Natural Resources: Canada's Advantage, Canada's Opportunity

Notes for Remarks

by

the Honourable Joe Oliver
Minister of Natural Resources

at

Canaccord Genuity Corporation

"Natural Resources: Canada's Advantage, Canada's Opportunity"

September 4, 2012

Toronto, ON

Introduction

Thanks very much, David (David Kassie, Group Chairman of Canaccord), and thanks to everyone for joining us.

It's something of an occasion today, because I have some impressive new numbers from Canada’s natural resources sector to share with Canadians, and this is a great place to announce it, in the heart of Toronto's financial services industry, which has contributed so much to Canadian capital formation, industrial growth and prosperity for Canadians across the country.

We all know that natural resources have been a key driver of Canada's economy for decades. There's good reason for that. This country has a tremendous natural wealth: huge capacities and reserves of energy, including the third-largest proven oil reserves in the world. We have tremendous hydroelectric capacity, massive tracts of forests and an abundance of minerals and metals.

Of course, it's not enough to have the resources. You have to do something with them, and very few people have capitalized on their natural bounty the way Canadians have. Only five countries produce more oil than we do. Canada is the third-largest producer in the world of both natural gas and hydroelectricity and the second-largest producer of uranium. Canada has over 200 active mines turning out more than 60 different minerals and metals, including more potash than anyone else. We're in the top five in aluminum, cobalt, diamonds, nickel, platinum group metals, titanium concentrate and tungsten. The Ring of Fire region in northern Ontario could make us one of the biggest producers of chromite as well. And northern Quebec has great mineral potential.

Canada is the second-largest exporter of primary forest products in the world and the biggest exporter of wood pulp, newsprint and softwood lumber.

So, it is no exaggeration to say the resource sector is the cornerstone of our economy, our long-term prosperity and our quality of life.

Real GDP vs. nominal GDP

What I'd like to share with you today is a new reckoning of just how big and how important that cornerstone is. Up to now, to describe the size of the natural resources sector in the Canadian economy we had been relying on real gross domestic product data because of its timeliness.

However, it is generally recognized that nominal GDP, which captures the effects of both the quantity produced and prices, is a more accurate indicator of a sector's share of the economy because it captures the total income generated by a sector.

Unfortunately, the most recent figures date back to 2008, so we haven't been able to put a good number on nominal GDP — until now.

Natural Resources Canada has now produced an estimate of the natural resource sector’s contribution to Canada’s economy based on nominal GDP. Moreover, we have estimated the sector’s indirect contribution, which is a more comprehensive measure of the total number of jobs generated by our natural resources.

The numbers

It turns out that in 2011, our energy, forestry, metals and minerals industries accounted for 15 percent of nominal GDP. That is the direct contribution, the sector’s stand-alone contribution to the Canadian economy.

Indirect GDP takes into account things like goods and services purchased from other sectors — construction, machinery and equipment, business and professional services, you name it. The natural resources sector indirectly adds a further four percent to Canada's nominal GDP.

In other words, directly and indirectly, the natural resources sector accounts for nearly 20 percent of our economy, one-fifth of all the economic activity in Canada.

And, contrary to the popular perception, it's not all oil sands, and it's not all Alberta. It‘s forestry in British Columbia, potash and uranium in Saskatchewan, mining in Ontario's Sudbury Basin, hydro power in Quebec and all of the related supply chains.

Directly, energy and other resources account for a third of nominal GDP in Alberta. In Saskatchewan, the number is the same. In Newfoundland and Labrador, where the development of offshore energy has turned the province around, it's even higher — over 40 percent of provincial GDP. In the Yukon, it's nearly 20 percent. In Nunavut, close to a quarter of GDP can be attributed directly to natural resources.

Now, translate those percentages into something all Canadians can relate to — jobs. In 2011, our resource sector provided jobs for close to 800,000 people in Canada. That's direct employment. And we are talking about high-quality, well-paying jobs for Canadian families. Add to that an additional 800,000 indirect jobs in other sectors. These are jobs that supply the natural resources sector in industries such as construction, manufacturing and engineering and the people you see working around you here today in financial services on Bay Street. So there are close to 1.6 million jobs that depend on natural resources — about 10 percent of all the jobs in Canada.

Behind the numbers

Natural resources jobs are in every part of Canada from coast to coast to coast — in rural communities, in the North and in Aboriginal communities. In fact, natural resources employs about 31,000 Aboriginal Canadians, proportionately more than other parts of the economy. In the oil sands, about 10 percent of the workforce is Aboriginal.

Over the past year, I've had the chance to travel all over Canada. I've seen what those numbers mean. One example: I was in Sault Ste. Marie a couple of weeks ago, where I toured the Tenaris-Algoma Tubes mill. It makes seamless pipe, the only plant of its kind in the country, and the oil and gas industry is its biggest customer. The company manufactures similar products at two plants in Alberta and at another in Nova Scotia. It started up in the Sault a little over 10 years ago in a mill that had been shut down by Algoma Steel. From 120 employees on the first day, Tenaris now has 550 people on the payroll. I talked to some of the men and women who work there. Believe me, they're big supporters of the natural resources sector. Their jobs, their mortgages and their kids' educations depend on it. Nobody understands how important the oil and gas industry is for Canada's manufacturing sector as do the workers at the Aecon’s fabrication facility in Cambridge, Ontario, where I was last week, and the skilled trades at the Automatic Coating Limited in Scarborough, providing services and goods to the oil business in the West.

More projects

In spite of the fragile international economy, I’m pleased to tell you that there’s more good news in Canada. A year ago, we reviewed projects that were planned over the next 10 years or already underway and calculated that as much as $500 billion could be invested in up to 500 major resource projects in Canada.

We repeated this exercise last month, and I am happy to tell you today that we can now see about $650 billion invested in over 600 major resource projects currently underway in Canada or planned in the next 10 years.

Projects like Areva’s $400-million Midwest uranium mine in northern Saskatchewan that got a green light in mid-August from my colleague, Environment Minister Peter Kent, after a six-year environmental assessment review.

Conclusion — Opportunity

That $650-billion figure represents tens upon tens of thousands of high-quality, well-paying jobs for Canadian middle-class families in every sector of our economy, in every region of the country. It also represents the potential for significant additional revenues for governments — revenue that will help secure health care and education and other vital services for Canadians for decades to come.

These numbers are just the beginning. Countries in the Asia-Pacific region are especially hungry for the energy and minerals and metals and forest products they need to fuel their growth and build a better quality of life for their citizens. This has created an unprecedented opportunity for Canada to grow and diversify the markets for its natural resources — and no country is better prepared to take advantage of this opportunity.

But we recognize the risks to realizing this potential. It is not a done deal. While our fundamentals remain strong, we remain subject to market fluctuations and global economic uncertainty. Ultimately, capital investments are business decisions. What our government can do — and is doing — is establish a competitive business climate so the private sector can capitalize on our enormous potential and create lasting jobs and economic growth for all Canadians.

Canada came through the global downturn better than almost anyone else, and Canada continues to stand out for its economic resilience and stability. A few months ago, Forbes magazine called Canada the best place in the world to do business.

We stand out. But we are not standing still. Our government continues to press Canada's advantage. Our Responsible Resource Development initiative, which modernizes the regulatory approval process, will provide greater predictability for investors and even better protection for our environment.

There is no question that Canada's natural resources can be the catalyst for a new era of jobs, growth and prosperity for Canadians. The potential for growth has never been greater than it is right now.

I am confident Canadians are up to the challenge. Our best days lie ahead.

Thank you very much.