Wyloo Metals CEO gives update on Ring of Fire mining projects, though First Nations resistance continues

Some First Nations still opposed to development as need for critical minerals grows

Kristan Straub, CEO of Wyloo metals, says mining can be done in a sustainable way within the Ring of Fire.(Marc Doucette/CBC)

January 23, 2024

CBC Indigenous: As the demand for critical minerals grows, the CEO of the main company involved in northern Ontario’s Ring of Fire says it’s developing a nickel deposit that could be producing minerals for two decades.

Wyloo Metals CEO Kristan Straub gave the update Tuesday in a speech to business leaders in Thunder Bay, where he outlined the company’s plans for the Ring of Fire and discussed how his company is engaging with First Nations in the region now and into the future.

“[Eagle’s Nest] is Canada’s best opportunity for a new nickel sulphide deposit,” Straub said.

Straub was speaking about Wyloo’s Eagles Nest site, approximately 500 kilometers northeast of Thunder Bay. Of all the company’s mining hopes in northern Ontario’s Ring of Fire mineral deposit, he said this site is where it is choosing to develop first. It’s the most promising discovery and the mining project closest to production in the region.

Eagle’s Nest would produce 15,000 tons of nickel annually for an expected 20 years, said Straub.

Wyloo metals, (formerly known as Ring of Fire Metals and Noront Resources) is an Australian-based mining giant ultimately controlled by billionaire Andrew Forrest. The company holds the majority of established mining claims in the region, which it says contains minerals worth around $90 billion.
Thousands protest mining exploration on Indigenous land in Ontario

WATCH | Protest against mineral development draws thousands to Queen’s Park: 4 months ago – Duration 2:01

Thousands of Indigenous people people gathered at the Ontario Legislature to demand a face-to-face meeting with Premier Doug Ford. They say the province has allowed thousands of mining applications without their knowledge or consent.

Click on the following link to view the video:

https://www.cbc.ca/news/canada/thunder-bay/wyloo-metals-ceo-update-1.7092369

The province considers nine First Nations to be within the Ring of Fire– and Wyloo has promises for them. Straub said the company is aiming for a workforce composed of at least 50 per cent Indigenous employees, and plans to award millions of dollars of contracts to local, Indigenous-owned businesses willing to collaborate.

Two of those First Nations — Webequie and Marten Falls — have signed memorandums of understanding with Wyloo, and they are both leading an environmental assessment on a proposed road to the Ring of Fire, Straub said. Ontario approves environmental assessment terms of reference for 3rd and final road to Ring of Fire
Consultations continue as 2 First Nations work toward road to Ring of Fire in northern Ontario

The Northern Road Link project would connect two other proposed roads: one is an access road that will connect the community with the provincial highway system to the south. The second project is the so-called “Northern Road Link” that would lead to a proposed Ring of Fire mining site known as Eagle’s Nest.

The Northern Road Link is being touted as a critical lifeline. For prospectors, it would provide a pathway to minerals needed to build the electric vehicle batteries that are hoped to fuel Canada’s green economy.

For Webequie and Marten Falls, it’s hoped to bring wide-scale economic development and better access to goods and services.

“Webequie and Marten Falls are definitely the two closest First Nations in a nearby framework, and those are the two that we continue to work with,” said Straub. “The First Nations that are in the region around, we’ll look to build the support and the collaboration with them. Ultimately that’s their decision whether they partner in or not.”

While other First Nations say they respect Webequie and Marten Falls’ position, many aren’t willing to go along with development just yet.
Resistance from some First Nations in northwestern Ontario

There’s been pushback surrounding mining in the Ring of Fire and how consultations with Indigenous communities are handled, with recent rallies led by members of the First Nations Land Defence Alliance at Queen’s Park.

Last summer, 10 First Nations from Treaty 9 filed a lawsuit against Ontario and the federal government to fundamentally change the way resources and land management decisions are made in the region. That case is early on in the court process.

The Ojibways of Onigaming are the latest nation to join the Land Defence Alliance. Elected Chief Jeff Copenace said they signed on for strength in numbers he hopes will protect their lands and waters.

“We’re not going to stand by idly and let you destroy our lakes as our young people are dying,” said Copenace. “If you’re not going to help save our lives… then you can’t have access to land and waters.”

https://www.cbc.ca/news/canada/thunder-bay/wyloo-metals-ceo-update-1.7092369

Like many northern Ontario First Nations, Onigaming has declared a state of emergency as youth suffer from mental health issues, addiction and suicide. Copenace said he can remember at least 32 community members who have died over just the past 2.5 years– which is felt heavily by the reserve of 490. Inside the battle over Ontario’s Ring of Fire
Mining claims jump in northern Ontario’s Ring of Fire as EV battery interest grows
First Nations leaders demand equal partnership in Ottawa’s ‘broken’ regional assessment for Ring of Fire

Onigaming plans to develop a youth crisis center and recreation multiplex, in hopes it will help struggling community members. The recreation center will also provide a much-needed space to hold the community’s many funerals.

“We’ve been doing them in the school and we just made a decision this past year not to do them in the school anymore because of how heavily we’re traumatizing the children,” said Copenace.

Responding to the state of emergency means there is little bandwidth left for resource negotiation, he said. “It’s impossible for us to come to the table because we’re always having funerals, because we’re always dealing with young people that are suicidal,” said Copenace.

ABOUT THE AUTHOR

Michelle Allan, Reporter

Michelle Allan is a reporter at CBC Thunder Bay. She’s worked with the CBC’s Investigative Unit, CBC Ottawa and ran a pop-up bureau in Kingston. She won a 2021 Canadian Association of Journalists national award for investigative reporting. You can reach her at michelle.allan@cbc.ca.

Graphic: Tin shackled by surplus, but green industry demand poised to mop up supplies

Reuters | January 24, 2024 | 

Tin man statue. (Stock Image)

The potential for a build-up of tin supplies this year is likely to put pressure on prices, but accelerating demand from the energy transition sector, including solar panels and electric vehicles, should support prices in the future.


Tin is used in circuit-board soldering for products like mobile phones and in electric cars and also in the manufacture of solar panels. Solder currently accounts for about half of global tin consumption.




Sluggish demand particularly from the semiconductor industry pushed the market into surplus for the past two years. This was despite a ban imposed last August on tin mining in Myanmar’s Wa region, which exports to China, the top producer of refined tin and also the biggest consumer.


The Wa state authorized a partial resumption of mining from January 3 “with the notable exception of the Man Maw mine area, which accounts for almost all tin production in the autonomous region”, according to the International Tin Association.


Tin prices on the London Metal Exchange (LME) have dropped 20% to around $26,500 a metric ton, since hitting a six-month high at $32,680 in January last year.

“The market may ease in 2024, especially if more supply comes through from Myanmar,” said Bank of America strategist Danica Averion.

“Against near-term headwinds, fundamentals look robust longer term on solar and electric vehicles.”

Bank of America estimates the tin market surplus at 5,800 tons last year and global consumption at 360,400 tons.

Myanmar accounted for 72% of China’s total imports of tin ores and concentrates last year, amounting to more than 180,000 tons, compared with a number above 187,000 tons or nearly 77% in 2022, according to Trade Data Monitor (TDM).


Short-term support for tin prices could come from Indonesia, the world’s second largest producer of refined tin after China.

“Over the last few years, we have seen Indonesian tin exports slump in the early months of the year due to export licence renewals,” Citi analysts said in a December note.

Longer term, investment in and sales of electric vehicles and solar panels will see tin consumption pick up pace.

“Tin demand from the green sector could more than double by 2030, potentially topping 70,000 tons per annum equivalent to a fifth of current consumption,” Averion said.

“This suggests that fundamentals are set to remain strong and the focus will be on the supply side and the extent to which producers will be able to meet this additional demand.”

(By Pratima Desai; Editing by Jane Merriman)

Plaintiffs demand 582m euros from TÜV Süd over Brazil dam burst

Reuters | January 25, 2024 |

The Fire Brigade of Minas Gerais searches for missing bodies. (Image: Ibama)

More than 1,400 plaintiffs are demanding over 582 million euros ($634 million) in damages from German industrial inspector TÜV Süd over its alleged role in the deadly collapse of a dam in Brazil, their lawyers said on Thursday.


The Jan. 25, 2019 tailings dam burst, in the Brazilian state of Minas Gerais, unleashed a wave of mud that left 270 dead, while also ravaging local forests, rivers and communities.

TÜV Süd, whose Brazilian subsidiary had certified the dam, has rejected any legal responsibility for the burst.

The Munich Regional Court will decide whether Brazilian law can be applied during the proceedings, the plaintiffs said, adding that this would make it easier to hold the German company accountable.

According to the plaintiffs’ lawyers, the court has commissioned an expert in Brazilian law to clarify the question.

TÜV Süd’s lawyers have referred responsibility to Brazil’s Vale, the world’s largest iron ore producer, that operated the dam.

“The responsibility of the dam operator was legally established in Brazil and the affected parties are being comprehensively compensated … The claims asserted by the plaintiffs against TÜV Süd therefore do not exist”, the company said in an emailed statement.

The Brazilian company promised to spend 7.8 billion reais ($1.58 billion) on repairs last year, after having spent around 10.2 billion reais in disbursements in 2022.

($1 = 4.9335 reais)

($1 = 0.9178 euros)

(By Joern Poltz and Nette Noestlinger; Editing by Matthias Williams and Tomasz Janowski)

Brazil judge orders Vale, BHP and Samarco to pay $9.7 billion in damages

Staff Writer | January 25, 2024 |

Reconstruction efforts at Samarco’s Fundão tailings dam in 2017. (Image courtesy of BHP)

A Brazilian judge has sentenced Vale (NYSE: VALE) and BHP (ASX: BHP) and their joint venture Samarco to pay 47.6 billion reais ($9.67 billion) in damage repairs over a burst tailings dam in 2015, according to a legal decision on Thursday seen by Reuters.


The Samarco Fundão dam burst occurred in November 2015, releasing 39.2 million cubic meters of tailings waste into the Rio Doce Basin. It was Brazil’s worst environmental disaster ever, resulting in the death of 19 people.

In 2015, the year of the tragedy, Samarco produced 25 million tonnes of iron ore. The joint venture was eventually shuttered for five years. During that time, BHP and Vale focused on reparations, compensations and clean-up efforts.

The companies also faced several lawsuits and site inspections until they were ready to safely reopen Mariana Complex in December 2020.

Brazilian prosecutors said that year that the Renova Foundation created by the miners for the reparation of the damages did not deliver on any of its promises.

Samarco said in 2020 that it had developed a new security system, which includes a monitoring and inspection center.

Brazil probes Mercado Libre sales of mercury used by illegal gold miners

Reuters | January 24, 2024 |

Stock image.

Public prosecutors chasing illegal gold mining in Brazil’s Amazon region on Wednesday opened an investigation into on-line sales of mercury through Mercado Libre, Latin America’s largest e-commerce site.


The Federal Prosecutors’ Office recommended Mercado Libre ban mercury ads from its platform, or inform authorities who is placing them and establish better controls over the trade in what it called “an extremely dangerous pollutant.”


Wildcat miners in the Amazon use liquid mercury to agglutinate gold particles and separate them from ore and dirt when they dredge through muddy excavations in the rainforest.

Mercury pollutes the rivers and poisons the fish, a staple for Indigenous communities in the Amazon where studies show women and children with dangerously high levels of mercury in their blood.

Stopping the sale mercury, along with fuel supplies and the financing of mine prospects is part of the Brazilian government’s crackdown on illegal gold mining that has surged in recent years in the Amazon.

“Mercado Libre sales platform has been used indiscriminately for trading liquid mercury, without any control over the origin of the material and the parties involved in the transactions,” the prosecutors recommendation said.

Mercado Libre said it was ready to help prosecutors with their investigations into the sale of prohibited products.

“As soon as such products are identified, the ads are removed and the seller is notified, and could be banned from the platform,” Mercado Libre said in a statement.

Mercury is a controlled substance in Brazil and sales are illegal if not registered stating its origin and use.

Brazil does not produce mercury, which must be imported and illegal purchases are made by Internet on platforms such as Mercado Libre, an Argentine company headquartered in Uruguay and incorporated in the United States.

Mercury poisoning can cause serious neurological damage and malformation of babies.

A 2019 study led by Fiocruz, Brazil’s top biomedical research lab, found the presence of mercury in 56% of Yanomami women and children in the Maturacá region of the Amazon.

Brazil is a signatory of the Minamata Convention, an international treaty designed to protect human health and the environment, named after the devastating incident of mercury poisoning in Japan.

(By Anthony Boadle; Editing by Diane Craft)

Sandvik to cut 1,100 jobs as Q4 profit lags expectations
Reuters | January 25, 2024 | 

Sandvik’s Toro LH518iB. Credit: Sandvik.

Sandvik plans to cut around 1,100 jobs as part of a cost-saving drive, the Swedish mining equipment maker said on Thursday, as it reported adjusted fourth-quarter profits just below expectations.


The company said orders with major mining companies were at a good level, but that it had seen a slowdown from smaller miners and softness in infrastructure markets.

It also said shipping disruption in the Red Sea was leading to some delays in larger mining equipment, but that it was manageable.

“But the longer it goes on the more troublesome it might become … it will also contribute to a new uncertainty on the logistics front just when we thought things had normalized,” CEO Stefan Widing told reporters, adding the company was not hiking prices due to any extra costs.

Sandvik said it planned to reduce annual costs by around 1.2 billion Swedish crowns ($115 million), including cutting nearly 3% of its workforce.

“The new measures include consolidation of productions units and optimizing the structure of the organization. The measures are group-wide and global,” it said, adding restructuring costs would total around 2.4 billion crowns.

Fourth-quarter operating profit before items affecting comparability fell to 5.74 billion crowns from 5.98 billion a year-earlier, below the 5.87 billion expected by analysts polled by LSEG.

The miss was due mainly to adverse currency moves and weak volumes, Jefferies analysts said.

The company proposed a 2023 dividend of 5.50 crowns per share, up from 5.00 crowns a year earlier and roughly in line with the 5.59 crowns expected by analysts.

Its shares were up almost 1% at 1043 GMT.

Widing said the slower demand from smaller mining companies was “mainly due to higher interest rates, so it takes a little bit longer for them to get financing”.

Sandvik’s overall order intake came to 30.1 billion crowns, roughly in line with the consensus estimate, according to Jefferies.

Excluding acquisitions and at fixed exchange rates, orders fell 4%.

($1 = 10.4351 Swedish crowns)

(By Marie Mannes; Editing by Emelia Sithole-Matarise and Mark Potter)

Rio Tinto utilizes Australia’s largest solar farm to supply power to its aluminum assets.

Admin2 Days Ago

Rio Tinto announced on Wednesday a power purchase agreement to source electricity from a new solar farm in Queensland, as part of its commitment to environmentally sustainable practices for its aluminum operations on the east coast of Australia. The company aims to reduce its direct and indirect emissions by 50% by 2030.

Under a 25-year agreement with green energy firm European Energy Australia, Rio Tinto will purchase power from the upcoming 1.1-gigawatt Upper Calliope solar farm, expected to become the largest in the country upon completion.

Once operational, the solar farm has the potential to reduce Rio’s carbon emissions by 1.8 million tonnes annually. Rio Tinto currently ranks as Australia’s 10th largest emitter, with approximately two-thirds of its reported 2022 emissions of 30.3 million tonnes CO2 equivalent originating from its aluminum division.

Construction of the Upper Calliope solar farm is slated to commence in 2025 or 2026, with the facility situated about 50 kilometers southwest of Gladstone. The solar power agreement is also anticipated to contribute to the repowering of Rio’s three production assets in Gladstone: the Boyne aluminum smelter, Yarwun alumina refinery, and Queensland Alumina refinery.

Rio Tinto had previously sought proposals in June 2022 for the development of wind and solar energy plants in Queensland to supply power to three aluminum projects by 2030. The Upper Calliope project is the initial successful applicant resulting from Rio’s formal request for renewable power and firming projects in Central and Southern Queensland.

CANADA SPACE PROGRAM

Reaching for the stars: Space sector could generate $40B by 2040

BNN Bloomberg

Space exploration could launch significant economic opportunities for Canada, according to a new report by Deloitte Canada and Space Canada.

The report, published on Monday, examines the economic potential in the space sector for Canada’s economy. It estimated that the industry could generate up to $40 billion by 2040.

In an interview with BNN Bloomberg, Brian Gallant, CEO of Space Canada and former premier of New Brunswick, said the “massive” economic potential of the space sector should not be overlooked.

“It really is an exciting time for the sector. I think it could really have immense benefits for our country and for people around the world,” Gallant said in a Tuesday television interview.

“There are ways in which space can help us tackle global challenges like climate change … It could help us protect our oceans, our forests, it can help us with defense, security, sovereignty. It can help agriculture be more sustainable.”

Gallant added that space innovation also offers the potential for improved telecommunications services, including in rural, Indigenous and remote communities across Canada

.

Space sector investment ‘imperative’: Deloitte

Scott Streiner, senior advisor of Deloitte Canada, said he believes strengthening Canada’s position in the space sector should be considered “imperative.”

“For the sake of the country’s economic competitiveness and productivity, and to help ensure national security and essential services for citizens, Canada needs to bring energy and determination to the new space race,” he said in a written statement on behalf of Deloitte Canada.

He said “now is the moment to act” and aim for the goal of a $40-billion space academic by 2040.

Gallant mentioned that Canadian NGOs, think-tanks, and governments have made “important investments” throughout the years when it comes to national contributions to the space sector.

But he made the case that Canada should not hold back on future investments.

“Canada’s in a different type of space race,” Gallant said. “We can’t sit on our hands.”

For the rest of Brian Gallant’s interview with BNN Bloomberg, watch the video above.

CANADA

Federal use of Emergencies Act was unreasonable, judge rules

A VERY POLITE RULING

Jim Bronskill, The Canadian Press

Police walk as heavy snow falls on the 21st day of a protest against COVID-19 measures that has grown into a broader anti- LIBERAL government protest, in Ottawa, on Thursday, Feb. 17, 2022. 

THE CANADIAN PRESS/Justin Tang

 

A judge has ruled it was unreasonable for the Liberal government to use the Emergencies Act to quell "Freedom Convoy" protests in the national capital and at key border points two years ago.

In a decision released Tuesday, Federal Court Justice Richard Mosley said invocation of the act led to the infringement of constitutional rights. 

The Canadian Civil Liberties Association and several other groups and individuals had argued in court that Ottawa ushered in the emergency measures without sound statutory grounds.

The government contended the steps taken to deal with the pan-Canadian turmoil were targeted, proportional, time-limited and compliant with the Charter of Rights and Freedoms. 

The Public Order Emergency Commission, which carries out a mandatory review after invocation of the Emergencies Act, found the government met the very high legal standard for using the law.

Mosley heard arguments in court over three days last April.

In his ruling, Mosley said he revisited the events with the benefit of hindsight and a more extensive record of the facts and the law than the government had when it proclaimed a public order emergency.

"I have concluded that the decision to issue the Proclamation does not bear the hallmarks of reasonableness — justification, transparency and intelligibility — and was not justified in relation to the relevant factual and legal constraints that were required to be taken into consideration," Mosley wrote.

Deputy Prime Minister Chrystia Freeland said the government respectfully disagrees with the decision and will appeal. 

In early February 2022, downtown Ottawa was filled with protesters, many in large trucks that rolled into the city beginning in late January. 

Ostensibly a demonstration against COVID-19 health restrictions, the gathering attracted people with a variety of grievances against Prime Minister Justin Trudeau and the Liberal government.  

The usually calm streets around Parliament Hill were beset by blaring rig horns, diesel fumes, makeshift encampments and even a hot tub and bouncy castle as participants settled in.  

The influx of people, including some with roots in the far-right movement, prompted many businesses to close temporarily, and aggravated residents with noise, pollution and harassing behaviour.

Public anger mounted over a lack of enforcement action by Ottawa police.  Meanwhile, trucks clogged key border crossings, including key routes to the United States at Windsor, Ont., and Coutts, Alta.  

On Feb. 14, the government invoked the Emergencies Act, which allowed for temporary measures including regulation and prohibition of public assemblies, the designation of secure places, direction to banks to freeze assets and a ban on support for participants.  

It was the first time the law had been used since it replaced the War Measures Act in 1988.  

In a Feb. 15 letter to premiers, Trudeau said the federal government believed it had reached a point "where there is a national emergency arising from threats to Canada's security.''

The civil liberties association maintained that legal threshold was not met.  

The Federal Court hearing included others who filed actions contesting use of the emergency measures: the Canadian Constitution Foundation, Canadian Frontline Nurses and Kristen Nagle, and individuals Jeremiah Jost, Edward Cornell, Vincent Gircys and Harold Ristau.

This report by The Canadian Press was first published Jan. 23, 2024.

Bank of Canada holds key rate at 5%, signals it's done with hikes

The Bank of Canada held its policy rate steady for a fourth consecutive meeting and explicitly stated for the first time that it won’t need to increase it again if the economy evolves in line with its forecasts.

Policymakers led by Governor Tiff Macklem left the benchmark overnight rate unchanged at five per cent on Wednesday, a pause that was widely expected by markets and by economists in a Bloomberg survey. Officials say the data show economic growth has stalled and will remain slow in the near term, which will help bring inflation back to the bank’s two per cent target next year.

“There was a clear consensus to maintain our policy rate at five per cent,” Macklem said in his prepared opening remarks for a news conference scheduled for 10:30 a.m. Ottawa time. “What came through in the deliberations is that Governing Council’s discussion about future policy is shifting from whether monetary policy is restrictive enough to how long to maintain the current restrictive stance.”

The dovish communications suggest the bank sees a rapidly slowing economy and believes its past rate increases — 475 basis points in less than two years — are sufficient to quell inflation. That potentially opens the door to rate cuts in coming months.

“If the economy evolves broadly in line with the projection we published today, I expect future discussions will be about how long we maintain the policy rate at five per cent,” Macklem said.

The Canadian dollar tumbled after the release, erasing earlier gains to trade at US$1.3468 at 9:54 a.m. New York time. The yield on the benchmark two-year note was down about four basis points on the day to 4.006 per cent. 

The governor reiterated the need to balance the risks of over- and under-tightening, but also noted concerns about the persistence of underlying price pressures, warning that policymakers haven’t ruled out further rate increases if new developments push inflation higher. Still, the bank removed language from its previous policy statements that said it remained prepared to hike again.

Officials want to see “further and sustained easing” in core inflation and will continue to focus on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing activity, the bank said in its statement.

Its forecasts suggest the economy is now in “modest excess supply” and it trimmed its economic growth projection to 0.8 per cent this year, from 0.9 per cent. Still, the Bank of Canada’s base case remains a soft landing, with growth picking up around the middle of the year.

Officials expect inflation to remain close to three per cent over the first half of 2024 before declining to around 2.5 per cent by the end of the year and returning to the bank’s two per cent target next year.

The consumer price index accelerated to a 3.4 per cent yearly pace in December, and has been stuck above the 3 per cent cap of the central bank’s target operating band for 32 of the past 33 months. A closely watched measure of the Bank of Canada’s preferred core metrics also spiked.

“Over the projection horizon, ongoing excess supply in the economy continues to weigh on prices, and corporate pricing behavior and inflation expectations gradually return to normal,” the bank said in its monetary policy report.

Wage growth, which is still rising at a four per cent to five per cent yearly pace, is expected to slow, falling closer in line with inflation and modest productivity growth, the bank said.

Shelter price inflation, however, is expected to remain “elevated for some time,” with growth in mortgage interest costs seen slowing gradually as financial conditions ease and the impact of additional households renewing and taking on new mortgages decreases.

Rental price inflation, which is supported by strong demand for housing and tight supply, is forecast to moderate due to a slowdown in population growth and an expected increase in new housing construction.

A stronger-than-expected rise in house prices is one of the main risks that could drive inflation higher than expected, the bank said.

Canada’s economy is more rate-sensitive than its peers due to higher debt loads and shorter-duration mortgages. Most economists see the Bank of Canada cutting the policy rate by June, and traders in overnight swaps are placing similar bets.

Read the Bank of Canada's full statement on its rate decision

BNN Bloomberg   

The Bank of Canada held interest rates at five per cent on Wednesday. Jan 24, 2024

Read the full statement on its decision:

Bank of Canada maintains policy rate, continues quantitative tightening

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening.

Global economic growth continues to slow, with inflation easing gradually across most economies. While growth in the United States has been stronger than expected, it is anticipated to slow in 2024, with weakening consumer spending and business investment. In the euro area, the economy looks to be in a mild contraction. In China, low consumer confidence and policy uncertainty will likely restrain activity. Meanwhile, oil prices are about $10 per barrel lower than was assumed in the October Monetary Policy Report (MPR). Financial conditions have eased, largely reversing the tightening that occurred last autumn.

The Bank now forecasts global GDP growth of 2½% in 2024 and 2¾% in 2025, following 2023’s 3% pace. With softer growth this year, inflation rates in most advanced economies are expected to come down slowly, reaching central bank targets in 2025.

In Canada, the economy has stalled since the middle of 2023 and growth will likely remain close to zero through the first quarter of 2024. Consumers have pulled back their spending in response to higher prices and interest rates, and business investment has contracted. With weak growth, supply has caught up with demand and the economy now looks to be operating in modest excess supply. Labour market conditions have eased, with job vacancies returning to near pre-pandemic levels and new jobs being created at a slower rate than population growth. However, wages are still rising around 4% to 5%.

Economic growth is expected to strengthen gradually around the middle of 2024. In the second half of 2024, household spending will likely pick up and exports and business investment should get a boost from recovering foreign demand. Spending by governments contributes materially to growth through the year. Overall, the Bank forecasts GDP growth of 0.8% in 2024 and 2.4% in 2025, roughly unchanged from its October projection.

CPI inflation ended the year at 3.4%. Shelter costs remain the biggest contributor to above-target inflation. The Bank expects inflation to remain close to 3% during the first half of this year before gradually easing, returning to the 2% target in 2025. While the slowdown in demand is reducing price pressures in a broader number of CPI components and corporate pricing behaviour continues to normalize, core measures of inflation are not showing sustained declines.

Given the outlook, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Bank’s balance sheet. The Council is still concerned about risks to the outlook for inflation, particularly the persistence in underlying inflation. Governing Council wants to see further and sustained easing in core inflation and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians.

 

European Central Bank leaves key interest rate at a record high as focus turns to timing of cuts

David Mchugh, The Associated Press

The European Central Bank left its key interest rate untouched at a record high Thursday, keeping credit expensive for businesses and consumers as it tries to make sure inflation is firmly under control before cutting borrowing costs — a move expected later this year.

The question is, how much later this year. Financial markets are expecting a rate cut from four per cent as early as April, while ECB President Christine Lagarde has indicated it likely would happen this summer.

Analysts expect her to use a news conference Thursday to underline that the bank needs to see more proof that painful inflation — which has made everything from groceries to energy more expensive — has been beaten down.

Lagarde has cautioned that the bank will make decisions based on the latest figures about the economy’s health rather than making longer-term promises.

The ECB’s statement dropped earlier wording that “domestic price pressures remain elevated” and noted that high rates are helping push inflation down. But it cautioned borrowing costs would stay high for “as long as necessary” without offering a future timetable.

Like the ECB, Norway’s central bank kept rates steady Thursday. The same day, the central bank in Turkey, which is suffering from out-of-control inflation of nearly 65 per cent, raised its key rate to 45 per cent, expected to be the last increase for some time.

With inflation falling in major economies, financial markets are frothing in hopes of cheaper credit that would boost business activity and stock prices.

Stock investors saw their holdings, such as those in U.S. retirement accounts, soar in the last weeks of 2023 as the U.S. Federal Reserve and ECB indicated that a rapid series of rate hikes was ending. Fed Chair Jerome Powell said officials discussed prospects for rate cuts at the bank's December meeting, and the U.S. central bank has indicated it would cut its key interest rate three times this year.

The S&P 500, a broad measure of U.S. large company shares, has hit record highs this week, and European indexes also have risen. The global stock rally faces questions about whether gains can continue.

Rate cuts make riskier investments like stocks more attractive than safer bets like money market accounts and certificates of deposit. They also stimulate business activity and thus prospects for share prices to go higher.

Expectations for rate cuts have been fueled by the rapid drop of inflation in Europe to 2.9 per cent in December from the peak of 10.6 per cent in October 2022. In a little over a year, the ECB raised its key rate from negative levels — which made it cheap to borrow money to buy a house or invest in a business — to a record-high four per cent.

While rate hikes are a central bank's chief weapon to snuff out inflation, they also can slow the economy — which has been seen in Europe and countries around the world, feeding expectations for cuts now that inflation has dropped closer to preferred levels.

The economy of the 20 European Union member countries that share the euro currency, where the ECB sets interest rates, shrank slightly in the July-to-September quarter of last year. Expectations are no better for the following months.

The economic squeeze follows a surge of inflation fueled by a supply chain crunch during the COVID-19 pandemic and then higher food and energy prices tied to Russia's war in Ukraine. The worst of the energy costs and supply problems have eased, but inflation has spread through the economy as workers push for higher wages to keep up with the boost in prices they're paying.

Analysts say there are good reasons for the ECB to move cautiously. For one, having to reverse course and raise rates if inflation doesn't keep falling — or spikes again — would only prolong the pain from tighter credit.

Another is the speed of pay raises for Europe's workers. ECB officials have indicated that they want to see figures for wage increases for the first months of this year before deciding where they think inflation is headed.

“Lagarde will likely keep the door wide open for a first cut in June without fully committing to it,” according to analysts at Berenberg bank. “By emphasizing the need for more data on inflation dynamics in early 2024, she may push back gently against market expectations for a first rate cut in April.”

Additionally, attacks by Yemen's Houthi rebels on ships in the Red Sea have forced many vessels bringing consumer goods and energy supplies to Europe to avoid the Suez Canal and take a longer journey around the tip of Africa.

The disruption has so far not led to higher oil prices but has added to shipping costs for companies and underlined uncertainty about energy supplies and whether businesses could pass along higher expenses to consumers that would fuel a new round of inflation.

 

Government looks at factory-built homes to increase supply

Daniel Johnson , BNN Bloomberg

The federal government hopes to utilize factory-built homes as one way to rapidly increase Canada’s housing supply, but experts and builders say regulatory issues stand in the way of widespread adoption. 

Housing Minister Sean Fraser told BNN Bloomberg last month the next phase of housing policy in Canada will be focused on increasing supply – and factory-build homes will be part of that industrial strategy to rapidly increase the scale of production.

Fraser characterized the strategy as ambitious but achievable through collaboration with various levels of government and the private sector.

The Canada Mortgage and Housing Corp. has estimated that Canada will have around 3.5 million fewer homes by the end of the decade than what is needed to restore affordability, as average home prices top $1 million in some cities. 

Housing starts rose 18 per cent in December compared to the previous month, CMHC said last week. On a seasonally adjusted annual basis, housing starts in December reached 249,255 units.

Factory-built homes, also known as modular homes, can help meet demand for housing, according to Sunil Johal, vice president of public policy at CSA Group, but getting them built is more complicated than it seems.

“Modular really represents an opportunity to give the construction sector different options to help meet that significant demand by fabricating different building components or modules in an off-site controlled factory environment,” Johal said in an interview with BNNBloomberg.ca. 

However, Johal flagged barriers to wide-scale adoption of factory-built homes, including “limited awareness” among regulators, which can slow down the approvals process.

“They tend to take quite a bit of time to review and approve these projects. That really eats into one of the big advantages that modular offers, which is the speed and timeliness with which it can be delivered,” Johal said. 

Targeted policy

The CSA Public Policy Centre released a report last week highlighting modular housing’s potential to help ease Canada’s critical shortage of housing. The report’s authors made recommendations for governments to capitalize on modular housing, including addressing gaps in building codes.

Johal said that will involve ensuring inspections and approvals are done in a “coordinated, streamlined fashion,” not just applying the same approaches from traditional construction to the modular market.

“Things are done differently and we need to make sure that we recognize that,” he said. “That could involve greater recognition of standards around how modular homes are built.” 

The report also noted a need to develop training and guidance for the industry and regulators, and called for improved access to financing. 

Builders at the ready

Some homebuilding companies are standing at the ready for a move to more modular building in Canada, and one is using new technology like AI to help speed up the homebuilding process.

Frank Cairo, co-founder and CEO of the Caivan Group of Companies, told BNNBloomberg.ca that his company leverages AI, generative design and various other technologies to automate large portions of the factory home-building process. 

Caivan is active in over 50 communities in Ontario, primarily Ottawa and GTA. They are a top three builder in Ontario by volume.

Caivan Group’s factory in Ottawa. Credit: Jairus Leeson

The standard building permit process applies to homes produced by Caivan, Cairo said. Going forward, he questions what the approval regime will look like for factory-manufactured homes compared to traditional builds. 

Caivan currently operates mostly in Ottawa and the Greater Toronto Area. In Ontario, Cairo said his company faces challenges around uneven flow of land development approvals, which can disrupt productivity.

He said the company’s Ottawa factory runs best when it is operating at an “even pace,” requiring predictability in the approvals process.

How modular building works

Johal said modular building approaches can offer “substantial” reductions in construction times with “completion schedule rates about 25 to 50 per cent faster than traditional methods. That’s because under the modular method, “builders can undertake tasks concurrently rather than sequentially.” 

Using this approach, about 80 per cent of construction occurs offsite, he explained.

Johal also noted that modular construction strategies can offer cost savings of up to 20 per cent when compared to traditional methods, and these types of construction projects can reduce waste by up to 46 per cent. 

In addition to factory building techniques, Cairo said the technology used by Caivan “shaves about three and a half months off the build cycle of a new home.”

Automating much of the process reduces human error, he added.

“Our factory will fully manufacture between four and six individual homes a day, and then it will take one day to install those homes,” Cairo said. 

This is partly possible due to “generative design algorithms” that automate large parts of the architectural process. 

“Those architectural sets that get generated through the algorithm directly connect with our equipment line for manufacturing processes,” Cairo said. 

At the moment, Caivan builds around 1,000 homes a year. The company has set an “ambitious target” to increase its annual manufacturing output, Cairo said, with a goal of building 4,000 homes per year within three years.