MNI INTERVIEW: Mines Coming Before Pipeline- Ex Canada Adviser

Canada will develop mines before the heavy crude oil pipeline and carbon capture project promoted by Alberta's premier because critical minerals show more reliable global demand while carbon storage requires "massive" subsidies, top former government adviser Rachel Samson told MNI.

Prime Minister Mark Carney's talk of making Canada a clean global energy superpower by expanding natural gas exports is also being undercut by signs of a supply glut, according to Samson. She served 15 years in the bureaucratic arm of the prime minister's office, in the departments of finance, natural resources and environment and is now at the IRPP think tank. 

“On the critical minerals side I would say there is massive potential, and a lot of certainty in the long term on the demand trajectory, and where countries and companies are going to want to source their critical minerals from,” she said. “When I’m looking at the major projects list, the critical minerals projects were all very strong, huge potential, very likely to go ahead.” (See: MNI INTERVIEW: NWT Gains On Arctic Shipping, Carney Projects)

“Natural gas, oil as well as other fuels like hydrogen, I think there’s a lot of market uncertainty.”

ALTERNATIVES TO CHINA

Western nations seeking alternatives to Chinese minerals create a secure market for decades to come, Samson said. “We know demand is going to grow massively in response to concern about supply chain resilience with China dominating some of these markets. So Canada is very well placed, and it’s global demand. So it’s not something where we need to restructure, it’s just about unlocking potential. The same is true with agricultural markets.”

Carney's first list of five projects to be fast-tracked has two mines, but he said the pipeline needs further work, as well as a private investor to pay for construction. (See: MNI INTERVIEW: Alberta Says BC Pipeline Must Be Fast-Tracked)

The problem with Alberta Premier Danielle Smith's push for a pipeline to be included on the list is the cost of developing carbon capture and storage, Samson said. 

“That one I think is going to run into some challenges, and it would have to require massive government subsidies,” she said. “We will see whether the political will is there to have that type of subsidization.”

TENSIONS TO SEPARATE

Carney doesn't have much room for side projects. His Liberals lack a majority in Parliament to pass budgets, and opposition parties are attacking a path of record deficits outside the pandemic including billions of subsidies for a shaky electric battery market. While Samson says Carney has done a good job keeping indigenous and environmental groups onside, missteps could ignite separatist movements in Alberta and Quebec. 

“It’s a huge challenge, particularly if the oil pipeline does become linked with the separation question in Alberta,” Samson said. 

Choosing the right projects also carry high stakes for an economy the Bank of Canada warns needs to reduce dependence on the U.S., in part by turning around a long track record of lagging productivity. 

One optimistic note is the potential for Canada to lure high-tech jobs that benefit from being near big electricity sources, Samson said. “There is probably going to be a shift towards creating products where the electricity is, instead of shifting the energy to other markets,” she said. “It’s kind of hard to divide it between resources and tech,
when so much of the tech potential is actually linked to the resources.”