ARCHIVED - Board of Trade of Metropolitan Montreal - November 23

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Thank you, Mr. Leblanc [Michel Leblanc, President of the Board of Trade of Metropolitan Montreal]. Distinguished guests, ladies and gentlemen, thank you very much for welcoming me. It’s a great pleasure to be with you this morning. I’d like to thank the Chamber for giving me this opportunity to speak to you about the natural resources sector’s key role in the prosperity of Quebec and Canada.

The global economy is going through a period of profound change. Certain developing countries, led by the BRIC countries — Brazil, Russia, India and China — have become the primary engines of global economic growth. Europe and the United States, our main export markets, will no longer be the main drivers. Although these changes pose a variety of challenges for Quebec and Canada as a whole, they also provide exceptional development opportunities, particularly in the natural resources sector.

I will address three topics. First, I’ll deal with the structural changes of the global economy and their effect on the natural resources sector. Secondly, I’ll discuss the unique opportunities for responsible development in Quebec and Canada as a whole. And thirdly, I’ll explain how the Government of Canada and the provincial governments can work together within their respective jurisdictions to promote the responsible development of our resources, which is in the interest of all Quebecers and Canadians. I met yesterday with Quebec’s Natural Resources Minister, Martine Ouellet. We had an excellent meeting, and I am convinced that we can work together for the benefit of Quebecers.

One of the characteristics of the changing global economy is the unprecedented growth of emerging countries. These economies are increasing steadily at the rate of six to eight percent annually. This means that their economic weight will double every 10 years. That is certainly an impressive increase. The United States and Europe, on the other hand, will experience only moderate growth. We must adapt to these changes, since Canada is a globally oriented economy and trade accounts for about 60 percent of our GDP.

So we have to diversify our exports, particularly by developing new markets in emerging nations. With the recent oil and gas discoveries in the United States, we can no longer rely on Americans as our sole customers in the energy sector. Even in its least optimistic scenarios, the International Energy Agency anticipates that the demand for energy will increase by over 30 percent by 2030. At least 90 percent of this growth will come from outside the OECD, essentially from emerging countries. To satisfy this demand for energy, all energy sources will have to be called into play, including hydroelectricity, wind energy, solar energy, biomass and hydrocarbons, which will still account for 75 percent of the global energy supply in 2030.

Canada is a global power in the natural resources sector. This sector, when its direct and indirect effects are taken into account, represents 20 percent of Canada’s GDP. It provides employment for at least 1.6 million Canadians. We have major projects to expand the country’s economy, and we believe that Quebec has a wealth of indispensable natural resources.

The energy, mining and forestry industries bring in over $30 billion in government revenues—revenues that support essential social programs such as health care, education and old age pensions. Every region in Canada benefits from the massive development of the oil sands. In Quebec, the oil sands will support an average of over 5,700 jobs per year between 2011 and 2035 and will pump $9.6 billion into Quebec’s GDP. With an increase in pipeline capacity, these figures could increase to 10,800 and more than $18 billion respectively over the same period.

There are many examples. Ezeflow, a Granby company, manufactures heavy-duty pipe fittings. Here in Montreal, Insight supplies communications services and equipment. Boréale, a company in Magog, provides environmental consultations. Michelin in Laval produces mining equipment. These are just four examples out of the 80 Quebec companies that supply the oil sands industry in the West and provide employment for many Quebecers. This bears witness to the efforts that are already underway in Quebec, efforts that must be sustained in order to create new markets and expand our economy.

Quebec itself is a world leader in the natural resources sector. This sector accounts for nearly 23 percent of the export volume of Quebec goods and employed nearly 175,000 people in 2011. As I said earlier, all of our oil and natural gas is shipped to the United States. Diversification is fundamental. That’s why several projects are currently being considered for exporting natural gas from Eastern Canada. Oil can also be transported from Western Canada to the Maritimes, and, of course, to Quebec.

Currently, 92 percent of the oil consumed in Quebec comes from foreign sources at a cost of about $100 per barrel. The value of the oil shipped through the St. Lawrence River in 2011 was $7 billion. One of our Government’s objectives is to commission pipeline from Western to Eastern Canada. This pipeline, as well as being an important tool for creating jobs, would enable us to use our own Canadian oil and reduce high-priced foreign oil imports, which would produce considerable savings. This could mean lower prices at the pump. These pipelines would allow us to send oil from Alberta and Saskatchewan to refineries in Lévis and Montreal to meet the needs of Quebec consumers.

I should also mention that pipelines are the safest and most secure way to transport oil, and we take safety and security very seriously.

The National Energy Board subjects pipeline development proposals to extensive review to ensure that pipelines are safe and secure and to protect the environment and the public. Permits are granted only after any environmental issues and First Nations concerns have been considered. There are rumours about the corrosiveness of diluted bitumen from the Alberta oil sands. But scientific research and experience in the industry have demonstrated that crude oil extracted from the oil sands is no more corrosive to transmission pipelines than other crude oils. In any case, Quebec refineries are not currently equipped to handle bitumen from the Alberta oil sands.

Quebec, for its part, should decide whether it intends to become an oil and gas producer. The reserves in the Gaspé, below Anticosti Island and in the St. Lawrence River are significant. Moreover, shale gas is an abundant resource in Quebec that would be worth using. The Canadian Society for Unconventional Resources estimates that Quebec’s Utica Shale contains between 7 and 42 billion cubic feet of marketable natural gas.

It’s up to Quebec to decide whether to develop these resources, and we respect Quebec’s decision. For its part, the Government of Canada is prepared to implement the agreement signed by the Government of Quebec to develop the resource in the Gulf of St. Lawrence. Under this agreement, Quebec receives all revenues from the resource, just as it would if the resource were on land.

Quebec’s mineral resources sector also offers numerous business opportunities. Quebec has great potential for mining iron, zinc, nickel, uranium, silver and gold. Exploration costs and investments in the natural resources sector have been increasing at an exceptional rate in Quebec for the past several years. Investment in this sector is expected to reach $4.4 billion this year, an impressive increase of 62 percent over 2011. Le Nord pour tous plan ties in with this mining boom in Quebec. The conditions are right for developing a visionary strategy for northern Quebec that will increase Quebec’s prosperity.

Quebec and Canada as a whole have an opportunity to develop a new technology and new industrial sectors that will benefit every region in the country. Companies operating in the resources sector are also generating a whole chain of suppliers and equipment manufacturers. In the mining sector, for example, Quebec has over 3,800 suppliers, of which about 1,800 are located in the greater Montreal area.

The natural resources sector is also synonymous with innovation. Owing especially to the development of hydroelectricity, Quebec boasts several of the world’s largest engineering consulting firms. Montreal has the largest concentration of engineers in Canada, and this has been a significant factor in a technological shift in Quebec’s economy. To maximize economic returns in this sector, we must innovate by investing in new technologies that foster responsible development of the resource and expand our supplier networks.

To achieve our goals, the governments of Canada and the provinces must work together with due regard for their respective jurisdictions. That’s why the Government of Canada has established a Responsible Resource Development plan to streamline the review process for large projects, making the process more predictable and faster, reducing duplication, strengthening environmental protection and improving consultation with Aboriginal peoples. Our plan streamlines reviews of major projects by making the assessment process faster, more efficient and more predictable. One benefit of this plan is that we will achieve our objective of one project, one review, thereby reducing duplication and overlap with the provinces. The environment is and will remain a priority for our government.

Governments must also cooperate to foster innovation. The Government of Canada is the main source of funding for FPInnovations, one of the world’s largest forest research organizations, which is based here in Montreal. Our Government supports the renewal of the forest sector by investing in emerging business opportunities and by fostering the development and marketing of innovative technologies and next-generation forest products.

For example, FPInnovations has developed a major pilot project involving nanocrystalline cellulose, a component of wood cellulose that can be used in the manufacture of products such as paints, finishes and advanced materials. Not only is it lighter and five times more resistant than steel, it’s renewable. Over $1 billion has also been invested by our Government in the Pulp and Paper Green Transformation Program to improve the environmental performance of Canadian factories. This is the largest amount invested in the forestry industry in the history of our country. Under this program, the Canadian government invested close to $10 million in the reopening of the Lebel-sur-Quévillon plant by Fortress Paper, a Canadian company. These are just a few examples of the cooperation through which the Government of Canada supports provincial government efforts to further economic development in the natural resources sector.

In conclusion, the natural resources sector provides outstanding development opportunities for Quebec and the whole of Canada. during my recent travels to several countries, I noted the high level of demand for our resources. Between 2002 and 2011, the export of minerals and metals to India increased by 600 percent, from $153 million to $964 million. Our natural resources exports to South Korea totalled $3.3 billion in 2011, and we could potentially export our natural gas to that country. In 2011, we exported over $5.6 billion in natural resources to Japan. By working in a spirit of cooperation and partnership, we can derive more benefits from the responsible development of our resources and secure a higher standard of living for future generations.

Speaking of resources, I’m reminded of the old adage that says “strike while the iron is hot.” Now is the time to act, and the Government of Canada is ready to shape the future together with partners such as the Government of Quebec. We could have had a different vision. We could have used other, less-effective means of helping our economy by taxing Canadians more than they already are. But our plan keeps taxes at a minimum. Our plan creates jobs. Our plan generates prosperity for Quebec and for all of Canada.

We have a responsibility to our fellow Canadians and to generations to come. We need to take the opportunities available to us. Let’s get to work. Thank you.