Northern Economist 2.0

Showing posts with label mining. Show all posts
Showing posts with label mining. Show all posts

Thursday, 3 August 2017

Economic News Around the North: August 3rd, 2017 Edition

Well, we are about to start a long weekend so why not stock up on some reading material related to the northern Ontario economy.  To start off, a couple of big picture items with important implications both economically and politically.

Why Canada would be directly in the way of a North Korean nuclear war. National Post. August 3rd, 2017.

It turns out the world is round after all and the shortest route to the United States from North Korea is a curve and the curve takes North Korean missiles right over Canada on their way to destinations like New York or Denver.  Looking at the map on this story carefully and one can see that the way to Chicago comes pretty close to Thunder Bay.  One wonders if the North Koreans are aware that Thunder Bay (actually the twin Lakehead cities of Fort William and Port Arthur) once styled itself as the up and coming  "Chicago of the North".  Hopefully, the North Koreans have updated their intelligence and will not get Thunder Bay confused with Chicago - not that it will really matter much if we head off into global thermonuclear war.  Where is President Trump's "Wall" when we really need it? I guess, we should all just move to Australia and hang out "On the Beach" with Nevil Shute.

Here in the north, we might want to use our enhanced political clout to get the Ontario government to take on North Korea. However, another story in the National Post is not too taken with the potential for two more northern Ontario riding.

Josh Dehaas: Ontario Liberals plans for two new ridings could violate the Charter and cost PCs the election, National Post, August 3rd, 2017.

In other news:

Thunder Bay Economy Sluggish-Conference Board of Canada. NetNewsLedger, August 3rd, 2017.

Personally, I think sluggish as a description of Thunder Bay's recent economic performance is a bit of an understatement.  However, there does appear to be a fair amount of recent hotel, condo and apartment construction so obviously all things considered a lot of people want to live in Thunder Bay either permanently or temporarily despite the economy and the bad national publicity.  The Economics Department at Lakehead just hired a new colleague so there is another addition to the local population (4 if you include family).  Welcome back to Lakehead Karl & family!

New $15 million plant opens in Timmins. Sudbury Star, July 20, 2017.

It is heavy industry tied to the mining sector.   A  Timmins-based speciality plant called The Bucket Shop for the creation and manufacture of custom heavy equipment buckets for front-end loaders, scoop trams, excavators and even dozer blades for mining and construction industries.  If you are in Timmins, put a visit to it on your bucket list.

Which way Sault Ste Marie? Northern Ontario Business. August 2nd, 2017.

Tom Dodds resigns from EDC.  Sault Star, August 1st, 2017.

Well, things are economically uncertain in the Sault so it is time for a new strategic approach to economic development. According to the story: " Under the new organizational flowchart, the EDC will handle business retention, attraction and expansion; export opportunities, infrastructure development, and tourism. The Innovation Centre will oversee technology and innovation development, provide support for tech companies and start-ups, run the Community Geomatics Centre, and handle special projects like the lottery and gaming initiatives, energy projects, and agricultural opportunities. The municipality, itself, has set up a Community Development Fund and will steer the development of a strategic plan, handle community promotion, arts and culture development and work on the labour front to attract newcomers and bring home ex-pats."

As an economist, restructuring your economic development approach is more of a political gesture designed to convey concern for the economy as economic fundamentals for the Sault like much of the north remain the same.  Still, I am not running for office and if I were I guess I would accept the need to look proactive.

If you are marketing your local economy, this is not good:

Sudbury lands 8th on list of bed-bug ridden cities. CBC Sudbury, August 1st, 2017.

Sault Ste. Marie came in 23rd out of 25.  For once, Thunder Bay did not make this type of list.

Sudbury is getting a new events center (not in the downtown) and an economist even suggests how it will be paid for - by taxpayers.

Robinson: how we'll pay for the events centre.  Sudbury Star. July 24th, 2017.

And as for the goings on in North Bay:

The hard numbers behind North Bay's population decline. BayToday.ca, August 2nd, 2017.

Well, that is all for this edition of  Economic News Around the North.  By the way, here is a great Pan Northern Link for news in general. Have a great long weekend!

Sunday, 9 July 2017

Economic Forecasts and the Impact on Northern Ontario's Economy: Overview and Assessment


Northern Ontario’s economy, with its traditional reliance on transportation and resource sector activities in the end relies on the international economy as a source of demand for its products.  With that in mind, it is helpful to see what the latest forecasts are for the world economy and the potential impact on northern Ontario.  FocusEconomics – headquartered in Barcelona – is a major international economic research and forecasting company that provides data and analysis on international economic indicators and produces economic forecasts and reports. It covers 127 countries, 12 global regions and 33 commodities.  It recently released its July 2017 Consensus Forecast for major economies.

Friday, 14 April 2017

Economic News Around the North: April 14th Edition

Well, we are heading into the Easter weekend.  Spring is a time of rebirth and who knows, after two decades of slow growth, perhaps the north's economy will finally resurrect itself in the third. On the other hand, Good Friday this year coincides with the anniversary of the sinking of the Titanic. Here are some of the stories that I felt were of economic significance for northern Ontario over the last week or so. 

Gas prices soar in city. TbNewswatch, April 13th, 2017.

Well the price of gas has shot up again, just in time for a long weekend but it is a phenomenon that hit the entire province.  If you want some insight on Canadian gasoline prices in general, there is an old post I did on gas prices on Worthwhile Canadian Initiative that also attracted quite a few comments that provided some interesting points.  The long and short, in my opinion, prices are higher because the companies can get away with charging more.  Price differentials across regions have converged over time and this may signify greater market power on the part of gas companies.

Alexander Henry one step closer to returning home. CBCThunderBay. April 11th, 2017.

There seems to be some support for relocating the former icebreaker Alexander Henry from Kingston to Thunder Bay's waterfront.  In principle, this will be an excellent addition to the waterfront as it can serve as the core exhibit for a transportation museum.  This might mesh in nicely with the plans for a grain museum which is being worked on by Nancy Perozzo's group.  As well, there are plans to relocate the Thunder Bay Art Gallery to the waterfront also.  When one looks at the restaurant development in the Waterfront area combined with the location of Magnus Theatre and the long-term plans to place an Events Centre in the area, one can finally see a substantial entertainment district coming into shape.  The one caveat - customers and money.  I know, presenting caveats and pros and cons does not go over well with local movers and shakers who prefer expressions of cheerful mindless optimism when it comes to economic development in the north but Thunder Bay's tax base is under stress and the city's population base and market size are limited.  Can Thunder Bay become a tourism destination with its central Canadian waterfront marked as "The Mid-Coast?"  Who really knows?

Thunder Bay taxi bylaw causes concern for council, taxi companies.  CBCThunderBay. April 11th, 2017.

Getting a taxi in Thunder Bay is a ordeal.  If you ever needed a taxi in the middle of a weekday afternoon on short notice, forget it as they are all engaged in "school runs". This is another example of how dependent even the private sector in northern Ontario is on public sector spending.  I won't even get into trying to get a taxi at the airport or late on a weekend after an evening out or the price.  Supply constraints have been very profitable for Thunder Bay taxi companies and by taking five years to re-write the taxi bylaws, Thunder Bay City Council has been aiding and abetting a cozy oligopoly.

Other Thunder Bay economic news:

First salty arrives in port. TbNewswatch. April 8th, 2017.

Grain shipments make for busy March at Thunder Bay port. CBCThunderBay. April 5, 2017.

Well, this has all been rather Thunder Bay centric to this point.  In other news:

Sudbury loses 400 jobs in March. SudburyStar.com. April 7th, 2017.

Yet, things are going to get better as the Canada Revenue Agency has announced it is adding 543 full-time jobs to the Sudbury tax centre.

Council sets criteria for location of new events centre. CBCNewsSudbury. April 12th, 2017.

Sudbury appears to be moving forward at a rapid clip with a site selection team in place.  However, four of the five members of the selection team appear to be directly related to Sudbury's municipal government with a consultant from PWC as the fifth.  It would have been useful from an optics point of view to have a more arm's length group of experts.  Apparently the criteria for site selection includes cost, economic impact and parking.  In the end, it is all about weighting the criteria and if parking carries the biggest weight, then one should expect the greenfield site outside of the downtown as the final destination.

Here are some interesting items from North Bay.

Casinos siphoned millions from Sudbury, Brantford and Thunder Bay in 2014-15. Nuggest.ca. April 12th, 2017.

And in another tourism infrastructure related story. ..

North Bay city council votes to keep Dionne house. CBCNewsSudbury. April 5th, 2017.

The only surprise here is that the City of North Bay was actually considering giving the historically significant house to a group that was going to move it to a "pioneer village" project 70 miles south of North Bay.  Why stop there, maybe they should consider moving it to Thunder Bay's waterfront - a nice plot of land between the yet to be completed hotel and the new condos?  

And in the relentless and ongoing efforts to attract new business activity via marketing techniques....

Invest Sault Ste. Marie website launched. SaultOnline. April 6th, 2017.

Sault needs to find gaming 'sweet spot'. SaultStar.com. April 9th, 2017.

And in Timmins, this story about the mining sector.

Gold is the new economic driver for Ontario mining. TimminsPress.com. April 12th, 2017.

There were a number of interesting comments made. I was particularly intrigued by the Red Tape Challenge - an Ontario government consultation program for mining asking for input on what could be done to make the mining industry work better with government.   Dealing with red tape by engaging in yet more consultation seems like a typically Ontario way to address questions of efficiency and regulatory barriers.  However, with respect to gold as a driver, according to the president of the Ontario Mining Association:
What has changed in Ontario in the last 10 years is that gold is now a larger contributor than nickel and copper. That’s new and it is a combination of the price of the commodities and the number of new discoveries of gold and the new investments around gold,” said Hodgson.

Have a nice long weekend.




Sunday, 19 March 2017

Economic News Around Northern Ontario: March 19th Edition

Well, another week has come and gone and there are many economic stories bubbling around northern Ontario and even farther afield with implications for northern Ontario.  For example, this morning's Thunder Bay Chronicle-Journal reported on upcoming talks between the forest sector and the federal government on preparing for the upcoming Canada-US softwood lumber negotiations.  However, little information was provided in the story as to what strategy options are being explored as Canada moves into negotiations with the Trump administration on this file.

Stakes high for forestry sector, Chronicle-Journal March 19th, 2017.

The policies of the Trump administration will soon also be front and center with respect to environmental funding dealing with the Great Lakes.  The budget proposed in the United States has put forth rather large cuts to program spending and one area that will have a direct impact on northern Ontario is what seems to be the complete elimination of $300 million dollars annually for the Great Lakes Restoration Initiative with plans shifting the responsibility onto state and local governments.  See:

Canadian politicians outraged at Trump Great Lakes funding cuts.  The Globe and Mail, March 17th, 2017.

In brighter news, while northern Ontario reports the lowest optimism when it comes to construction activity in the Ontario Construction Secretariat 2017 Construction confidence Indicator, it is nevertheless up from 2016 and part of that optimism is due to a number of post-secondary construction projects in Sudbury and North Bay at Laurentian University and Canadore College.  However, the Trump effect is again rearing its head here as: "Despite the boost in overall confidence, nearly half of the 500 contractors surveyed report they expect the Donald Trump presidency to have a negative or harmful effect on Ontario’s economy and construction industry. This sentiment is most acute in Windsor-Sarnia where 59 per cent of respondents believe Trump’s government will harm Ontario’s economy." See:

Post-secondary projects generate optimism in North Bay, Sudbury-survey. North Bay Nugget, March 16th, 2017.

In business activity and expansion news:

Explor Resources starts drilling program on Timmins-area property. Northern Ontario Business. March 16th, 2017.

Prime Gelato makes the leap to grocery stores and restaurant menus in Thunder Bay. CBC News. March 17th, 2017.

U.S. Coast Guard ready to break ice from Duluth to Thunder Bay. CBC News. March 15th, 2017.

Seminar offered to help local firms export to the U.S. Saultonline. March 14th, 2017.

When it comes to civic issues and municipal government, a couple of items.  The urban renewal legacy of the 1970s haunts us still.  In Thunder Bay, they are revisiting the future of Victoriaville Mall.  In the 1970s, both the north and south downtowns in Thunder Bay (corresponding to the old cities of Port Arthur and Fort William) received urban renewal makeovers that in the long run were less than successful.  The Keskus Mall in downtown Port Arthur was eventually demolished to make way for the Casino but Victoriaville which was built right on the main downtown intersection and permanently affected traffic patterns lingers on and apparently costs the City of Thunder Bay $500,000 annually.  Victoriaville hit tough sledding right off the bat in the recession of the early 1980s as its anchor store -the Chapples family store - went under.  Keskus did not lose its major retail anchor until the late1990s when Eaton's went under. 

Thunder Bay city council considers step towards Victoriaville mall demolition. CBC News. March 15th, 2017.

And in Sudbury, the big municipal fiscal issue is the contentious reorganization of its fire and paramedic services with a big meeting slated for March 21st.  For my take on the issue and links to some of the news stories, see my earlier blog post here.

In Sudbury mining news, see:

Vale to mothball century-old Ontario nickel mine. Mining.com. March 13th, 2017.

It is also Federal budget week with the budget coming down March 22nd and we will have to see what emerges specifically geared towards northern Ontario.  For my contribution to federal budget debate this week, see here. Have a great week. 


Tuesday, 7 March 2017

The Ring of Fire: Waiting for Ignition


There was an exchange in Ontario’s Legislature yesterday between MPP Norm Miller and Minister of Northern Development & Mines Bill Mauro regarding whether or not the government would “finally take a leadership role that will make the Ring of Fire a reality in Ontario?”  The minister responded that mineral exploration activity in Ontario was climbing and progress was being made and more specifically asserted that: “there are three other mines under construction in the province. But they want to spend their time focusing on one. There’s one not too far from my home community of Thunder Bay called the New Gold project. Speaker, right now it’s under construction and 600 people are working on a construction site. When that mine is open for the next 10, 20 or 30 years of its life, there are going to be 450 people working in that mine.”

My belief is that any full-blown development of the Ring of Fire is many years away given the ongoing negotiations with First Nations, the immense cost of transportation infrastructure to access the Ring of Fire as well as the state of resource and commodity markets.  However, it is worth examining whether there has been some progress in northern Ontario’s resource sector particularly when it comes to employment generation.  Figures 1 and 2 present employment in northern Ontario’s resource extraction sector as measured by Statistics Canada series  v91415810 (Northeast) and v91415829 (Northwest) on employment in Forestry, Fishing, Mining, Quarrying, Oil and Gas presented monthly from 3rd month 2001 to 1st month 2017.  

 

The results in Figure 1 show that while there is some substantial fluctuation in resource extraction over time with some large upswings, when a linear trend is fitted to the data the long-term performance is quite flat.  Indeed, average monthly employment was 21,500 in 2001 and 21,867 in 2016 – actually a 1.7 percent increase.   

 

Figure 2 is more interesting because it separates the employment data up into northeast and northwest Ontario.  While the northeast has trended up over time, the northwest has trended down.  Average monthly resource extraction employment in the northeast was 12,470 in 2001 and 17,892 in 2016 – an increase of average monthly employment over time of about 44 percent.  Meanwhile, the northwest has seen average monthly employment in resource extraction fall from 9,030 in 2001 to 3,975 in 2016 – a decline of 56 percent. 

This is a remarkable difference in performance and likely represents the long-term impact of the forest sector crisis on the northwest – which was much more forestry intensive than the northeast – as well as the relative success of mining in the northeast relative to the northwest.  While the northwest is seeing mining activity, it has not yet been on a sufficiently large enough scale to be the employment generator it is touted to be.  I suppose we are still waiting for the Ring of Fire to be ignited.

Wednesday, 25 July 2012

Planning for the Boom


The talk of booms and rumours of booms continues in Northwestern Ontario and with good reason given the ramping up of mining activity.  Along with several mines currently in production, there are a number of planned projects. Cliffs Chromite Project in the Ring of Fire is about to undergo an environmental assessment.  Thunder Bay is currently the host to some 26 exploration companies with projects expected to produce gold over the next 3-5 years at Greenstone (Hard Rock), Atikokan (Hammond Reef), Pickle Lake (PC Gold Inc.) as well as several other places.  As well, Stillwater is planning to develop a copper project near Marathon. 

All this activity is generating exploration and supply work but the mining boom is not here yet.  Nonetheless, area governments are beginning “to plan” for the development that is underway and yet to come.  Atikokan apparently has commissioned a community readiness study that among other things argues that six major projects in the area will lead to substantial construction activity, home building and potentially a doubling of the population.  Thunder Bay is apparently also undertaking  a Mining Readiness Strategy that will attempt to capitalize on the mining development.

A boom with population growth would be a welcome development in Northwestern Ontario.  This would be a much different region if Thunder Bay had 150,000 people and Nipigon and Atikokan were communities of 20,000 people each.  Yet, it remains to be seen if all of this mining development will come to pass and yield the expected employment and income benefits given the volatility of world commodity prices.  Most of the economic benefits will flow from the prospecting, exploration and setting up the mines as operating mines today are much more capital intensive.

With respect to all the planning being undertaken, the emphasize seems to be entirely short term – that is, how to meet the needs of the anticipated increase in population and demand for housing as well as capitalizing on the mining employment.  A longer view needs to be taken. Three other things these communities need to plan for.  First, making sure that new construction and development creates urban density in communities rather than a short-term build it where you like frontier  mentality.  Second, that some of the resource rents generated from these projects are invested in sovereign wealth funds for both the First Nations and the rest of the region’s residents to serve as a long-term source of income from a non-renewable resource.  Third, there be some thinking devoted to what happens when the mines close.  Is this too much to ask?

Thursday, 23 February 2012

Does Ontario Need Another Growth Plan?


Last Saturday’s Globe and Mail (February 18, B6) ran an article titled “Rebuilding Ontario: A Plan for the Way Forward” which laid out a discussion of Ontario's economic future. For Northerners, all the talk of decline and the need for diversification was strangely familiar.  Indeed, one can best describe what is happening as the “Northern Ontarioization” of Ontario’s economic discourse as Ontario tries to decide how to grow its future economy in the wake of the Drummond Report, which seems to have finally crystallized the fact that Empire Ontario has slipped into decline.  Of course, some of us saw the eclipse of Ontario a bit earlier than that (check out End of Empire, National Post, February 19, 2005, FP19) but better late than never.

The Globe and Mail described four options for the province to get its “mojo back”. They were financial services, technology, health care and natural resources. Missing was that perennial Northern Ontario favorite - tourism.  Despite the talk of putting a casino in Toronto, it is unlikely to see Ontario reinventing itself as Vegas North. Vegas style tourism requires a degree of individual and entrepreneurial freedom that regulatory Ontario is unlikely to acquire anytime soon.

Of all these options, the one most likely to kick start Ontario’s economy is the natural resource sector. The mining frontier in Ontario’s North – especially the so-called Ring of Fire- can serve as an investment frontier for the rest of the province much like mining and forestry did in the late nineteenth and early twentieth century.  However, this does require that the province embrace its North rather than treat it as a remote relic of the economic past.  Here, the contrast is made with Quebec.  According to the Globe and Mail: “Rather than shun its expansive north, Quebec is emphasizing it, hashing out an ambitious 25-year project dubbed “Plan Nord”.  Quebec is betting its future on developing mining, energy and forestry resources located far north of its major cities. Ontario could adopt a similar scheme.”

Really?  How interesting.  The fact is Ontario has also developed a Northern Growth Plan – a point the Globe and Mail article seemed to have missed but then Canada’s “national” newspaper is based in Toronto.  Part of what is wrong with Ontario’s economy is a myopic economic vision that does not look outside of Toronto.  Perhaps that is why since the Northern Growth Plan has been released, all that has resulted is more planning.  Given the dominance of Toronto vision in Ontario and its government, the chromite deposits of the Ring of Fire could only be developed quickly if they were at the corner of Yonge and Bloor.

Ontario does not need a growth plan.  Ontario needs a set of concrete actions to develop its northern resource frontier as an investment frontier for the province.  The North can be a place for infrastructure investment and value-added processing that can drive economic growth in Ontario.  The North can be a frontier for the deployment of Ontario’s labour skills and human capital.  Given the capital and technology intensive nature of modern mining, the North can also be a frontier for high technology industries.  And, the financial service industry in Toronto got its start in the financing of mining ventures in Northern Ontario.  Financing new mining ventures in the North can once again be a source of growth for Toronto’s financial sector.  What is Ontario waiting for?