Yesterday, I talked about how the largest upcoming industrial construction projects are resource-related. This is based on the list of the biggest upcoming projects in this category as published in CanaData’s August 2008 newsletter.

The reason for the planned investment strength in the resource-related area is high worldwide demand, especially augmented by emerging nations, and the consequent bidding up of commodity prices.

I promised that I would discuss some of these projects in more detail. Here goes.

Two aluminum smelter expansions are valued at several billion dollars each. The largest, at an estimated $2.5 billion, is only in the contemplated stage. This is a proposed expansion of Alcan’s facility at Jonquière, Québec. The second, also by Alcan, is planned for the company’s existing site in Kitimat, British Columbia. The latter project is in the preparing-plans stage and carries an estimated value of $1.8 billion. This will be a “potline” modernization.

If both projects proceed, they will provide the company with an additional 700,000 and 800,000 tonnes of aluminum per year. Expansions in this industry depend on a demand outlook that primarily comes from the automotive and aerospace industries and an input dynamic that is mainly dependent on electricity. Both Québec and British Columbia are blessed with the resources to provide Alcan with carbon-free and renewable hydroelectric power.

The next largest project on the roster is a gold mine complex for Agnico-Eagle Ltd. This is to be located 70 kilometres south of Baker Lake in the Keewatin Region of Nunavut. It will consist of three open pit mines with the capacity to produce 300,000 to 400,000 ounces of gold per year. The project has proceeded to “working drawings” and some roadwork to the site is underway. The price of gold set a new record high in this latest cycle, flirting with $1,000 US per ounce, as a hedge against U.S. dollar declines and worries about inflation.

Strength in steelmaking demand from countries such as China, South Korea and India is driving up the cost of raw material inputs, including coal and iron ore. Fortune Coal Ltd. is planning a nearly $300 million coal mine at Mount Klappan, 160 kilometres northeast of Stewart in B.C. and Cline Mining Corp. is working on a similarly-sized project, known as the Lodgepole coal mine, 50 kilometres south of Fernie, also in B.C.

Most of the remainder of the list is also made up of resource-related work including: an oriented strandboard plant for Ainsworth Lumber in Manitoba; a meat packing plant for the Northwest Cattlemen’s Alliance in Lethbridge, Alberta; and a canola processing plant for James Richardson International in Yorkton, Saskatchewan.

The only “what-might-be-called” traditional manufacturing project on the industrial construction list is a $400 million plant addition “contemplated” by General Motors for St. Catharines, Ontario. If approved, this new facility will produce rear-wheel-drive, six-speed transmissions.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News.

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