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High hopes Canada’s new Liberal govt will breathe new life into struggling resources sector

20th November 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Canada is holding its breath while 18 rookie federal Ministers are being briefed by their respective departmental officials as the country turns a new leaf following the recent federal election that saw the Liberal party form a majority government, ending a decade of Conservative rule.

Soon after being sworn in, some members of the new 30-strong Cabinet moved fast to propagate immediate federal policy changes, while others with no federal experience, and some with little previous exposure in the portfolios they now oversee, took time to get up to speed with their respective portfolios.

Shortly after being sworn in as Canada’s twenty-third Prime Minister, Justin Trudeau announced a new gender-equal Cabinet that includes Manitoba MP James Carr as Minister of Natural Resources and Ottawa MP Catherine McKenna as Environment and Climate Change Minister.

Carr is a former editorial board member of the Winnipeg Free Press, a former Liberal Member of the Manitoba Legislative Assembly and had led the Business Council of Manitoba. He was an oboist with the Winnipeg Symphony Orchestra.

According to Canada West Foundation head Dylan Jones, Carr is known for hammering out common ground when environmental and economic concerns clash, the Calgary Herald reported on November 4.

Despite being relatively unknown to Canadian oil producers and the minerals industry, Carr’s priorities will entail helping structure the Liberal government’s approach to pipelines and global energy market access, while also dealing with the 15% Mineral Exploration Tax Credit (METC), which has helped Canadian miners raise billions of dollars for exploration.

Natural Resources Canada (NRCan) declined to comment on policy-related questions posed by Mining Weekly, stating that Carr was using his first full week in office to receive a number of briefings from departmental officials.

Carr will also sit on the Cabinet committee that is responsible for government spending and human resources, as well as on the committees on environment and climate change and energy, and on world and public security. He will also sit on the Cabinet subcommittee on US relations.

NRCan is charged with creating a sustainable resource advantage for Canadians – now and in the future – through collective efforts by all stakeholders in the natural resources sector. According to the Ministry, each portfolio agency will play an important and unique role to help ensure a strong resource future for Canadians through promoting growth, competitiveness and environmental leadership.

Meanwhile, former executive and Toronto MP Bill Morneau has been appointed Canada’s new Finance Minister, while MP and former Liberal leader Stephane Dion has taken on the high-profile foreign affairs portfolio. Jody Wilson-Raybould becomes the country’s first aboriginal Minister of Justice.

Other notable members of Trudeau’s Cabinet are Public Safety Minister Ralph Goodale, Defence Minister Harjit Singh Sajjan, Transport Minister Marc Garneau and Health Minister Jane Philpott.

Trudeau has named himself Minister of Intergovernmental Affairs and Youth. Provinces are expected to have greater engagement with the Prime Minister, as he tries to implement policy on a more collaborative basis.

In one of the first acts of the new government, Innovation, Science and Economic Development Minister Navdeep Bains has unmuzzled Canadian scientists, announcing that government scientists and experts will be able to speak freely to the media and the public about their work – something they were denied under the previous dispensation.

“We are working to make government science fully available to the public and will ensure that scientific analyses are considered in decision-making,” he stated recently.

Policy Change?
The Liberal election platform placed strong emphasis on clean technologies, calling for a price to be set on carbon emissions linked to climate change.

The Liberals indicated in their election platform that carbon pricing would be left to the provinces, with the federal government taking on a coordinating and implementation role.

The Liberals also showed less enthusiasm to win US support for Canadian energy infrastructure operator TransCanada’s Keystone XL pipeline than the previous Conservative government.

Trudeau suggested that pushing the development of Alberta’s oil sands was not top of mind for federal policy when he stated that “the government of Canada will work hand in hand with provinces, territories and like-minded countries to combat climate change, adapt to its impacts and create the clean jobs of tomorrow”, on the day US President Barack Obama announced that he had rejected the conduit.

He had previously stated that he would consider supporting the Keystone project, which would provide a critical link between Canada’s Alberta oilpatch and the US Gulf Coast refineries, reducing the discount Canadian producers receive to the West Texas Intermediate oil price.

The Liberal government is also perceived as likely to support the Energy East pipeline to New Brunswick and the expansion of Kinder Morgan’s Trans Mountain pipeline to Vancouver. One pipeline Trudeau has expressed opposition to is the Northern Gateway pipeline, which, he believes, would threaten the pristine British Columbia coast.

The Canadian Association of Petroleum Producers has expressed its commitment to working constructively with the Liberal government to advance initiatives that are important for the petroleum industry and Canadians. These include enhanced market access “by all means in all directions”; maintaining a timely, efficient regulatory and environmental review processes; engaging with aboriginal communities on industrywide issues; and balanced and realistic solutions to address climate change.

“The oil and natural gas sector is crucial to the economic health of our country, as it creates jobs, provides significant government revenues and helps create prosperity for all Canadians,” president and CEO Tim McMillan noted in a recent statement.

The energy sector might also be impacted on by any potential repeal of energy reforms announced as part of the Conservatives’ Economic Action Plan 2012, which is aimed at addressing Canada’s oil and gas industries’ limited international market access.

Auspice Capital CEO Tim Pickering tells Mining Weekly he is also optimistic about potentially improving relations between Canada and its southern neighbour, as a result of the federal Liberal regime change in Canada, noting that nothing much will change until after the 2016 US election. Until then, there will remain a lot of uncertainty until the politics have settled somewhat.

The Liberals have promised to launch an immediate public review of Canada’s environmental-assessment processes. Based on this review, government will replace former Prime Minister Stephen Harper’s changes to the environmental-assessment process with a new, comprehensive, timely and fair process that aims to restore robust oversight and thorough environmental assessments.

The new government will also ensure that decisions are based on science, facts and evidence; serve the public’s interest; provide ways for interested Canadians to express their views and for experts to meaningfully participate in assessment processes; and require project proponents to choose the best technologies available to reduce environmental impacts.

In their election platform, the Liberals promised to act swiftly to streamline the federal regulatory process toward a ‘one project, one review’ system, setting timelines for hearings and assessments, extending the term of natural gas export licences from 25 to 40 years and finalising an agreement with Quebec over petroleum development in the Gulf of St Lawrence.

The Liberals have vowed to “make environmental assessments credible again”, and proposed to modernise the National Energy Board, ensuring that its composition reflects regional views and has adequate expertise in fields, such as environmental science, community development and Indigenous traditional knowledge.

The Liberals assert that the Conservatives’ changes to the Fisheries Act and the elimination of the Navigable Waters Protection Act had weakened environmental protection measures. “We will review these changes, restore lost protections, and incorporate more modern safeguards.”

McKenna will also be called upon immediately to support the Prime Minister at the December United Nations Climate Change Conference, in Paris.

Policy Development
The Liberal election platform included policies and commitments of significant interest to the Canadian mining industry. These include investment in innovation, infrastructure, education and skills training, notably for Aboriginal Canadians, a critical partner of Canada’s mining sector.

While federal government oversight of the mining sector was robust and unchanged by recent federal reforms, the Mining Association of Canada has pointed out that opportunities exist to improve efficiencies and federal-provincial coordination.

Prospectors & Development Association of Canada (PDAC) president Rod Thomas says there are several elements of the Liberal platform that are of interest to the mineral exploration and development industry. In particular, the PDAC is eager to work with the new government on the proposed Canada Infrastructure Bank and the role it might play in supporting the development of infrastructure in Canada’s northern and remote regions.

“The infrastructure deficit in these regions creates major obstacles to exploring and operating in these regions. Strategic infrastructure investments are necessary for mineral development in these regions and [to realise] the associated economic benefits [of] development,” Thomas emphasises.

He also points out that the METC is a critical policy tool that has helped Canada become a world leader in mineral exploration investment. A strong mineral exploration sector is necessary to support the Canadian minerals industry, which has contributed about C$54-billion to the country’s gross domestic product and employs more than 380 000 workers across the country.

“The Liberal Party has been supportive of flow-through financing and understands the need for greater certainty in financing given project timelines. We are confident that the Liberal government understands the unique needs of the mineral exploration sector to compete on the global stage and the important role the METC plays in maintaining Canada’s competitive advantage.

“As the prolonged downturn in exploration financing persists, we will work with the Liberal Party on enhancements to the METC to return liquidity to the sector,” Thomas says.

The 15% METC for flow-through share investors was first introduced in 2000 by the previous Liberal government and the Liberals are expected to continue to support this tax measure to encourage increased investment in the struggling mining industry.

The PDAC also encourages the new government to support the establishment of the Cooperative Capital Markets Regulatory System, which the association sees as instrumental in helping its members succeed in financing their exploration activities.

“The cooperative system seeks to create a harmonised regulatory system for our industry across Canada that is efficient and will help contribute to economic growth. The current capital markets regime is fragmented, inefficient and costly. The establishment of a cooperative system provides an opportunity to implement important reforms that will facilitate cost- effective capital raising for small, medium-sized and microenterprises, including junior mining companies,” Thomas says.

The 30 newly appointed public servants will get to work on December 3, when Parliament is to be recalled. Trudeau will deliver his throne speech the next day, outlining his government’s agenda for the session.

Edited by Creamer Media Reporter

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