Suncor signs oilsands lease development MOU with Fort McKay First Nation

On Thursday, Alberta Premier Danielle Smith said; 'it just warms my heart'.

Amanda Stephenson, The Canadian Press

Suncor Energy Inc. has signed an agreement with the Fort McKay First Nation that the oilsands giant says could lead to its first-ever bitumen extraction project on reserve lands.

The Calgary-based energy company, together with the Fort McKay First Nation, announced Thursday that they have struck a memorandum of understanding on an oilsands lease development opportunity.

Suncor said it is in the process of conducting early-stage technical and commercial feasibility assessments to determine the quality and quantity of mineable bitumen ore in the area, which is located within the Regional Municipality of Wood Buffalo in northern Alberta and on the Fort McKay First Nation's traditional territory. (Bitumen is a variant of oil common in the oilsands.)

"Any resource extraction from this lease would be a first," said Suncor's executive vice-president of oilsands Peter Zebedee in an interview, adding the agreement ensures the First Nation will be in charge of governing oilsands activity on the reserve as well as having the opportunity to financially benefit from it.

“It’s a real example of Fort McKay having a significant say in responsible resource development and how we build these resources ultimately to fruition, but also having a significant share and sharing in the benefits of this resource extraction.”

Suncor has been seeking ways to boost its long-term bitumen supply to replace output from its Base Plant mine, which is expected to be depleted as early as the mid-2030s. Suncor's move to buy French company TotalEnergies' stake in the Fort Hills oilsands mine last year was part of that effort. 

While Zebedee said it's too early to know the exact scale or potential of the bitumen resource at the Fort McKay lease site, he said it's one of a "suite of opportunities" being considered as part of the company's overall bitumen supply plan.

He said the lease site is appealing in part because of its location between Suncor's joint venture Syncrude Aurora site and its Fort Hills mine.

"Given just where it's located geographically, we do see some good synergies with Suncor's existing operations in the region," Zebedee said.

The Fort McKay First Nation has more than 900 band members of Dene and Cree heritage residing on the reserve and abroad. The community is located 50 km north of Fort McMurray along the shores of the Athabasca River.

In a news release, Fort McKay First Nation Chief Raymond Powder said the agreement charts a new path for economic development on Indigenous lands and will help secure the local community's future growth.

"This is the true meaning of reconciliation," Powder said. 

"It puts in our hands the tools we need to bring prosperity and a sustainable future for our people."

First Nations' relationship with Canada's oilsands industry over the years has been complicated. Some First Nations people in northern Alberta oppose oilsands expansion over concerns about potential negative impacts on treaty rights, culture, waterways and the environment.

Others welcome the jobs and economic growth opportunities that the industry brings. 

The Fort McKay First Nation has been supportive of Suncor's commitment to achieving net-zero emissions from its oilsands operations by 2050, as well as the work of the Pathways Alliance oilsands industry group, which has proposed building a major carbon capture transportation and storage network in northern Alberta.

The same project has attracted criticism and concern from some other First Nations in the region.

On Thursday, Alberta Premier Danielle Smith said she was excited to hear about the agreement between Suncor and Fort McKay First Nation.

"I would love to see more projects like that because I have conversations often times with our First Nations partners and one of the things they ask is, 'How can we do more to share revenue?' " Smith told reporters.

"So to see a proposal where a band is going to be in on the ground floor of production, it just warms my heart. I think it's a fantastic proposal."

This report by The Canadian Press was first published March 7, 2024.

 

Trudeau eyes boost to housing in new budget as firms worry about tax hikes

Brian Platt, Erik Hertzberg and Laura Dhillon Kane, Bloomberg News

Finance Minister Chrystia Freeland’s upcoming budget is likely to put significant money toward boosting Canada’s housing supply, according to people familiar with the plans, adding pressure on the government to find more revenue.

Freeland and Prime Minister Justin Trudeau have been trying for months to quell rising public frustration over the high cost of homes, announcing plans to give billions to cities in return for changes that accelerate construction, among other moves. The government is working on other housing-affordability policies in advance of Freeland’s April 16 budget, the people said, speaking on condition they not be identified.

The government may also have to commit more money for industrial subsidies, defense, university research and drug plans in that document. New measures to raise revenue are likely if Freeland is to stick to her promise to keep deficits from growing — unless she cuts spending in other areas. That has some in Canada’s business community concerned the government will introduce corporate tax increases to fill the gap.

In November, the government projected annual deficits about $40 billion (US$29.6 billion) between 2023 and 2026 — but the country’s fiscal watchdog has already raised doubts it will meet this year’s target.

Home construction activity was soft in parts of Canada last year as higher interest rates and slow approval times discouraged many developers from starting projects. Meanwhile, surging rents have led to new debate about whether the country can continue to absorb large numbers of immigrants.  

Trudeau and Freeland face political constraints, in addition to financial ones, as they craft what will be one of their final budgets before the next election. They can’t afford to produce a fiscal plan that’s seen as inflationary. The governing Liberal Party is far behind Pierre Poilievre’s Conservatives in opinion polls, and officials are eager to see the Bank of Canada cut interest rates.

Some business leaders are worried Freeland is considering hiking corporate taxes, such as a broad-based tax on profits of large companies. It’s a tactic the government has used before: in 2022, Freeland levied a one-time tax on windfall profits by major banks and insurers, and last fall Trudeau threatened grocers with new taxes if they didn’t help rein in food inflation. 

An excess profits tax would be favored by the opposition New Democratic Party, which is propping up Trudeau’s government in Parliament. 

“The latest rumor in Ottawa is the government will try to solve its problem by introducing a new corporate tax — one that targets Canada’s most successful companies,” Goldy Hyder, chief executive officer of the Business Council of Canada, wrote in an editorial published in The Hub on Wednesday. 

Hyder said large businesses “have become a popular punching bag for politicians,” but warned that taxing profits would “further discourage business investment in Canada and force successful Canadian companies to either constrain or cancel any growth plans.”

Freeland’s office declined to comment on any potential tax measures in the budget.

Still, Trudeau and Freeland may decide a battle with business over taxes is preferable to letting the deficit run higher, or failing to address concerns about housing. A loose fiscal policy risks giving pause to the central bank’s rate-setting committee as it debates whether and when to start lowering borrowing costs.

Some economists point out that government spending in recent years — including on Covid-19 emergency programs, which led to a record $328 billion federal deficit in the first year of the pandemic — has already complicated the central bank’s job. Last year, Bank of Nova Scotia economists estimated that the combined spending of provincial and federal governments forced the Bank of Canada to add as much as 200 basis points of tightening. 

On the other hand, drastically cutting spending now risks weakening an economy that’s already struggling. 

“Now that rates have gone up this much, I don’t think it would be especially constructive to really slam the brakes on the fiscal side,” said Doug Porter, chief economist with Bank of Montreal, adding that he’d still “heavily caution against spending a lot more at this stage.”

The government will get some help from a spending review recently led by Treasury Board President Anita Anand, which she says “refocused” $10.5 billion in planned travel and consulting expenses over the next three years toward priorities such as housing, health care and the clean economy. 

Still, the spending estimates she introduced in Parliament project $449.2 billion in spending in the upcoming fiscal year — on top of anything to be announced in the spring budget. That’s an increase of $16.3 billion, or 3.8 per cent, from the main estimates for the current fiscal year, which ends March 31. 

Anand rejected calls to cut spending. “We did not want to undermine services to Canadians,” she said in an interview. “We’re reallocating money that can be used for a higher purpose.”

Trudeau has taken some steps to reduce inflationary pressures. After a record surge in international students, Immigration Minister Marc Miller set a cap on the number of study permits. That’s expected to ease pressure on rental costs, which rose 6.5 per cent last year. 

There’s also some inflation risk attached to the budget plans of provincial governments, which are planning to ramp up spending. British Columbia recently projected its budget deficit will widen by a third to a record $7.91 billion in the coming fiscal year. “I think there are some question marks about how much fiscal restraint or stimulus there will be at the provincial level,” said Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce.

 

Keystone oil pipeline segment shuts, sending futures higher

Devika Krishna Kumar, Lucia Kassai and Robert Tuttle, Bloomberg News

TC Energy Corp’s Keystone oil pipeline, which transports heavy Canadian crude to the U.S. Midwest and Gulf Coast, partially shut Thursday, sending oil futures higher in post-settlement trading. 

Pressure dropped on a segment of the line running from Hardisty, Canada, to Steele City, Neb., according to a Wood Mackenzie report seen by Bloomberg. The pressure drop indicates the line stopped moving oil. 

TC Energy and Wood Mackenzie didn’t immediately return requests for comment. 

Keystone has a long history of ruptures, including a 12,000-barrel spill last December that shut the line for two weeks and roiled global oil markets. U.S. benchmark crude futures edged above US$79 a barrel Thursday afternoon after closing at $78.93.

The shutdown at Steele City means that the line is likely sending less oil to the key storage hub of Cushing, Oklahoma, and to the refining center around Patoka, Illinois. The Keystone pipeline also ties in with the Marketlink pipeline, which transports oil to refiners on the Gulf Coast and to sea terminals that take Canadian oil to fuelmakers in Asia and Europe. 

 

BMO, CIBC and Scotiabank executives missed bonus targets in rocky 2023

Christine Dobby, Bloomberg News

The top executives at three of Canada’s biggest banks took home less than their target pay last year, according to new filings. 

The fiscal year was marked by rising interest rates, the US regional bank crisis, geopolitical uncertainty and increasing regulatory pressures. Those challenges influenced executive pay at the four largest lenders that have disclosed annual compensation so far — Royal Bank of Canada, Bank of Nova Scotia, Bank of Montreal and Canadian Imperial Bank of Commerce.

Of the four chief executive officers, only Royal Bank’s Dave McKay took home more than his target compensation in fiscal 2023. Here’s how compensation played out at those banks. 

Bank of Montreal’s Darryl White

Darryl White was paid $11.2 million (US$8.4 million) in direct compensation, which includes salary, bonus and share- and option-based awards, below the board’s $11.8 million target. “Through the year greater instability in U.S. regional banking and more global economic uncertainty occurred than anticipated and BMO did not achieve its 2023 goals,” the bank said in its proxy circular.

Bank of Montreal completed its acquisition and integration of San Francisco-based Bank of the West last year.   

Including pension amounts and non-cash benefits, White’s pay was $12.5 million, down from $14.3 million in 2022. 

Scotiabank’s Scott Thomson

Scott Thomson officially stepped into the CEO role at Scotiabank on Feb. 1 last year and his compensation was pro-rated to reflect that. The board awarded him $7.7 million in direct pay, $1 million less than his target. His total compensation including pension and other benefits was $9.4 million. 

The new CEO conducted a “comprehensive review” of the business last year and held more than 50 one-on-one meetings with institutional investors, the bank said in its circular. Thomson unveiled a new strategy at an investor day in December. 

“While earnings were below plan for the year,” the document said, “Mr. Thomson made key strategic decisions to establish the foundation needed to prepare the bank for its next phase of profitable, sustainable growth.”

CIBC’s Victor Dodig

Victor Dodig’s target for direct compensation was set at $11 million and CIBC’s board awarded him $10.7 million, reflecting the fact that the bank fell short of its financial targets. 

His total compensation was up slightly from the previous year at $11.2 million.

CIBC announced an executive shuffle Thursday, including plans to move Chief Financial Officer Hratch Panossian into an operating role as head of personal and business banking. 

“Victor’s been CEO for a decade. So, it looks like they’re shuffling the pieces around a little bit and hopefully getting some interesting names some different experience,” John Aiken, an equity analyst with Jefferies Financial Group Inc., told Bloomberg in an interview. 

Royal Bank’s Dave McKay  

Dave McKay received overall compensation of $16.1 million for the fiscal year ended Oct. 31, down slightly from a year earlier.

His direct compensation target was $14 million and the board awarded him $15.2 million, making him the only CEO of the four to exceed his target. 

McKay’s short-term incentive payment for the year was 10 per cent lower than last year, “reflecting lower financial performance compared to target,” the bank said in the filing. 

But the board granted McKay more generous mid- and long-term awards, noting citing his “continued leadership in steering RBC through a turbulent environment and making strategic investments”.

McKay managed to win government approval for Royal Bank’s landmark acquisition of HSBC Holdings Plc’s Canadian assets last year, a deal that is set to close on March 2

 

Perrin Beatty leaving Canadian Chamber of Commerce after 17 years

BNN Bloomberg

Perrin Beatty is leaving his post as president of the Canadian Chamber of Commerce at the end of August. 

The Chamber announced Beatty's departure Thursday, saying it starts a process of leadership renewal ahead of the Chamber's 100th anniversary next year. 

It says Beatty has been president and CEO for 17 years, making him the Chamber's longest-serving president. 

He is a former Progressive Conservative cabinet minister, and led the Canadian Broadcasting Corp. and the Canadian Manufacturers & Exporters before joining the Chamber. 

Beatty says the next leader will "bring a fresh perspective" to the organization. 

The Chamber says a special committee will conduct the search for the next president and CEO through a recruitment firm. 

This report by The Canadian Press was first published March 7, 2024.

Canadians paying billions of dollars in 'excess' bank fees: report

Ian Bickis, The Canadian Press

As the federal government pushes to reduce bank fees, a report from consultancy North Economics figures Canadians are overpaying by billions of dollars a year.

The report by the Alberta-based firm compared fees at the Canadian Big Five banks — RBC, TD, BMO, CIBC and Scotiabank — with what consumers face in the U.K. and Australia.

It shows that Canadians pay much more per month for bank accounts, as well as for fees for non-sufficient funds, overdraft charges, and accessing ATMs at competitor banks.

To get a sense of just how much more Canadians pay, North Economics managing director Alain de Bossart looked at how Canadian and British non-interest retail bank profits compare with their deposits. The measure excludes interest-based profits from mortgages and other loans.

Using the retail banking profits to deposits ratio for 2022, he found that Canada's five biggest banks had $7.73 billion in "excess" income. The number works out to about $250 per Canadian. 

"Canadian banks have done a very good job of extracting as many fees out of people as possible," said de Bossart.

He said he's been wanting to delve into the issue since moving to Canada from the U.K. about seven years ago. 

"The first thing that struck me was that you pretty much have to pay a monthly fee, for just allowing a bank to hold your day-to-day deposits," said de Bossart.

"In the U.K., you can hold multiple bank accounts with multiple banks, and expect to pay no monthly charges at all for a bank account that allows you to do everything you would reasonably expect to do in a month."

The Canadian Bankers Association said in a statement that Canada's banks provide the tools Canadians and small businesses need to manage their finances. 

"Our country’s competitive banking system provides good value, ready access and wide choice for consumers and businesses," said spokeswoman Maggie Cheung. “The banking sector understands the importance of financial well-being to all Canadians, and that many Canadians are feeling additional pressure on their budgets.”

The report highlights that along with major banks in the U.K. and Australia offering free accounts to all consumers, they also charge either nothing or only a few dollars when a customer is hit with non-sufficient funds. Canadian banks charge between $45 and $50 each time.

Finance Minister Chrystia Freeland has been pushing to improve low-cost banking options and lowering non-sufficient fund fees but has yet to do so, which de Bossart said prompted him to look into the issue.

The report also notes that Canadian banks generally charge $5 for overdraft protection, either on a monthly or per instance basis, whereas U.K. banks charge nothing (though banks in the U.K. do charge higher interest on the overdrafted amount). 

Canadian also often face multiple fees when using the ATM of a bank where they don't have an account, which can run anywhere from $1 to $9, while consumers in the both Australia and the U.K. aren't charged anything, he said.

Cheung said the banking sector "understands the importance of financial well-being to all Canadians, and that many Canadians are feeling additional pressure on their budgets.”

She noted that according to recent data from the Bank of Canada, roughly 57 per cent of Canadians either do not pay for a bank account or had their monthly fee waived or refunded.

No-cost accounts are available to groups like young people, students and seniors, but the North Economics report notes there is no free option offered to all Canadians.

It also points out that while customers can avoid paying fees if they keep a high enough balance in their account, that amount can run anywhere from $3,000 to $6,000. That means the lump sump can't be generating more via a different account with better interest rates. 

De Bossart said the lower fees in the U.K. and Australia are in part a result of regulators having a stronger mandate to encourage competition, including through things like making it easier to switch accounts.

“The regulation mandate has really included a competition mandate, so the idea of promoting and enhancing competitive behaviours in the market, whereas in Canada, that's really not something that is being considered."

This report by The Canadian Press was first published March 7, 2024.

 

McMaster University launches partnership with Celesta Capital

Daniel Johnson , BNN Bloomberg

McMaster University and Celesta Capital, a Silicon Valley venture capital firm, entered into a partnership to support start-ups and Canada’s technology industry. 

The partnership was announced in a press release on Tuesday and aims to commercialize technologies developed by researchers at McMaster. Through the agreement, Celesta will provide support to start-up companies affiliated with the university, working towards commercializing intellectual property. 

"McMaster is committed to moving research from the lab and into the hands of those who can put it to work out in the world," McMaster President David Farrar said in the release. 

"This partnership with Celesta Capital allows us to combine our research, talent, and intellectual property with their entrepreneurial expertise and vast network of investors to create companies that benefit both the Canadian economy and broader society."

According to the release, Celesta Capital is a multi-stage venture capital firm focused on deep technology and has a portfolio of over 100 early-stage technology investments. 

 

Surprising jobs numbers show Canadian labour is 'holding on': economist

Ben Cousins, BNN Bloomberg

Canada’s surprising job numbers for February show a resilient economy that has remained consistent over the past few months.

On Friday, Statistics Canada reported the Canadian economy added 41,000 jobs in February, as the nation’s unemployment rate ticked up to 5.8 per cent.

Brendon Bernard, senior economist at Indeed, said the figures are “really similar” to January’s, as unemployment ticks higher due to high levels of immigration. 

“In general, big picture, it's consistent with the labour market holding on as we are continuing this period of economic uncertainty, but not deteriorating like I think some might have feared,” he told BNN Bloomberg in a television interview on Friday.

“We did see the unemployment rate tick up … that's still a pretty low number and so overall, consistent with maybe a slight softening of the market that we saw throughout the second half of last year, continuing to start this year.”

Meanwhile, the report found hourly wages climbed five per cent from a year ago, but year-over-year growth fell from the 5.3 per cent in January.

“A fall in wage growth signals more disinflation in sight: it dampens workers’ wage growth expectations and when employers do not have to keep raising wages, they can keep prices in check,” Tu Nguyen, an economist with RSM Canada, wrote in a statement.

Dominique Lapointe, director of macro strategy for Manulife Investment Management, called Canada’s unemployment rate “concerning” when factoring in immigration. 

“One good news from the (Bank of Canada's) standpoint is that wage growth slowed down both in (year-over-year) and momentum basis,” he said. “In turn, this should be seen through easier core services inflationary pressure later this year.”

What does this mean for the Bank of Canada?

Bernard said the jobs data will do little to influence the Bank of Canada’s decision-making concerning interest rates.

“I think the key thing they're watching for right now is coming out from the (Consumer Price Index) report seeing their various range of measures of inflation getting back to two per cent,” he said.

“This report, I don't think, moves the dial really.”

Nguyen added that Friday’s numbers “did little to sway” to Bank of Canada’s thinking.

“The Bank might feel no urgency to cut rates faster as the economy added tens of thousands of full-time positions, a sign of remaining steam that could keep the economy afloat for a few more months,” Nguyen said.

With files from The Canadian Press

 

Public sector hiring is driving the labour market in Canada

Randy Thanthong-Knight and Jay Zhao-Murray, Bloomberg News

Employment gains in the public sector more than offset losses among Canadian businesses last month, highlighting a labour market that has been propped up by government hiring.

In February, public-sector roles rose by 18,800 positions, while the private sector lost 16,400 jobs, Statistics Canada data showed. Over the past year, employment in the public sector has grown 4.7 per cent, versus 1.2 per cent in private industry.

“If you look at how the private sector’s trending, it’s sharply decelerating,” Beata Caranci, chief economist at Toronto-Dominion Bank, said in a phone interview. “That’s tied to the interest rate cycle, not the government hiring that’s tied to specific funds and social policy.”

Caranci said she’s focused on the job market as one of the key metrics to gauge the timing of Bank of Canada rate cuts. The central bank held its key rate steady at 5 per cent this week, saying it needs to see sustained downward momentum in core inflation before considering cuts. Many economists in a Bloomberg survey expect it to begin lowering borrowing costs in June.

The trend in hiring by businesses “is going to be one of the more compelling arguments if they are going to cut interest rates earlier or later,” she said. “That, to me, is going to be a huge influence on their decision if we see private sector demand really starts to collapse.”

Last month, the labour market surged past expectations with the biggest job gains since September, but a rising unemployment rate and slowing wage growth still point to easing inflation pressures ahead. Self-employed positions along with public-sector roles drove the increase of 40,700 jobs.

The federal public service has grown by 38 per cent since Prime Minister Justin Trudeau came to power in 2015, according to MEI, a Montreal-based think tank. Recently, Treasury Board President Anita Anand led a spending review that moved some $10.5 billion that was earmarked for consultants and travel over the next three years to other areas, such as health care and housing.

Anand said the goal of the review was not to cut jobs, but some may be lost as government employees leave and aren’t replaced.

“For certain departments, as a result of this exercise, there may be changes in the workforce because of the redeployment of employees to higher priority activities or through attrition,” she said in an interview, adding that senior bureaucrats will be responsible for those decisions.

CANADA

Economy adds 41,000 jobs in February, but employment gains lag population growth

Nojoud Al Mallees, The Canadian Press

Canada's labour market is getting a helping hand from population growth as the economy added 41,000 jobs in February. 

Statistics Canada also reported on Friday that the unemployment rate ticked up to 5.8 per cent.

Job gains, which were driven by full-time employment, were spread across several industries in the services-producing sector, with the strongest growth in accommodation and food services.

The February increase comes after similar stronger-than-expected job gains in January.

The Bank of Canada's steep interest rate hikes have helped cool the labour market over the last year by causing a pullback in spending. However, strong population growth appears to be offsetting some of those effects, including in the labour market.

"Certainly, that overwhelmingly large rise in full-time jobs is quite impressive," said BMO chief economist Douglas Porter in an interview. 

"(But) it's quite clear also that the numbers are being heavily influenced by the incredibly rapid population growth we're seeing." 

Over the last year, Canada's population grew by 1,031,200 people while employment rose by 368,000 jobs. 

With more people searching for work at a time when the economy is slowing, Porter says job seekers may be more willing to take on less-than-ideal work. 

"As you add people to the labour force, and it gets tougher and tougher to find the kind of job you want, you might be more willing to take a job that's available," he said. "So we do get employment gains, it's just there simply aren't as many new jobs as there are new people."

Andrew Grantham, CIBC's executive director of economics, says population growth "continues to flatter the Canadian jobs figures," though other measures of the labour market suggest weaker conditions. 

"There is evidence from a further decline in the employment ratio and increase in long-term unemployment that labour market conditions are continuing to weaken," wrote Grantham.

"However, this is happening only gradually and not in a way that demands an imminent reduction in interest rates."

Statistics Canada has been putting more emphasis on the employment rate in its reports recently to capture whether job gains are keeping up with the country's ballooning population.

The federal agency noted Friday that the employment rate – which represents the proportion of Canadians aged 15 years and older who are employed – fell for a fifth consecutive month in February.

That’s the longest period of consecutive decreases since the six-month period ending in April 2009.

Porter says the decline in the employment rate is also being influenced by the greying population. 

"At the same time as we have this very rapid population growth and immigration growth, we've also got, of course, a lot of people who are hitting the age 65 every single month," he said.

Meanwhile, wages continue to grow rapidly in Canada. Average hourly wages were up five per cent from a year ago, down from a rate of 5.3 per cent in January.

Economists reacting to Friday's jobs report say it shouldn't move the needle for the Bank of Canada.

The central bank, which is holding its key interest rate at five per cent, is widely expected to begin lowering its benchmark rate in June. 

On Wednesday, governor Tiff Macklem was tight-lipped about the future path of interest rates.

“With inflation still close to three per cent and underlying inflationary pressures persisting, the assessment of governing council is that we need to give higher rates more time to do their work,” said Macklem in a news conference.

“We’ve come a long way in our fight against high inflation. But it’s still too early to loosen the restrictive policy that has gotten us this far.”

This report by The Canadian Press was first published March 8, 2024.