Energy & Commodities

Peter MacKay: It’s absurd for Trudeau to let China buy a Canadian lithium firm — especially without a security review

The Liberals must stop rewarding Beijing’s unconscionable behaviour

For some time now, it has seemed as if Canada’s foreign policy approach toward China has been similar to that old Abbott and Costello baseball shtick of “Who’s on First?” That is to say, Ottawa’s strategy, insofar as one can even call it that, has been a circular, confusing and nonsensical parody. The major difference is, clearly, there is no humour to be found; rather, this comedy of errors carries only dire consequences for Canada.

The Trudeau government’s latest confounding abdication of common sense stands out for being particularly egregious. Ottawa has allowed a Chinese state-owned company, Zijin Mining, to bid on a Canadian-owned lithium mining operation, Neo Lithium Corp. The government has done this while abandoning the national security review that accompanies such purchases. The Liberals claim this is a non-issue as Neo Lithium’s operation is not in Canada, even though the headquarters is based here. But this just speaks to their narrow-minded naiveté about the threat posed by China.

Surely the Trudeau government knows that critical minerals like lithium are crucial to addressing the climate crisis. It is therefore absurd that we are allowing China to capture an even greater presence over resources critical to the green transition. A major polluter and unwilling climate partner, it defies logic that Ottawa would further cede control to China over global climate efforts by allowing it to solidify dominance over this sector…read more.

Canada Sees Oil Investment Rise 22% In 2022

Investments in crude oil this year in Canada could rise by as much as 22 percent, according to the Canadian Association of Petroleum Producers.

While this is an improvement over 2021, the expected spending total of US$26.2 billion (C$32.8 billion) is still much lower than the annual industry spending a decade ago, CAPP said as quoted by CBC.

“Today we’re at $32 billion, and we’re only capturing about six per cent of global investment,” CAPP president Tim McMillan said. “We’ve lost ground to other oil and gas producers, which I think is problematic for a lot of reasons … and it leaves billions of dollars of investment that is going somewhere else, and not to Canada.”

Canadian oil production is set to increase by 18 percent this year, according to the national energy industry regulator. That would come in at a total of close to 4 million barrels of crude daily. In spite of the federal government’s ambitious emission-reduction plans, the oil output increase is perfectly understandable, according to Canada’s natural resource minister.

“For the [oil] demand that continues to exist, Canada needs to extract value from its resources, just like the United States, the United Kingdom in the North Sea, and Norway,” Jonathan Wilkinson told the FT earlier this month…read more.

Tilbury LNG plant expansion moves to environmental assessment phase

The FortisBC Tilbury natural gas plant has moved ahead another step towards expansion.

Both the federal and provincial governments decided last week to move forward with environmental assessments of the proposed project to build a new storage facility and expand natural gas liquefaction capacity at the Delta plant, located on the Fraser River.

But a group opposing the expansion said the plans are “out of line” with the province’s targets for the oil and gas sector.

“We think the minister of environment should have terminated the proposal because of (climate change) and its poor location for an LNG facility right off the bat,” said Peter McCartney, who belongs to Friends of Tilbury and is also a climate campaigner for the Wilderness Committee.

FortisBC wants to start expanding the storage capacity of the Tilbury facility by 2023 – with a goal of finishing by 2026 – and start expanding its liquefaction capability in 2028…read more.

Fruit and veggie outages in Canada get worse with trucker shortages

Extreme weather and supply-chain snarls are among the reasons for shortages in grocery stores. Here’s another: Unvaccinated truck drivers.

In Canada, where as much as 90% of the country’s fruits and vegetables come from the US during the winter, a vaccine mandate for truckers is slowing down food shipments. Drivers who aren’t fully vaccinated against covid-19 have to quarantine for two weeks after entering Canada. Just about half of US truckers are vaccinated, according to industry estimates.

Vaccination rates among Canadian truckers are roughly in line with the national average, which is in the 83% to 87% range, according to the Canadian Trucker Alliance.

The mandate adds to the already strained supply chains in Canada, which have been subject to worker shortages, transportation bottlenecks, and recent storms. These factors are pushing up food prices globally.

The price to bring food across the border has doubled on some routes due to the scarcity of available truckers, Alex Crane, an operations manager at Paige Logistics, a freight broker in British Columbia, told Bloomberg. As a result, some shipments are just sitting in warehouses.

The US is set to impose similar rules on Jan. 22, which could worsen the cross-border food trade…read more.

Goldman Sachs Calls 10-Year Commodity Supercycle

While the markets digest the inflation numbers on Wednesday, all eyes will be focussed on the Federal Reserve’s reaction to the inflation data. Many economists expected the 7% gain in the Consumer Price Index, marking a 39-year high. Many markets, including stocks and bitcoin, have come under pressure this year on expectations that the Federal Reserve will likely raise interest rates sooner and more frequently than earlier anticipated.

Experts consider rising inflation one of the biggest market risks this year because runaway inflation could corrode asset values, limit buying power and eat away at corporate margins. In a research note, Goldman Sachs’ Jan Hatzius has warned that rapid progress in the U.S. labor market and hawkish signals in minutes from the Dec. 14-15 Federal Open Market Committee suggest faster normalization, with the central bank now likely to raise interest rates four times this year and start its balance sheet runoff process in July, if not earlier.

But the commodities sector is a different beast altogether.

Commodities outperformed other asset classes in 2021 and are widely expected to remain competitive in 2022.

Indeed, Goldman Sachs global head of commodities research Jeffrey Currie has reiterated his earlier call saying we are merely at the first innings of a decade-long commodity supercycle…read more.