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News and Opinions Highlights - November

  • Government of Canada announces pipeline decisions – The Government of Canada has announced decisions on four proposed pipelines in Western Canada. On October 31, the Government approved TransCanada’s NOVA Gas Transmission Project. On November 29, Ottawa conditionally approved Kinder Morgan’s Trans Mountain expansion and Enbridge’s Line 3 Replacement projects, but rejected Enbridge’s Northern Gateway Pipeline. The approvals were applauded by many in Alberta and Saskatchewan, who hope these decisions will spur the creation of jobs in the oil sands and elsewhere. The decisions were swiftly condemned by some First Nations groups whose lands could be affected by the pipelines, as well as Vancouver Mayor Gregor Robertson.
  • Line 3 pipeline to be built in Saskatchewan – Evraz North America applauded the federal government’s decision to approve the construction of both the Kinder Morgan Trans Mountain expansion and the Enbridge Line 3 projects. Evraz announced that the majority of the pipe for the Enbridge Line 3 replacement project will be made at its Regina facility. Evraz is investing over US$220 million to upgrade the steel production capabilities at the Regina site. Because of the facility’s low emissions profile and its proximity to the Line 3 route, making the pipeline in Regina minimizes the project’s carbon footprint.
  • Competitiveness of Alberta’s royalty regime – A recent paper by the University of Calgary’s School of Public Policy found that the Government of Alberta’s changes to the royalty system for conventional oil production, which come into effect in 2017, will create a more lucrative environment for investors in this sector. They will also help to move Alberta from one of the highest to one of the lowest marginal effective tax and royalty rate (METRR) jurisdictions globally, increasing the province’s competitiveness in comparison to both Saskatchewan and British Columbia. Under the current regime, conventional oil producers in Alberta face a METRR of 35 percent. This will be reduced to 26.7 percent once the new royalty regime comes into effect.
  • Magellan contract extended two years – The contract for Winnipeg-based Magellan Aerospace to build parts for the F-35 fighter jet has been extended for two years. The contract, with BAE Aerospace, is worth $70 million revenue to Magellan and employs 150 people in Winnipeg.
  • Tolko sells paper mill, preserving 300 jobs – On November 10, BC-based Tolko Industries announced the purchase of their mill in The Pas by Canadian Kraft Paper Industries. The purchase agreement, which will allow the mill’s 300 employees to keep their jobs, includes a five year wage cut, three year moratorium on pension-solvency payments, and a three-year municipal tax break. The mill was scheduled to close in December, and is the largest employer in The Pas.
  • US lobby group files petition asking for investigation of Canadian softwood shipments – The US Lumber Coalition, a lobby group representing US forest industry interests, filed a petition with the US Department of Commerce (DoC) requesting an investigation into Canadian softwood lumber shipments. The lobby group alleges that the system of stumpage fees charged by Canadian provinces for timber rights on crown land results in below-market costs for Canadian producers, and thus negatively impacts the US industry and its workers. The US and Canadian governments have been negotiating towards a new bilateral agreement on softwood lumber trade. The previous agreement expired in 2015, and a one-year standstill period on new trade sanctions expired on October 12, 2016. With the launch of a DoC investigation, Canadian producers could see countervailing duties imposed on US-bound softwood lumber shipments as early as Spring 2017. International Trade Minister Chrystia Freeland’s office issued a statement saying Canada “will vigorously defend the interests of Canadian workers and producers.” This is likely to take the form of petitions with the World Trade Organization and under the North American Free Trade Agreement. Both of these bodies ruled in Canada’s favour in past disputes over softwood lumber. In a statement, BC Minister of Forests, Lands and Natural Resource Operations Steve Thomson said, “We encourage the US government to review previous cases and determine that the US industry allegations against Canada and B.C. are unfounded.”
  • GE Digital buys B.C. startup for US$153 million – Bit Stew Systems, a Vancouver-based software developer in the industrial-Internet-of-Things sector, has been acquired by General Electric for its GE Digital business. The deal is valued at US$153 million—one of the largest exits of a company backed by venture capital in Vancouver’s tech scene. It also represents the largest exit to date for early investor Yaletown Partners, which led Bit Stew’s $5.4-million Series A round in 2013, generating a sevenfold return on that initial investment. GE says they will continue to expand from Vancouver, incorporating Bit Stew’s technology into its own industrial systems.
  • Saskatchewan CEO named Canadian Entrepreneur of the Year – Murad Al Katib, president and CEO of Regina-based AGT Food and Ingredients, was named this year’s Canadian Ernest & Young Entrepreneur of the Year. AGT is one of the largest suppliers of pulses in the world, growing to become a $1.7 billion-a-year business. Mr. Al Katib attributed the award to the exponential growth of pulse crops in the province transforming Saskatchewan into a global leader.