappy trend.

Before delving into my suggestions however, it is important to note that the Federal Government is pretty well out of the resources business. The provinces rule that roost, the northern Territories have been sufficiently devolved in order to run their affairs, and even offshore energy plays are managed under joint boards. The Feds are left with mandates in (some) environmental approvals, climate change protocols, species-at-risk, marine transportation and national infrastructure. None of these drive resource projects.

It’s precisely because Ottawa is out of the resources business that it needs to get into it. And the mechanism for returning to the fore requires the creation of an entirely new federal ministry that will act as a clearing-house. Nothing on this scale exists.

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Kathleen Wynne’s reality: Ontario’s massive debt cannot be ignored – by Theresa Tedesco (National Post – June 13, 2014)

The National Post is Canada’s second largest national paper.

Now that voters have returned Kathleen Wynne to power, the premier will need to find a way to manage a debt load that is larger than California’s while continuing to keep the credit rating agencies mollified long enough to avoid a dreaded downgrade.

With a net debt of $267.5-billion that is growing at a faster rate than the economy, the challenge is just beginning for the party that emerged victorious from the provincial election. “They are still going to be facing pressures from the credit agencies to get the province’s fiscal finances in order,” said Mazen Issa, senior Canada macro strategist at TD Securities in Toronto. “There’s no way to avoid it. The reality is there and it can’t be wished away.”

Put simply, Ontario is increasingly dependent on tapping lines of credit because it spends more than it collects. Currently, the province pays $11-billion annually in interest payments to finance its debt — money that is not going toward paving roads, building public transit, hiring more teachers and shortening wait times in hospitals.

During the 40-day election campaign, which focused predominantly on the economy, the three main parties offered a stark choice: Conservative leader Tim Hudak vowed to cut 100,000 public-sector jobs over four years and lower corporate taxes to kick-start the creation of one million jobs in eight years while balancing the budget in two.

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World’s largest asset manager rails against companies’ short-term thinking – by Boyd Erman (Globe and Mail – May 24, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Larry Fink is in an odd spot. He runs BlackRock Inc., the world’s biggest money manager. His New York-based company oversees assets greater than 20 times those of the mammoth Canada Pension Plan Investment Board. He should have more influence than just about anybody over how companies behave.

Yet he lacks the big stick that other fund managers have when they talk to chief executive officers. He can’t threaten to sell shares of a company when he doesn’t like its strategy.

Most of the more than $4-trillion (U.S.) that BlackRock oversees on behalf of clients is in index funds that passively track market benchmarks. Because it can’t sell individual stocks in index funds, BlackRock is, by necessity, in it for the long haul.

So instead of threatening, Mr. Fink cajoles. He writes letters. Very, very well-read letters. His latest went to the heads of all the biggest companies in the United States and Europe, hundreds of them, urging CEOs to think long term.

“As the largest index player in the world, we have to own companies, even if we hate ‘em,” Mr. Fink said in an interview on a recent visit to Toronto.

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Corruption in Canadian organisations ‘disturbingly high’ – EY survey – by Henry Lazenby (MiningWeekly.com – June 11, 2014)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – One in five Canadian executives believe that bribery and corrupt practices take place widely in the country, advisory firm EY’s latest Global Fraud Survey has found.

“That’s disturbingly high,” EY partner and Canadian fraud investigation and dispute services leader Mike Savage said.

He noted that corruption interfered with fair competition for business and, to overcome that, companies needed to create a culture where ethical behaviour was at the core of their operations – not just at home in Canada, but also at their overseas operations.

“They also need to encourage people to speak up if they think something isn’t right,” Savage said. The survey found that while 74% of Canadian organisations had whistleblowing hotlines in place, this number was still much lower than countries such as the US (96%) and the UK (82%).

The head of corruption risk management at Canadian risk mitigation firm CKR Global Margaret Wilkinson recently told Mining Weekly Online that the resource extraction industry as a whole was at an extreme risk to bribery and corruption of officials, especially owing to the often isolated and foreign underdeveloped locations of the companies’ projects.

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Palladium futures hit highest level since 2001 amid South African mining strike – by Peter Koven (National Post – June 12, 2014)

The National Post is Canada’s second largest national paper.

Palladium futures have soared to their highest levels since early 2001. And with no end in sight to a key supply disruption, many experts predict there is still room for prices to run.

Prices for the silvery-white metal have jumped about 20% this year, with the key futures contract hitting a 13-year high on Wednesday of US$864.60 an ounce. The main reason is a strike in South Africa, which began in January and is now the longest mining strike in the country’s history.

Recent talks to end the dispute failed, and it is not clear when they will restart. South Africa accounts for nearly 40% of global palladium production, second only to Russia.

“It’s quite conceivable that palladium could really pop if the mines in South Africa don’t restart soon,” said Patricia Mohr, vice-president and commodity specialist at Scotiabank.

Not surprisingly, uncertainty about Russia is also causing jitters in the palladium market. There are some concerns that sanctions could be placed on Russian companies — including key palladium producer OAO Norilsk Nickel — in response to the seizure of Crimea.

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Joe Oliver says national securities regulator could become reality by fall 2015 – by Gordon Isfeld (National Post – June 10, 2014)

The National Post is Canada’s second largest national paper.

MONTREAL — Canada’s finance minister believes the government’s long-sought goal of a single national securities regulator could become a reality by the next federal election, scheduled for the fall of 2015.

“I think it is very positive that Canada, British Columbia and Ontario entered into this agreement in principle [on a national regulator]. We’re expecting there will be a number of other provinces coming on board soon,” Joe Oliver told the Financial Post on Monday.

“I don’t use the word ‘soon’ unless I mean ‘soon’. The Ontario election [set for Thursday] obviously delayed the matter. But it really makes sense for everyone to join in.”

Mr. Oliver, the former natural resources minister who was named finance minister in March, was speaking on the sidelines of the International Economic Forum of the Americas in Montreal.

“I think it will be well on its way” by the next federal election, he said in an interview. “It won’t be viewed as a promise as much as an accomplishment, in my opinion,” added Mr. Oliver, 73. “I believe we will have achieved a lot. I’m not saying every province will be in — although the door is always open,” he said.

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Next Ontario government will only have bad news to deliver as debt pile grows – by Jack M. Mintz (National Post – June 10, 2014)

The National Post is Canada’s second largest national paper.

No matter who wins the Ontario election, the newly elected government will be faced with a fiscal hole that gets only wider and deeper. If the province is to gets its fiscal situation under control, either revenues need to increase or spending restrained by billions. There are no quick and easy solutions.

Let me detail Ontario’s house of debt to understand the gravity of the situation. The 2014 Liberal budget projected gross debt is expected to increase from $296-billion in 2013-14 to $311-billion by 2014-15. After subtracting financial assets, net debt will rise from $269-billion in 2013-14 to $289-billion in 2014-15.

Ontario’s net financial liabilities will be $20,500 per person or $82,000 for a family of four. This mortgage is in addition to federal, local and household debt liabilities borne by Ontario residents. It does not include other unfunded liabilities such as health care and elderly benefits that will increase sharply as baby boomers retire.

The $20-billion increase in net debt this coming year is a good measure of the real Ontario deficit. The debt problem is a bigger issue than suggested by a recent “educational” analysis provided in the Globe and Mail, which focused on the $12.5-billion operational deficit of the province, ignoring net liabilities to finance broader government operations, including $10-billion in capital spending.

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San Gold Corp’s new chief Greg Gibson sees smaller mines as key to survival – by Peter Koven (National Post – June 11, 2014)

The National Post is Canada’s second largest national paper.

San Gold Corp.’s new chief executive faces a straightforward challenge: mine much less gold, and make it profitable.

Greg Gibson was named CEO of San Gold on Tuesday, a formerly high-flying company that has fallen into a cycle of losses and liquidity problems like many other small gold miners. He said in an interview that his mandate is to shrink output to where it should have been in the first place.

“I see a small producer that always had ambitions to be a big producer. And when you take small mines and try to make big mines out of them, they don’t work,” Mr. Gibson, 52, said.

Winnipeg-based San Gold is one of many small gold miners operating in Canada that emerged last decade, when gold prices were going up every single year. In order to attract investors and capitalize on rising prices, some of these firms set aggressive production targets. San planned to churn out more than 100,000 ounces a year from its Rice Lake mine in Manitoba.

“When you went to see the fund managers, the more ounces you could tell someone you were going to discover, the bigger the cheque you got,” Mr. Gibson said.

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Vancouver company pitches $10B oil sands refinery on the B.C. coast it says would be ‘world’s greenest’ – by Claudia Cattaneo (National Post – June 11, 2014)

The National Post is Canada’s second largest national paper.

CALGARY – For a province that likes natural gas a lot more than oil, British Columbia is attracting lots of oil plans to link growing production in Alberta with Asian markets.

The latest one is a $10-billion oil sands refinery on the northern coast headed by a Miami-based telecom executive for Mexico’s Groupo Salinas and using engineers from Italy.

Vancouver-based Pacific Future Energy Corp. said Tuesday the refinery, which could be sited in the Prince Rupert area, would be built in partnership with First Nations and be the world’s greenest by using advanced European refining technology.

It would take bitumen from Canada’s oil sands and process it into gasoline, diesel, kerosene and other products that would be less harmful to the environment if there is an accident. It would also capture and store greenhouse gases.

“This is a plan that absolutely must happen,” said Samer Salameh, chairman of Pacific Future Energy and head of telecommunications businesses for Groupo Salinas, a large conglomerate based in Mexico owned by billionaire Ricardo Salinas with more 100,000 employees and operations in 12 countries.

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