This is a post from Alex Carrick's blog that covers the Canadian construction industry.

Since 1985, Mr. Carrick has held the position of Canadian Chief Economist with Reed Construction Data's CanaData, the leading supplier of statistics and forecasting information for the Canadian construction industry.

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Construction Industry Forecasts

Notes from Alex Carrick - Jan 26, 2011

Alex Carrick
Canadian upcoming showcase construction projects

The first half of 2011 will be a period of transition for construction activity. More specifically, the source of financing will begin to shift from the public sector to the private.

When considering the outlook for construction, it is useful to compile a mental inventory of some of the largest projects that are likely to proceed in the months and years ahead. Individual large construction projects have an inordinate impact on the industry in terms of manpower and material requirements. They can also be tremendous confidence boosters for a regional economy.

Think of these projects as the equivalents of blockbuster hits in the entertainment world. 

The following are some of the capital projects that will be making the headlines in 2011 and beyond. Most of these are in the private sector, but a surprising number still originate with government. Plus there will be ongoing pitches to politicians to provide financial support.

Regina is looking for help to build a new domed stadium to play home to the city’s beloved Roughriders in the Canadian Football League. The city is also about to acquire its first new skyscraper in a while. A new 20-story office tower is set to shoot up in the downtown core, with Mosaic Potash Corp. as the lead tenant. It will be the company’s headquarters.

In Quebec City, printing magnate Pierre Karl Peladeau of Quebecor, has offered financial support for a new hockey arena, with the ultimate goal being to lure back a National Hockey League team to the province’s capital. Some members of parliament have jumped on the bandwagon.

In Hamilton, extensive renovations to Ivor Wynne stadium are planned, both to improve and expand seating for Tiger Cats’ games and to serve as a venue for soccer at the Pan Am Games to be hosted by Toronto and surrounding regions in 2015.

The Pan Am Games are also the motivation for a new aquatic centre to be built at York University. The new city council in Toronto, headed by Rob Ford, is balking at the unexpected cost of cleaning up what was once a landfill site, but the project is still a lock to proceed. Housing for Pan Am’s participating athletes will be erected on Toronto’s eastern waterfront.

De Beers plans to proceed with its Gahcho Kue diamond mine north of Yellowknife in the Northwest Territories. Brazil’s Vale S.A. is planning major mining expansions in Sudbury and at Voisey’s Bay, Labrador. The company is also reviewing whether to develop its Milestone potash property in Saskatchewan. Rio Tinto Alcan is beginning preparatory work for aluminum smelter expansions in Quebec and B.C. The world price of aluminum has picked up smartly.

In Ontario, there is expected to be major investment in the Ring of Fire region north of Thunder Bay. Noront Resources and Cliffs Natural Resources are two firms given a good chance to proceed with projects at nickel, copper, platinum, palladium and chromite deposits.

Potential iron ore mines in northern Quebec are generating excitement. One example is the Mary River property partly owned by ArcelorMittal. While the extracted product will probably be shipped to Europe for steelmaking, it is the surge in demand from China and other emerging nations that is causing record high prices for all manner of metals and minerals.

Shale gas projects in Canada aren’t charging ahead to the same degree as in the U.S. The highest-profile pilot projects and development sites are in northeastern B.C. and southern Saskatchewan. A major project partly backed by Talisman Energy south of the St. Lawrence River in Quebec was derailed by environmental protests. It is interesting to note that former Quebec Premier, Lucien Bouchard, has been retained by gas producers to work on improving the industry’s image.

The global price of oil has climbed above $90 USD per barrel. Combine surging motor vehicle demand in emerging nations with reduced deepwater drilling since BP’s Gulf of Mexico disaster last summer and the price could easily shift above $100 per barrel by the end of this year. The giant producers in the industry have taken notice and are responding with alacrity.

France’s Total SA (under the name Total E&P Canada Ltd.) and Suncor Energy Inc. have formed an alliance to spend billions on their Fort Hills and Joslyn mining sites, combined with the previously stretched-out Voyageur upgrader project, in Alberta’s Oil Sands region.

Nalcor (the Newfoundland and Labrador power authority) and Emera (Nova Scotia Power) will be proceeding with the Muskrat Falls hydroelectric station on the lower Churchill River in Labrador for $6 billion. SNC-Lavalin has signed a letter of intent with the owners to be project manager.

Queen’s Park in Ontario plans major new nuclear facility expansions, with or without clarity in the sale of Atomic Energy of Canada Limited (AECL). If AECL’s ownership remains in limbo – potential suitors have so far walked away – Ontario will proceed with foreign technology, leaving behind the once cutting-edge Candu heavy water system.

Also longer term, if ever, is a Mackenzie Valley natural gas pipeline ($16 billion), which recently received approval from the National Energy Board. However, unlike oil, gas prices remain depressed and are a disincentive to proceed with such mega spending any time soon.

There are also several proposals to ship oil to Canada’s west coast for transport to energy-thirsty countries along Asia’s Pacific Rim. Enbridge’s Northern Gateway Pipeline proposal from Alberta to Kitimat has drawn the most attention. Kinder Morgan Canada is offering an alternative pipeline option with a Vancouver terminus.

The two national railways have also entered the game. CN was first to step up, but CP is also said to be preparing a pitch to move tanker cars full of oil to ports along B.C.’s Coast. CP’s major concern, in the months ahead, will be labour negotiations, with a possible strike looming. All of these export-oil-to-Asia ideas will have to overcome proposed super-tanker shipping bans.

The Canadian construction industry may not be kicking up its heels just yet but at least a couple of toes are starting to tap dance.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News. Mr. Carrick also has a lifestyle blog that can be reached by clicking here.


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