A freshly-released think-tank report shows billions of dollars in planned spending on resource projects in Canada has rapidly evaporated, and a further drop should be expected unless there are substantial amendments to the federal government’s planned regulatory overhaul in controversial legislation presently being considered by parliament.
The C.D. Howe Institute indicated that the investment value of major energy, mining and forestry projects plunged C$100 billion between 2017 and 2018 – equivalent to erasing 4.5% from Canada’s GDP. The report is aptly titled: “A Crisis of Our Own Making.”
Among the projects that have been cancelled are TransCanada Corp.’s Energy East Pipeline CNOOC Ltd.’s Aurora LNG and Petronas Bhd’s C$36 billion Pacific Northwest LNG project. For the first time, Canada has dropped out of the ten top energy destinations in the world.
The declines in planned investment in the Canadian resource sector have continued even as investments in competing jurisdictions have rebounded following a long decline in commodity prices.
U.S. and global investment in oil and gas has rebounded while in Canada it has continued to plunge,” said the report, adding: “Global planned investment in mining has dropped but it has dropped even further in Canada.”
Extensive regulatory delays are cited as a significant issue. The study showed that it can take up to 15 years to get a mine approved in Canada, compared with six years in Australia. And it can take up to 11 years for pipeline approvals in Canada versus two years in Australia and five years in the United States.
Even more important, the study stresses, is the fact that the proposed legislation does not fix the biggest obstacle facing major resource projects: the federal government’s approach to consultations with impacted Aboriginal peoples.