By David Ljunggren, Nia Williams, Laura Sanicola and Harry Miller
OTTAWA/NEW YORK (Reuters) – Canada is pushing on several diplomatic fronts against the U.S. state of Michigan’s efforts to close a cross-border oil pipeline, the second such dispute since Joe Biden became U.S. president in January, complicating the governments’ efforts to work together to lower carbon emissions.
The conflict over the aging but key pipeline highlights the disruptions caused by a global shift away from fossil fuels. Both governments are working to accelerate the energy transition, but their oil industries are interdependent, so a policy shift in one country can affect energy supply, and the political balance, in the other.
The United States imports more crude from Canada than any other nation, at about 3.7 million barrels per day, or about 80%of Canada‘s crude output.
Ottawa’s strategy, according to four sources familiar with the government’s thinking, is to repeatedly raise the issue of Enbridge Inc’s Line 5 with numerous U.S. counterparts – including Biden – to get them to pressure Michigan’s Democratic Governor Gretchen Whitmer to keep the pipeline open.
Last November, Michigan ordered Line 5 to shut by May 13, citing the environmental risk of a possible leak in the four-mile (6-km) stretch of the 540,000-bpd line passing under the Straits of Mackinac in the Great Lakes.
The White House has shown no sign of responding to Canadian entreaties, so Ottawa is considering more drastic options, including a threat to invoke an obscure bilateral treaty to keep Line 5 operating or intervene in the legal dispute currently playing out in U.S. courts.
Line 5, which flows crude oil and refined products from Wisconsin to Sarnia, Ontario, via Michigan, has been in operation for nearly 70 years, but officials in Michigan are increasingly alarmed by its advanced age.
The line has never leaked into the straits but there have been at least eight other spills since 1980, according to U.S. Pipeline and Hazardous Materials Safety Administration data.
The imbroglio over Line 5 comes just three months after Biden angered the Canadian oil and gas industry by cancelling a permit for the long-delayed Keystone XL pipeline project on his first day in office.
Canadian Prime Minister Justin Trudeau’s government reluctantly accepted that decision, even though it killed thousands of construction jobs and further soured Ottawa’s relationship with the main energy-producing province of Alberta.
Ottawa has resolved to fight publicly to keep Line 5 open, which – unlike Keystone – is already operating and a vital link in Enbridge’s export network that ships the vast majority of crude from Canada‘s western oil patch to the United States.
DOZENS OF MEETINGS
Canadian government officials are frustrated by how much time they are spending on the matter, the sources said.
Canada has discussed the pipeline’s fate in dozens of bilateral meetings, including 23 virtual meetings between lawmakers and U.S. members of Congress, according to a spokesman for Canada‘s Natural Resources Minister Seamus O’Regan.
“Clearly Line 5 is an important issue for the government of Canada … at the same time we need to be advancing on a cooperative basis the work we’re doing on climate action,” Canada Environment Minister Jonathan Wilkinson told Reuters earlier this month.
Wilkinson raised the pipeline on Feb. 24 during a meeting with U.S. climate envoy John Kerry. Trudeau also raised Line 5 with Biden when the two met in February to discuss making global warming a joint priority. The Canadian prime minister attended a U.S. international climate summit hosted by Biden last week.
Neither Kerry nor the White House responded to a request for comment.
Calgary-based Enbridge has refused to shut the pipeline, arguing the governor’s order needs to be backed by a judge. The case is being heard in U.S. federal court and the two parties started mediation on April 16.
Enbridge spokesman Ryan Duffy said a negotiated solution would be in the best interests of all parties.
Trudeau’s administration is mulling whether to take part in the legal challenge by filing an amicus, or “friend of the court” brief, which would explicitly lay out their reasons for backing Enbridge, said a source directly familiar with the matter.
Ottawa is also considering invoking the never-before-used 1977 Transit Pipelines Treaty, designed to stop U.S. or Canadian public officials from impeding the flow of oil in transit.
“The federal government continues to have a role to play, and we appreciate what they’ve done to date,” Enbridge’s Duffy said.
Line 5 is key to fuel supply for the Great Lakes region on both sides of the border, helping supply an area with a population of more than 40 million people.
Environmental campaigners have long been concerned Line 5 could leak into the straits. Whitmer, a Biden ally, made shutting it a key promise in her 2018 gubernatorial campaign.
Wilkinson, after meeting with Kerry, told reporters that “the issue in Michigan is the governor.”
Canada‘s Ambassador Kirsten Hillman and Infrastructure Minister Catherine McKenna have both met separately with Whitmer, but she has not changed her stance.
A spokeswoman for Whitmer told Reuters that the governor stands behind her decision to close the pipeline.
Enbridge said shutting Line 5 would cause fuel shortages and gas price spikes, and require 15,000 trucks and 800 rail cars a day to replace deliveries to Ontario. Michigan would also need truck transport to account for lost propane delivery, while refineries in Ohio and Michigan would need to secure supply from other suppliers.
Scott Archer, business agent with Local 663 Pipefitters Union in Sarnia, home to three of Ontario’s refineries, described Line 5 as the “spinal cord of Ontario’s infrastructure” in testimony to Canadian lawmakers.
“Shutting down Line 5 will in effect kill my hometown… and many more places like it in Canada and the U.S.,” he said.
(Reporting by Nia Williams in Calgary, David Ljunggren in Ottawa and Laura Sanicola in New York; additional reporting by Valerie Volcovici in Washington; Editing by Marguerita Choy)
Barrick Gold profit beats expectations as copper, gold prices surge
JOHANNESBURG (Reuters) -Barrick Gold Corp reported a 78% jump in first-quarter profit on Wednesday, beating analyst expectations thanks to rising gold and copper prices, and said it was on track to meet annual forecasts.
Production in the second half is expected to be higher than the first, the gold miner said, thanks in part to the ramp-up of underground mining at the Bulyanhulu mine in Tanzania and higher expected grades at Lumwana in Zambia.
Barrick’s first-quarter gold production fell to 1.10 million from 1.25 million ounces due partly to lower grades at its Pueblo Viejo mine in Dominican Republic.
Adjusted profit surged 78% to $507 million in the quarter ended March 31, from $285 million a year earlier, and Barrick announced a 9 cent per share quarterly dividend.
Stronger prices helped boost Barrick’s revenue from its copper mines in Chile, Saudi Arabia and Zambia by 31% from the fourth quarter. Overall earnings per share were $0.29, ahead of analysts’ estimate of $0.27.
“We expect a positive stock reaction to the earnings beat and strong cash flow,” said Credit Suisse analysts.
POTENTIAL FOR SOUTH AFRICA MERGER
Barrick CEO Mark Bristow, who has championed mergers across the gold industry, said he backed the idea of South Africa-listed miners Goldfields and AngloGold Ashanti combining.
Speculation has been swirling around the two companies and Sibanye-Stillwater, whose CEO Neal Froneman floated the idea of a three-way merger in March.
“I’m a South African, and this country has such a great mining history and it would be great to see a real gold business come out of the many failed discussions that we’ve seen,” said Bristow.
Goldfields declined to comment. In a statement, AngloGold Ashanti said it was focused on delivering on its growth plan to unlock value from its portfolio of gold assets.
Bristow also said he had met with the Democratic Republic of Congo’s new mines minister and other officials and was continuing to work on getting $900 million belonging to its Kibali mine joint venture out of the country.
“We have a solution, it just needs to be sanctioned by the appropriate authorities which haven’t been around for a while,” he said, referring to a recent government overhaul by President Felix Tshisekedi.
(Reporting by Helen Reid in Johannesburg and Arundhati Sarkar in Bengaluru; editing by Shounak Dasgupta and Bernadette Baum)
Loblaw gets quarterly sales, profit boost from online demand surge
Retailer Loblaw Cos Ltd beat market estimates for quarterly revenue and profit on Wednesday, as its online sales more than doubled on soaring demand from homebound buyers for groceries and other essentials during the COVID-19 pandemic.
Lockdowns and other virus-related restrictions in Canada, including reduced store capacity, during the first three months of the year pushed consumers to stockpile groceries and other essential items.
Loblaw, one of the biggest retailers in Canada, said that the momentum from the first quarter has continued into the current quarter, adding that it expects to exceed its own full-year profit expectations.
However, the company has warned that its food retail unit, which saw a surge last year at the peak of stockpiling, would not be as robust in the current quarter. In the first month of the ongoing quarter, food same-store sales have declined slightly, Loblaw said.
For the second quarter, the company expects to incur pandemic-related costs of about $65 million to $75 million, compared with $282 million a year earlier.
Net earnings available to its common shareholders rose to C$313 million, or 90 Canadian cents per share, in the quarter ended March 27 from C$240 million, or 66 Canadian cents per share, a year earlier.
Excluding one-time items, the retailer earned C$1.13 per share, beating the average analysts’ estimate of 87 Canadian cents per share.
Its revenue rose to C$11.87 billion ($9.67 billion) in the first quarter from C$11.80 billion a year earlier, surpassing analysts’ estimate of C$11.72 billion, according to IBES data from Refinitiv.
($1 = 1.2277 Canadian dollars)
(Reporting by Mehr Bedi in Bengaluru; editing by Uttaresh.V)
Bombardier in talks to amend bondholders’ agreement after breach claim on asset sales
(Reuters) – Bombardier on Monday contested a bondholder’s claims that its recent sales of non-core assets breach the terms of certain notes, and said it would seek bondholders’ consent to amend terms on eight bond issues.
Bombardier has emerged as a pure play business jet maker after divesting assets including the sale of its transportation business to Alstom, which it completed in January, to pay down debt and boost earnings.
The company said it launched consent solicitations with respect to outstanding senior notes or debentures, following the claims by the unnamed bondholder that the asset sales constitute a breach of certain covenants under the indenture governing the 2034 notes.
Bombardier said in a statement these claims are without merit and it has not breached any covenant, adding that after evaluating various options it had determined requesting bondholders to amend the terms of the bonds was the most “expedient and efficient path” to maintain value and protect itself and its stakeholders.
If the amendments are approved, Bombardier will make a consent payment of $1.25 per $1,000 principal amount for applicable series of notes, and C$1.25 per C$1,000 principal of Canadian dollar-denominated 7.35% debentures due 2026, the statement said.
Bombardier also flagged early first-quarter revenue that would beat analysts’ estimates, as rising vaccinations encourage wealthy travelers to return to flying.
Bombardier reports earnings on Thursday.
The jet maker said it expects first-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) from continuing operations of $123 million, above analysts’ average estimate of $89 million, according to IBES data from Refinitiv.
The company expects business jet revenue to rise by 18% to $1.3 billion in the first quarter, from a year ago, beating Wall Street’s estimate of $1.18 billion.
Bombardier stock closed up 3.3%.
While deliveries are roughly the same, Bombardier’s product composition is shifting toward its flagship Global 7500 jets, a revenue driver.
Bombardier said it remains on track to deliver between 110-120 business aircraft in 2021. The company’s full-year deliveries fell 20% to 114 jets in 2020.
(Reporting by Ankit Ajmera in Bengaluru and Allison Lampert in Montreal; Editing by Shailesh Kuber and Karishma Singh)
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