MNI INTERVIEW: Investors Undeterred By Separatism- NWT Premier

Foreign investors remain confident about deploying funds in Canada as a strong pro-business environment and increasing differentiation from a volatile United States overshadow trade disruptions and separatist talk in Alberta and Quebec, Northwest Territories Premier R.J. Simpson told MNI.

Fund managers he's spoken with recently indicate they are inclined to move money from the U.S. to Canada seeking greater safety. “There are some international organizations, sovereign funds, that have been looking at Canada and the United States almost as one, but now they're parsing," he said in an interview. "In some instances, they're shifting more investments to Canada because of our stability.”

Groups in the provinces of Alberta and Quebec pushing referendums on separation don't represent a proper majority to advance, Simpson said. “There's some small minorities who are getting a lot of airtime but I think Canada is still very stable, and I don't think we could see a lot of political upheaval anytime in the near future.”

“We're still a very safe place to invest in becoming more attractive by the day, especially as we go down the path of building up our infrastructure, breaking down our own internal trade barriers, and really being a lot more business-minded than we have been in the past in this country,” he said.

Canada's 10-year yield stood at 3.23% mid-Tuesday, 82bps lower than a similar U.S. Treasury. Canada's dollar has also strengthened 4% over the last year against the greenback, a surprise amid the biggest trade war since the 1930s. 

ARCTIC CONNECTION

Canada is poised to open up new resource projects in the north with construction soon poised to begin on the Mackenzie Valley highway, he said. The road will also bring a reliable connection to the country's main Arctic military base, following talk from the United States about taking over Greenland.

“If you want to assert sovereignty, you need some infrastructure in the north,” he said. “It would also open up a region which has really been under-explored because it's been inaccessible.” (See: MNI INTERVIEW:Canada Must Bulk Up, Aid US To Keep Arctic Stake)

Prime Minister Mark Carney is under pressure from Donald Trump's assertion of regional dominance in the Arctic and he's also warned Canada not to embrace free trade with China. The federal resources minister said recently China might be allowed to take major stakes in crude oil projects if they can do so in what he called a responsible way, and Simpson said it's up to the federal government to set those kinds of rules.

“There are plenty of opportunities for investment in the territory. I think something that is a big unique about us relative to somewhere like the oil sands, is that we have critical minerals, that China really has a lot of control over right now,” he said.

“For example, lithium, they're able to depress the price of that, which negatively impacts our ability to develop lithium here. And so minerals and rare elements are critical for Canada's security and our allies’ security,” Simpson said. “I'm looking forward to hearing more about Canada's views on working with China, but there is logic there.”

Carney has said differences with China make it hard to advance full free trade and security officials are warning about such transactions. Canadian Security Intelligence Service Director General Rene Ouellette told lawmakers last week “China is in strategic competition to control critical minerals, to control supply chains” and “the concern we have would be with clandestine or deceptive investment practices.”