On average, economies of resource-rich countries do not outperform countries lacking those natural materials. According to Jeffrey Frankel, Professor of Capital Formation and Growth at Harvard’s Kennedy School, this results from undesirable side effects of resource extraction…
Continue readingTag: Natural Resources
Views from the Beltline: “Why are we building houses if we don’t have enough water?”—A big lesson from a little town
Oakley, Utah, is small but appealing. Nestled in the mountains beside the Weber River less than an hour’s drive east of Salt Lake City, the town offers an attractive bargain for out-of-staters and weekenders. The river and mountain springs provided plentiful water that attracted early settlers. Water, however, is no
Continue readingIn-Sights: Privatizing public wealth
Years ago, corporations decided they should pay less for BC’s natural resources. The companies funded pressure groups, slick online websites, and social media shills. All amplified public messaging in support of private resource extraction. Lobbyists wined and dined politicians and senior bureaucrats. Dollars moved into the bank accounts of political
Continue readingViews from the Beltline: Time to start paying Mother Nature back
I’ve long thought that the sensible approach to the global economy is obvious, if complex. We calculate what the Earth can sustainably provide in terms of natural resources, then we set our economic demands at something less including a substantial safety factor. The total demand is then equitably shared by
Continue readingIn-Sights: Extractivism – BC as third world economy
In British Columbia’s natural resource sector, public revenues decreased while quantities and values produced increased. First published in 2014. Still relevant in 2019: Not long ago, British Columbia thrived on resource based […]
Continue readingIn-Sights: Rising production, declining gas revenue
Sale of crown petroleum and natural gas rights in the first nine month of 2019 totalled $12 million. The average for the first nine months of the preceding 20 years was $448 million. That is a reduction of more than 97%.
Continue readingIn-Sights: Omission of truth becomes a lie
In real terms, the BC government’s natural resource revenues in 2018 were 37% of the level in 2001, despite material increases in output.
Continue readingIn-Sights: Premier Horgan, where were you on Mount Polley?
Compare the passage of 4 years without a charge against Mount Polley operators to the quick response when a rude 19-year-old released an adult-sized blow-up doll over West Vancouver’s Ambleside beach. He was arrested within two weeks and faces a charge of mischief under Canada’s Criminal Code.
Continue readingIn-Sights: When regulators don’t believe in regulation
When a new government takes office, there is often a significant change at senior levels of the civil service and among OIC political appointments. One person still employed by the Horgan government may surprise more than a few people. Accordingly, I dug this out of the archives. By Order in
Continue readingIn-Sights: LNG facilities: siting, safety, regulation
An August 19 fire and gas leak at the Tilbury Island LNG facility reminds of the fuel’s inherent dangers. Luckily, Delta’s Firehall No. 7 is only 1,500 meters from the Fortis property and the situation resulted in minimal damages and injuries. However, consider what might result if the proposed Woodfibre
Continue readingIn-Sights: Socialized losses, privatized gains
Postmedia’s Michael Smyth came to Gordon Wilson’s defense after the LNG advocate was relieved of vague but costly responsibilities for gas industry promotion. But, did the political commentator make even a small effort to examine BC Liberal ambitions for this “generational opportunity”? Given Postmedia’s partnership with the Canadian Association of Petroleum
Continue readingIn-Sights: Huge cost, high risk, low government revenue, few permanent jobs, better choices
When thinking about the Petronas LNG project (PNW LNG), we should consider which supporting claims for it were believable. For example, proponents have routinely misrepresented the value and benefits of the project. The Star Online explains how the capital cost was calculated: Adding values of the export terminal and TransCanada’s troubled
Continue readingIn-Sights: Behind the ostensible government
An item previously published, with minor updates: I studied political science at university long, long ago. In those days, I was naive and idealistic and a member of the Liberal Party. Because I did not stay naive, I did not remain a Liberal. Yet, the theory of party politics makes
Continue readingIn-Sights: Gas sales in new fiscal year begin on a sour note
Premier Clark and friends are organizing demonstrations, trying to keep the LNG fantasy alive with voters, at least for another year.BC Liberals won’t admit economic reality but producers have already passed judgment on the future of the BC gas industr…
Continue readingIn-Sights: Gas sales in new fiscal year begin on a sour note
Stephen HumePremier Clark and friends are organizing demonstrations, trying to keep the LNG fantasy alive with voters, at least for another year.BC Liberals won’t admit economic reality but producers have already passed judgment on the future of the BC…
Continue readingIn-Sights: Gas sales in new fiscal year begin on a sour note
Stephen Hume Premier Clark and friends are organizing demonstrations, trying to keep the LNG fantasy alive with voters, at least for another year. BC Liberals won’t admit economic reality but producers have already passed judgment on the future of the BC gas industry. Looking at monthly sales of gas rights,
Continue readingIn-Sights: What’s good for the BC Liberals may not be good for BC Hydro
An article by Dermod Travis of Integrity BC. First published February 15, 2016, repeated here with permission.One of the last things anyone would ever imagine the B.C. government doing is adopting an old NDP program, but that’s exactly what Energy an…
Continue readingIn-Sights: What’s good for the BC Liberals may not be good for BC Hydro
One of the last things anyone would ever imagine the B.C. government doing is adopting an old NDP program, but that’s exactly what Energy and Mines Minister Bill Bennett did this month when he announced a five-year, $300 million hydro bill deferment plan for 13 mines owned by six companies.
Never mind that B.C. Hydro is already grappling with its own deferral problems to the tune of $5 billion.
Make no mistake, there’s a price to pay when B.C. Hydro becomes a political arm of government. The intertwining of self-interests gets complicated, while the interests of ratepayers can take a backseat to political interests.
Three of the six companies in Bennett’s deal were highlighted in a December Financial Post article, “Debt risks mount as Canada’s base metal miners sink deep in the hole.”
One could argue that the headline alone justifies Bennett’s move, except there’s no guarantee – other than a hope and a prayer – that B.C. Hydro will be repaid.
The issue of what happens if metal prices don’t rebound wasn’t addressed in Bennett’s news release.
Consider the “dire financial position” of one of the companies: Colorado-based Thompson Creek Metals.
Last year, Deutsche Bank analyst Jorge Beristain said the company is “quickly approaching an end-game” with debts of $832 million US.
According to the Financial Post, Teck Resources “has more than $3.5 billion US of debt coming due between 2017 and 2023 and lost its investment-grade credit rating last year.”
Taseko Mines, “has more than $260 million of senior notes coming due in 2019, while a $30-million US secured loan matures this May.”
It seems like only yesterday that the company sent Bennett off to lobby Ottawa on its behalf.
In January 2014, Bennett spent a day on Parliament Hill meeting with Natural Resources minister Joe Oliver and Industry minister James Moore to make Taseko’s case for its controversial New Prosperity copper and gold project.
By then copper prices had already fallen 27.5 per cent off their 2011 high.
Taseko is also in the midst of a messy proxy fight with Chicago-based Raging River Capital over $26 million in management fees Taseko has paid Hunter Dickinson Inc. Taseko and Hunter Dickinson share three directors in common.
Imperial Metals owns three of the 13 mines in Bennett’s deal, including Mount Polley, Red Chris and Huckleberry. In 2004, the government quietly forgave $3 million in liabilities owed it by Huckleberry Mine.
Imperial Metals’s controlling shareholder – Murray Edwards – has a net worth of $2.69 billion.
The B.C. Liberal party has done well from them.
From 2005 to 2014, the six companies donated $2.8 million to the party. Key executives kicked-in another $380,000.
Three of the six companies donated $97,010 to the NDP, $75,300 of it in 2013.
B.C. Hydro’s contractual obligations with private power producers have ballooned from $22.25 billion in 2009 for “2010 and beyond” to $56.2 billion for “2016 and beyond.”
It’s the gift that keeps on giving for everyone involved, except ratepayers.
In a 2008 call for independent power projects, 75 proponents registered with B.C. Hydro.
Forty-three submitted proposals and, in 2010, B.C. Hydro signed purchase agreements with 18 of the proponents.
From July 1, 2008 to September 30, 2010 – when B.C. Hydro was making its decisions – 14 proponents donated $268,461 to the Liberals. One donated $1,000 to the NDP.
Ten of the 14 signed purchase agreements with B.C. Hydro. One of the 14 who didn’t, never donated again.
Their before and after donations are interesting too.
For the 10 successful proponents, their donations more than doubled from $112,801 (January 2005 to June 2008) to $229,471.
After the deals were done, they settled back again. Seven donated $112,345 to the Liberals and five gave $16,225 to the NDP (2010 to 2014).In 2008, the Mining Association of B.C. received a $295,188 grant from the Northern Development Initiative Trust (NDIT) to make the business case for the Northwest Transmission Line.
In turn, the association hired Australia-based Macquarie Bank to “determine the threshold of economic activity that would be required to make the construction of the (line) an economically viable infrastructure project.”
NDIT’s Highway 37 Power Line Coalition has 22 private sector partners.
Excluding the six companies in Bennett’s deferral program, independent power producers and those identified by B.C. Hydro as “potential future mines” for the transmission line, three trade associations and ten of the companies donated $962,220 to the Liberals and $10,320 to the NDP.
Macquarie has donated $17,050 to the Liberals.
The $404 million transmission line overshot its budget by more than $300 million, with a final price tag of $716 million. But who counts bills among friends?
There are the nine “potential future mines” that B.C. Hydro hopes will one day connect to the line.
With the downturn in metal prices, B.C. Hydro shouldn’t hold its breath in anticipation.
Excluding donations from Imperial Metals and Teck, who have interests in three of the mines, the most generous companies were Goldcorp at $795,700, the Lundin Group of Companies ($112,145) and Copper Fox Metals ($93,130).
One of the founding directors of Copper Fox Metals is Hector MacKay-Dunn, who co-chaired the B.C. Liberal’s 2009 election preparation efforts.
MacKay-Dunn is affectionately known in some party circles as Hector the Collector for his prowess at political fundraising.
The nine companies behind the potential mines have donated $1 million to the Liberals and $18,050 to the NDP ($10,000 of it from Copper Fox in 2013).And at the same time the government was imposing hydro rate increases on schools and hospitals in 2014, Bennett announced a $100 million B.C. Hydro initiative for pulp and paper producers to “support investments in more energy efficient equipment.”
The forest industry has donated more than $4.2 million to the Liberals and $294,905 to the NDP.Tidy haul.
Add it all up: more than $9.8 million in donations from interested parties to the Liberals and $417,185 to the NDP, not including their 2015 donations.
Guess who gets saddled with the bill?
Including operating and capital development agreements that have tripled to $3.3 billion since 2010, B.C. Hydro’s contractual obligations now stand at $59.7 billion, not including their debt which has grown from $6.8 billion in 2004 to $16.7 billion last year.
They’ve had to borrow $3.2 billion just to turn around and give it to the B.C. government as so-called dividends.
Meanwhile, Hydro-Quebec cut a dividend cheque of $2.5 billion for the Quebec government in 2014.
They didn’t have to borrow money to cover the cheque and still had $700 million in profits left over.
In 2014, it’s rates were nearly two cents per kWh lower than B.C. From 2007 to 2015, its cumulative rate increase was 17.1 per cent. In B.C., it was 63.2 per cent.
Total donations from all of Hydro-Quebec’s suppliers and contractors to the Parti Quebecois and the Quebec Liberal party in the last 30-years? Zero.
Quebec bans corporate and union donations. The maximum any Quebec resident can give to a political party is $100 annually.
Dermod Travis is the executive director of IntegrityBC. www.integritybc.ca
In-Sights: What’s good for the BC Liberals may not be good for BC Hydro
An article by Dermod Travis of Integrity BC. First published February 15, 2016, repeated here with permission. One of the last things anyone would ever imagine the B.C. government doing is adopting an old NDP program, but that’s exactly what Energy and Mines Minister Bill Bennett did this month when
Continue readingIn-Sights: BC Liberals’ special partners
Again, another contribution from an In-Sights reader who is closely following the situation in Malaysia and asking why British Columbia wants to trust part of its economic future to these people.On Friday an Australian Broadcasting Corporation news sto…
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