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Can the Liberal government fix its sorry innovation record with a new agency?

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François-Philippe Champagne, Minister of Innovation, Science and Industry, acknowledged Monday that challenges related to productivity and innovation policy have been an issue in Canada ‘for decades.’Heywood Yu/The Globe and Mail

After years of disappointing innovation programs that haven’t fixed Canada’s chronic economic underperformance, the Liberal government is still trying to get it right.

Its latest attempt is the Canadian Innovation and Investment Agency, announced in the 2022 budget as a surprise replacement for a program the party had promised in the 2021 election campaign, but pulled: a Canadian version of the U.S. Defense Advanced Research Projects Agency, which spearheaded the creation of technologies such as the internet.

Like other federal innovation programs, the CIIA, which will help underwrite business expenditures on research and development, is inspired by success elsewhere. The Finnish Funding Agency for Innovation helped transform the Nordic country’s low-tech sectors, such as forestry, into innovative, competitive industries.

Ottawa’s idea won plaudits from longtime government innovation critic Dan Breznitz, co-director of the Innovation Policy Lab with the University of Toronto’s Munk School of Global Affairs and Public Policy. He praised the idea when the CIIA was announced.

“There is finally a realization that the problem in innovation and engagement with new technology is not the lack of new ideas or human capital but the private market … this is a systemic problem,” said Mr. Breznitz at the time, when he was a visiting economist with the Finance Department.

He added that the CIIA could succeed if it is nimble, independent, engaged with business and free to experiment.

Canada has leading AI experts. But does Ottawa have the right plan to support an AI industry?

A backgrounder prepared by the Canadian government last fall shows it has been listening to critics: Funding proposals will be assessed based on whether projects have potential to create and retain intellectual property in Canada and commercialize resulting products globally.

Industry groups consulted by Ottawa said the program must be easy to navigate, reach entities that have not traditionally done R&D, get companies to commercialization and scale and keep the economic value of investments here.

The government did not deliver details about the agency in its fall economic update, as it initially promised. Innovation policy watchers are now waiting to see if Ottawa selects the right leaders and governance structures to deliver on the agency’s mandate.

What also isn’t clear is how much the CIIA can change chronically uninventive Canadian companies or whether an agency modelled on a small country in the European Union will work here.

And while the agency’s focus on business investment in R&D, IP and commercialization is promising, Benjamin Bergen, president of the Canadian Council of Innovators (CCI), said “if the CIAA winds up being another funding agency, rather than a focused organization to steer policy structures and improve innovation policy outcomes across Canada’s economy, it will fail to move the needle.”

Another question is how much innovation funded companies can patent and claim as their own after a long head start by global competitors. Waterloo patent lawyer Jim Hinton said the CIIA “won’t work unless it recognizes the existing technology foundation that any new company would necessarily be building on is currently not owned by Canadian companies.”

He worries companies may have to pay holders of existing patents, which would “simply be another wealth transfer of Canadian funds” abroad.

Where do we go from here?

To make innovation work, the Canadian government might need something that has been lacking in an advanced country blessed with national resources, relative geopolitical stability and a big trading partner to the south: a sense of urgency.

Robert Asselin, who was budget director for then finance minister Bill Morneau and is now senior vice-president of policy with the Business Council of Canada, says that urgency has been a common thread in government-led creation of innovative clusters in several other countries.

In the Netherlands, he said, postwar food security concerns sparked creation of a huge agri-food exporting sector. For South Korea, a successful electronics industry gave a small country in a geopolitically tense region economic might. When the Soviet Union got to space first, it jolted the United States into action; the space race had major spinoff benefits for U.S. companies.

“These three didn’t succeed because of market forces; they were designed as public-private partnerships,” Mr. Asselin said. “This is where industrial policy needs to go, as opposed to subsidies we throw everywhere.”

Asked about Ottawa’s continuing struggle to turn its innovation investment into real productivity growth, which The Globe and Mail has been reporting on in a story series, Innovation Minister François-Philippe Champagne said Monday, “Innovation is a journey, it’s not a destination.” He acknowledged challenges related to productivity and innovation policy have been an issue in Canada “for decades, but we’re really serious in terms of focusing on that and bringing perhaps novel solutions.”

Perhaps it will take a crisis to focus minds in Ottawa – maybe resulting from an inward-looking U.S. leaving Canada vulnerable in a mercantilist world. But the government doesn’t have to wait; there are plenty of suggestions for what to do.

Mr. Bergen says government must build capacity in the public service for navigating the knowledge economy and setting clear evaluation metrics for policies. Some observers feel the government has relied too much on consultants for ideas.

Diverting procurement dollars to startups has helped expand the U.S. economy. Our government has a similar program, Innovative Solutions Canada, that has been underused. The program can do more and needs a champion in government, Mr. Bergen says.

There are also many proponents for an overhaul of the Scientific Research and Experimental Development tax credit, Ottawa’s largest expenditure on innovation. The tool provides $3-billion-plus in credits to companies that perform R&D here.

But it doesn’t cover expenses related to commercialization, which would reward companies that take their innovations to market and deliver economic returns. That should change, the CCI says. The government promised last year to reform the program.

Focusing innovation initiatives on helping promising startups grow into global giants should be the top priority. That has been the clear call from many observers, and was the first recommendation in fall 2018 from Canada’s Economic Strategy Tables, made up of advisers in six sectors and commissioned by Ottawa to propose economic growth ideas.

Ottawa could also incentivize domestic pension funds to direct more investment dollars to Canadian tech, Mr. Asselin says.

Meanwhile, said Angela Mondou, CEO of technology lobby group Technation, “Canada’s global competitiveness depends on bringing Canada’s technology adoption rate to par with our global counterparts. A clearly defined digital strategy is non-negotiable.”

With files from Temur Durrani

 

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Investment regulator imposed $14M in enforcement penalties in latest fiscal year

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TORONTO — Canada’s investment product regulator says it imposed more than $14 million in fines and other financial enforcements in its last fiscal year.

The Canadian Investment Regulatory Organization (CIRO) says the total also includes imposed costs and the forced return of ill-gotten profits.

The regulator says it also ordered suspensions and permanent prohibitions in a significant proportion of proceedings against individuals.

Enforcement efforts included a $2 million fine against Fortrade Canada for recommending a high-risk product to unsophisticated retail clients, and a $1.7 million fine and permanent ban on securities-related business against Paul Walker for a range of misconduct including soliciting more than $1.5 million in investments for an outside business activity.

CIRO was created at the start of 2023 through a combination of the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada.

The new self-regulatory organization says it is focused on harmonizing its regulatory approach to create more consistency and timeliness with enforcement action.

This report by The Canadian Press was first published July 16, 2024.

The Canadian Press

 

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Conditions on Simandou investment now satisfied

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LONDON, July 15, 2024–(BUSINESS WIRE)–All conditions have now been satisfied for Rio Tinto’s investment to develop the Simandou high-grade iron ore deposit in Guinea, including the completion of necessary Guinean and Chinese regulatory approvals. The transaction is expected to complete during the week of 15 July 2024.

Along with the recent approval by the Board of Simfer1, this allows Simfer to invest in and fund its share of co-developed rail and port infrastructure being progressed in partnership with Winning Consortium Simandou2 (WCS), Baowu and the Republic of Guinea.

More than 600 kilometres of new multi-use trans-Guinean railway together with port facilities will allow the export of up to 120 million tonnes per year of mined iron ore by Simfer and WCS from their respective Simandou mining concessions in the southeast of the country3. Together, this will be the largest greenfield integrated mine and infrastructure investment in Africa.

Rio Tinto Executive Committee lead for Guinea and Copper Chief Executive Bold Baatar said: “We thank the Government of Guinea, Chinalco, Baowu and WCS for their partnership in reaching this milestone towards developing the world class Simandou project.

“Simandou will deliver a significant new source of high-grade iron ore that will strengthen Rio Tinto’s portfolio for the decarbonisation of the steel industry, along with trans-Guinean rail and port infrastructure that can make a significant contribution to the country’s economic development.”

Under the terms of the transaction, Simfer will acquire a participation in the WCS project companies constructing rail and port infrastructure, commit to perform a portion of the construction works itself and commit to funding its share of the overall co-developed infrastructure cost, in an aggregate amount of approximately $6.5 billion (Rio Tinto share approximately $3.5 billion)4.

Chalco Iron Ore Holdings Ltd (CIOH) has now paid its share of capital expenditures incurred or required by Simfer to progress critical works up to completion. A first payment of approximately $410 million, for expenditures until the end of 2023, was made on 28 June 2024, and a second payment of approximately $575 million, for 2024 expenditures, was made on 11 July 2024. These amounts settle all expenditures incurred up to date.

The co-developed infrastructure capacity and associated cost will be shared equally between Simfer, which will develop, own and operate a 60 million tonne per year5 mine in blocks 3 and 4 of the Simandou Project, and WCS, which is developing blocks 1 and 2.

Under the co-development arrangement, Simfer and WCS will deliver separate infrastructure scopes to leverage expertise. Simfer will construct the approximately 70 kilometre Simfer spur rail line and a 60 million tonne per year transhipment vessel (TSV) port, while WCS will construct the dual track approximately 536 kilometre main rail line, the approximately 16 kilometre WCS spur rail line and a 60 million tonne per year barge port.

Once complete, all co-developed infrastructure and rolling stock will be transferred to and operated by the Compagnie du Transguinéen (CTG) joint venture, in which Simfer and WCS each hold a 42.5% equity stake and the Guinean State a 15% equity stake6.

First production from the Simfer mine is expected in 2025, ramping up over 30 months to an annualised capacity of 60 million tonnes per year5 (27 million tonnes Rio Tinto share). The mine will initially deliver a single fines product before transitioning to a dual fines product of blast furnace and direct reduction ready ore.

Simfer’s capital funding requirement for the Simandou project as a whole is estimated to be approximately $11.6 billion, of which Rio Tinto’s share is approximately $6.2 billion, broken down as follows.

US dollars in billions (nominal terms) Simfer

capex

  Rio Tinto
share
Mine and TSVs, owned and operated by Simfer
Development of an initial 60Mt/a mine at Simandou South (blocks 3 & 4), to be constructed by Simfer $5.1 $2.7
Co-developed infrastructure, owned and operated by CTG once complete
Simfer scope (funded 100% by Simfer during construction)

Rail: a 70 km rail-spur from Simfer mine to the mainline, including rolling stock
Port: construction of a 60Mt/a TSV port

$3.5 $1.9
WCS scope (funded 34% by Simfer during construction)

Port and rail infrastructure including an approximately 552 km trans-Guinean heavy haul rail system, comprised of a 536 km mainline and a 16 km WCS rail spur

$3.0 $1.6
Total capital expenditure (nominal terms) $11.6 $6.27

Rio Tinto’s share of expected capital investment remaining to be spent from 1 January 2024 is to be $5.7 billion. Rio Tinto’s expected funding requirements for 2024 and 2025 are included in its share of capital investment guidance for this period, with project funding expected to extend beyond this timeframe.

Further details on the Simandou project can be found in the 2023 Investor Seminar presentation at https://www.riotinto.com/en/invest/investor-seminars.

As Chinalco, Baowu, China Rail Construction Corporation and China Harbour Engineering Company are Chinese state-owned entities, and given Chinalco indirectly holds 11.2% of shares in the Rio Tinto Group, they, and WCS, may be considered to be associates of a related party of Rio Tinto for the purpose of the UK Listing Rules. Rio Tinto’s funding commitment pursuant to the infrastructure co-development arrangement (Rio Tinto share $3.5bn) is a smaller related party transaction for the purposes of Listing Rule 11.1.10R and this announcement is, therefore, made in accordance with Listing Rule 11.1.10R(2)(c).

___________________________
1 Approval has been granted by the Board of Simfer Jersey Limited, a joint venture between the Rio Tinto Group (53%) and Chalco Iron Ore Holdings Ltd (CIOH) (47%), a Chinalco-led joint venture of leading Chinese SOEs (Chinalco (75%), Baowu (20%), China Rail Construction Corporation (2.5%) and China Harbour Engineering Company (2.5%)). Simfer Infraco Guinée S.A.U. will deliver Simfer Jersey’s scope of the co-developed rail and port infrastructure, and is, on the date of this notice, a wholly-owned indirect subsidiary of Simfer Jersey Limited, but will be co-owned by the Guinean State (15%) after closing of the co-development arrangements. Simfer S.A. is the holder of the mining concession covering Simandou Blocks 3 & 4, and is owned by the Guinean State (15%) and Simfer Jersey Limited (85%).
2 WCS is the holder of Simandou North Blocks 1 & 2 (with the Government of Guinea holding a 15% interest in the mining vehicle and WCS holding 85%) and associated infrastructure. WCS was originally held by WCS Holdings, a consortium of Singaporean company, Winning International Group (50%) and Weiqiao Aluminium (part of the China Hongqiao Group) (50%). On 19 June 2024, Baowu Resources completed the acquisition of a 49% share of WCS mine and infrastructure projects with WCS Holdings holding the remaining 51%. In the case of the mine, Baowu also has an option to increase to 51% during operations. After Closing, Simfer will hold 34% of the shares in the WCS infrastructure entities during construction with WCS holding the remaining 66%.
3 WCS holds the mining concession for Blocks 1 and 2, while Simfer S.A. holds the mining concession for blocks 3 and 4. Simfer and WCS will independently develop their mines.
4 A true-up mechanism will apply between Simfer and WCS to equalise most of their costs of constructing the co-developed rail and port infrastructure. The figures shown here are pre-equalisation.
5 The estimated annualised capacity of approximately 60 million dry tonnes per annum iron ore for the Simandou life of mine schedule was previously reported in a release to the Australian Securities Exchange dated 6 December 2023 titled “Simandou iron ore project update“. Rio Tinto confirms that all material assumptions underpinning that production target continue to apply and have not materially changed.
6 Ownership of the rail and port infrastructure will transfer from CTG to the Guinean State after a 35 year Operations Period, with Simfer retaining access rights on a non-discriminatory basis and at least equivalent to all Third Party Users.
7 By the end of 2023, Rio Tinto spent $0.5 billion (Rio Tinto share) to progress critical path works. Rio Tinto’s share of expected capital investment remaining to be spent from 1 January 2024 was $5.7 billion.

This announcement is authorised for release to the market by Andy Hodges, Rio Tinto’s Group Company Secretary.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240621382292/en/

Contacts

Please direct all enquiries to media.enquiries@riotinto.com

Media Relations,
United Kingdom
Matthew Klar
M +44 7796 630 637
David Outhwaite
M +44 7787 597 493

Media Relations,
Australia

Matt Chambers
M +61 433 525 739
Jesse Riseborough
M +61 436 653 412
Alyesha Anderson
M +61 434 868 118
Michelle Lee
M +61 458 609 322

Media Relations,
Americas

Simon Letendre
M +1 514 796 4973
Malika Cherry
M +1 418 592 7293
Vanessa Damha
M +1 514 715 2152

Investor Relations,
United Kingdom
David Ovington
M +44 7920 010 978
Laura Brooks
M +44 7826 942 797

Investor Relations,
Australia

Tom Gallop
M +61 439 353 948
Amar Jambaa
M +61 472 865 948

Rio Tinto plc
6 St James’s Square
London SW1Y 4AD
United Kingdom
T +44 20 7781 2000
Registered in England
No. 719885

Rio Tinto Limited
Level 43, 120 Collins Street
Melbourne 3000
Australia
T +61 3 9283 3333
Registered in Australia
ABN 96 004 458 404

riotinto.com

Category: Simandou

 

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BlackRock Pulls Ad Featuring Trump Rally Shooter Thomas Matthew Crooks

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A screengrab of Thomas Crooks from the BlackRock ad that aired in 2022.

Thomas Matthew Crooks, the 20-year-old who shot at former president Donald Trump at a rally in Pennsylvania, had briefly appeared in a 2022 advertisement for BlackRock Inc, the world’s largest money manager.

The ad, filmed at the Bethel Park High School in Pennsylvania, featured Crooks and several other unpaid students in the background, said the investment giant in a statement. Crooks graduated from the school in 2022.

BlackRock said it has pulled the ad but the video will be available to authorities. The ad, however, is being widely shared by social media users.

“The assassination attempt on former President Trump is abhorrent. We’re thankful former President Trump wasn’t seriously injured, and thinking about all the innocent bystanders and victims of this awful act, especially the person who was killed,” the company added in its statement.

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BlackRock, whose earnings figures are expected today, has faced scrutiny after shooting incidents since some of its index funds own shares in gunmakers.

Trump Assassination Attempt

Trump survived an assassination attempt on Saturday after a gunman opened fire at him at a rally in Pennsylvania ahead of the Presidential elections. The attack left him with a bloodied face as the former president said the bullet pierced his “upper part of right ear”.

Latest and Breaking News on NDTV

A bystander died in the attack while shielding his family and Crooks – a registered Republican – was shot dead by a Secret Service sniper.

Trump, whose Republican candidature will be finalised today, shared a message of unity after the attack and said Americans must not allow “evil to win”. “It was God alone who prevented the unthinkable from happening,” he said on social media.

Biden, too, appealed to the nation to “lower the political temperature” in a rare Oval Office address. “Politics must never be a literal battlefield, God forbid a killing field,” he said.

The US markets are expecting Trump trades to gain momentum after the attack. It has already been pinning hopes for the return of Republicans, especially after Biden’s poor performance in last month’s debate. Those trades are likely to take deeper hold as the attack sparks a wave of sympathy and support for Trump.

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