When Will the Ring of Fire Heat Up?

On Friday afternoon, I did a brief presentation at the Impact of Development Conference/Workshop held at the historic Trinity United Church on Algoma Street in Thunder Bay.  My talk (which you can access here under "Looking Back and Looking Forward") was titled "Resources and the Northern and Northwestern Ontario Economies: Past, Present and Future."  Along with a quick survey of the economic history of northern Ontario and an overview of current economic indicators, I also opined on the current state of developments in the Ring of Fire.

For the benefit of those not fully acquainted with the Ring of Fire, it is of course the massive planned chromite mining and smelting development project in the mineral-rich James Bay Lowland region.  The area covers about 5,000 square kilometers but development has been slow.  Major players include Noront Resources, the Ontario government and nine first nations.  There have been a number of challenges including the cost of capital and transportation infrastructure to access the chromite, energy costs,  the lengthy environmental assessment process as well as the process of consultation and negotiation with the nine members of the Matawa Tribal council. You can get a very good detailed analysis of the issues in the Skogstad-Alahmar report here.

However, all of these challenges can be resolved once the real challenge is resolved: commodity prices.  Much of the hype in the Ring of Fire springs from the spike in ferro-chrome prices in the 2008-09 period which was followed by a collapse from which there has yet to be a recovery.  As the accompanying figure illustrates, there was a 60 percent drop in the price of ferro-chrome and the price has not gone anywhere since.



In the end, its all about commodity prices and until the market price goes up and makes the project profitable, not much else is going to happen.

The Impact of Development

There is going to be a conference on economic development ithis week.  The Impact of Development workshop will be held this Thursday and Friday at Trinity United Hall, 310 Park Street Thunder Bay and has been made possible through the support of the Resources, Economy, and Society Research Group (RESRG) at Lakehead University, ReSDA: Resources and Sustainable Development in the Arctic, Lakehead University Department of History, Canadian International Council – Thunder Bay Branch, and Lakehead University Faculty of Social Sciences and Humanities.


The focus of the conference is single industry communities and features presentations on northern Ontario, Atlantic Canada as well as the Arctic and even Latin America.  Among the resource sectors covered are forestry and mining.  Moreover, a glance at the program will illustrate that there will be a diverse set of perspectives available with respect to development.  I will be doing an overview on the resource sector experience in northwestern Ontario with a foray into mining and the Ring of Fire on the Friday afternoon.  See the program below.

Day 1



Day 2: Morning



Day 2: Afternoon
 
Everyone is welcome!

Recent Labour Force Numbers for Northern Ontario Are Not Pretty

Last week’s labour force numbers for Canada from Statistics Canada were seen as a bit of a shock given that employment fell by 88,000 in January. Part-time employment declined (-137,000), while full-time employment was up (+49,000). At the same time, the unemployment rate increased by 0.1 percentage points to 5.9%.  Ontario also declined by about 51,000 jobs and much of the loss was due to part-time work.  So how does northern Ontario compare when recent labour force estimates are looked at?

 

The accompanying figure looks at employment growth for northeast and northwest Ontario compared to Ontario and Canada between December 2017 and January 2018.  Whereas Ontario and Canada saw employment drop by just over one half of one percent, total employment in the northeast declined 2.4 percent while in the northwest it fell by 1.8 percent.  As well, the losses were more driven by full-time employment as it dropped 2.5 percent in the northeast and 2.3 percent in the northwest.  All one can hope is that the January numbers are a short-term aberration because northern Ontario saw its employment drop more than either Ontario or Canada and the northeast seems to have been hit harder.

Population Growth Results: Thunder Bay and Sudbury at the Bottom

Statistics Canada has released its recent sub-provincial population estimates for 2016/17 and the results find that population is still growing faster in the Prairies well as parts of Ontario but the two major northern Ontario CMAs are not in the pack.   According the Statistics Canada, the 10 CMAs with the highest population growth in 2016/2017 were in either the Prairies or Ontario. In 2016/2017, the population growth rate was 2.0% or higher in four CMAs: Saskatoon (+2.8%), Regina (+2.4%), Guelph (+2.2%) and Ottawa–Gatineau (Ontario part) (+2.2 and were followed by Toronto (+1.9%), Oshawa, Winnipeg, Edmonton and Calgary (+1.8% each), and Kitchener–Cambridge–Waterloo (+1.7%).  The figure below shows the picture pretty clearly.

 

At the bottom of the rankings are Sudbury, Thunder Bay and Saguenay.  Sudbury is third from the bottom with a population increase of only 0.1 percent.  The population decreased in the Saguenay (-0.2%) and Thunder Bay (-0.1%) CMAs for the fourth consecutive year with Saguenay’s population decrease partly attributable to out-migration of young adults aged 18 to live elsewhere in Quebec. In Thunder Bay, the number of deaths surpassed the number of births, and has done so since 2006/2007, contributing to its population decline. 

Economics News Around the North: February 11th Edition

Well, traveling in winter is never much fun and this weekend I was in Montreal for the Fraser Institute Student Seminar Series and my way back has been affected by snow and freezing rain and assorted other things.  Still, there is always time to blog so here are the economic news stories that have caught my attention over the last little while with respect to northern Ontario economic affairs.

“Drop CN bridge appeal, Fort William First Nation chief tells Thunder Bay city council.” CBC News Thunder Bay, Feb. 8^th, 2018.

Well, this makes a lot of sense.  I recall speaking on a Thunder Bay Chamber of Commerce panel last spring where I made a similar remark that it was time to plan for a new span across the Kam River.  I suppose Thunder Bay City council is gambling that they can get something for nothing by getting CN to maintain the bridge but it would be forward looking to plan and line up the funding for a new modern bridge.  Best case scenario – they could end up with two bridges.  How’s that for infrastructure!

“Porter Airlines new crew base ‘good news’ for Thunder Bay Ontario” CBC News Thunder Bay, Feb. 2^nd, 2018.

This is a good news story not least of which is that 40 jobs from the crew base are coming to Thunder Bay but because it bodes well for the development of Porter’s air network.  With a crew base in Thunder Bay, Porter can use Thunder Bay as a mini hub perhaps for an expansion west to Winnipeg or a link through Chicago as part of it existing network.  Porter is innovative and service oriented and a great alternative to Pearson. They are also adding a 7^th daily flight out of Thunder Bay to Toronto. This weekend reminded me why I rarely fly out of Pearson.

In other transportation news, it would appear air travel is big in northern Ontario. North Bay is also getting some aviation jobs. I guess 40 is a magic number for airlines as it is expected that 40 jobs will be created here also.

“Voyageur Airways receives $2.7 million to expand,” North Bay Nugget.ca, Fe. 9, 2018.

In other news…

“Business confidence Drops in northeast: survey” Sudbury Star, Feb. 10^th, 2018.

Apparently, less than a fifth of businesses in northeastern Ontario are confident in Ontario’s economic future according to this Chamber of Commerce annual report. This was reinforced by regional data, as the Business Confidence Survey reveals that nearly half of northeastern Ontario businesses expect their organization’s revenue to stay the same over the next 12 months.

It could be that the Canadian economy is finally slowing down given the recent numbers from Statistics Canada.

“Canada’s volatile jobs survey posts biggest monthly drop since 2009” CTV News, Feb 9^th, 2018.

While Canada lost 88,000 jobs and Ontario and part time workers were heavily affected, it is only one month’s data – January – and you would need several months more before you could argue a trend was underway.  However, Thunder Bay and Sudbury saw their unemployment rates remain pretty much the same with Sudbury remaining at 6.8 percent and Thunder Bay dropping slightly from 6.1 to 5.8 percent.  However, as I have noted previously, the unemployment rate in northern Ontario is not the best indicator of job growth given the shrinking labour force.  Indeed, even the Sudbury Star noted that while Sudbury’s unemployment rate stayed at 6.8 percent, it nevertheless shed 800 jobs.

In Ring of Fire news, the saga continues.

“Plan to develop Eagle's Nest site a step 'in positive direction' for Indigenous communities” CBC News Sudbury, Feb. 7^th, 2018.

Timmins is trying to boost tourism as is the Sault.

“Will thousands flock to Timmins to watch Bryan Adams?” Feb. 8^th, 2018. TVO.

“Minister Chagger promotes Sault Ste. Marie tourism at Bon Soo Winter Carnival”

As so economic life goes on in northern Ontario. Have a great week!