Steel pipe to be used in the oil pipeline construction of the Canadian government’s Trans Mountain Expansion Project lies at a stockpile site in Kamloops, B.C., on June 18, 2019.Dennis Owen/Reuters
The federal government says no more public funds will be spent on the Trans Mountain pipeline expansion, after the Crown corporation building the project announced Friday that the cost has ballooned to $21.4-billion and the expansion now won’t be complete until late 2023.
That’s close to a 70-per-cent jump over the initial $12.6-billion price tag, and almost a year later than the original December, 2022, start date targeted by Trans Mountain Corp.
Finance Minister Chrystia Freeland told media Friday that instead of public cash, Trans Mountain will secure the funding necessary to complete the project with third-party financing, either in public debt markets or from financial institutions.
Ms. Freeland said financial advice from BMO Capital Markets and TD Securities confirmed that “public financing for the project is a feasible option that can be implemented promptly.” And despite the increased cost estimate and longer completion timeline, she said the project remains commercially viable.
Trans Mountain referred questions about how it will secure financing to Ms. Freeland’s office. Her office provided no details on how confident the minister is that the project will be able to nail down funds, but said prospective purchasers still have a strong interest in operational infrastructure assets such as the pipeline expansion.
Financial institutions are growing increasingly wary of financing oil projects, as they face pressure to put more emphasis on environmental, social and governance (ESG) measures and make greener investment decisions.
Less than a year ago, Trans Mountain successfully lobbied the federal energy regulator to let it keep the name of its insurer secret, arguing that public pressure on insurance companies over environmental concerns in the oil sector has already made it harder and more expensive to insure the pipeline expansion.
The expansion’s financing costs alone have already increased by about $1.7-billion, Trans Mountain said Friday. The corporation attributed that to higher construction costs, the extended end date and interest payments.
Trans Mountain said another $2.3-billion of the cost jump comes from what it called “project enhancements,” such as more benefit agreements with Indigenous communities, the installation of advanced leak detection systems and new, unplanned route changes that avoid culturally and environmentally sensitive areas.
Wildfires, extreme heat, flooding and landslides that pummelled British Columbia in 2021 and COVID-19 measures added $1.7-billion to the price tag, while schedule pressures such as securing permits and the “significant construction challenges in both marine and difficult terrain” that have pushed the completion date into late 2023 account for another $2.6-billion.
The expansion project will nearly triple the capacity of the existing pipeline, which runs from Strathcona County, near Edmonton, to Burnaby, B.C. The vast majority of the project, which is about half complete, uses the existing pipeline route.
Prime Minister Justin Trudeau’s government bought the pipeline and expansion project from Kinder Morgan Inc. for $4.5-billion in 2018 amid legal hurdles and opposition from Indigenous communities, environmentalists and the B.C. government. The Federal Court of Appeal overturned the pipeline project’s approval, ruling Ottawa had failed to adequately consult First Nations. That led to a new round of consultations, and the federal cabinet approved the expansion for the second time in 2019.
However, the federal government has never intended to be the final owner-operator of the expanded pipeline, and Ms. Freeland reiterated that position Friday.
While buying the pipeline and the expansion was “a serious and necessary investment” to ensure Canada receives fair market value for its oil and gas, she said, Ottawa intends to launch a divestment process in the coming months.
“Our government has also been working with Indigenous communities on further economic participation in Trans Mountain for more than two years, and we will announce the next step towards that important objective later this year,” she said.
Eugene Kung of West Coast Environmental Law, an environmental law and public advocacy group, said in a statement Friday that the skyrocketing cost of the expansion and the delay demonstrate that Trans Mountain’s “already-collapsed business case is worse than ever, and the cost will probably increase further.”
“It is outrageous that [the Trans Mountain expansion’s] cost has nearly doubled in two years with very little oversight. Especially since the so-called economic benefits were used to justify the infringement of Indigenous rights, the significant climate impacts of building oil and gas expansion infrastructure, and the devastating effects on wildlife like salmons and orcas,” he said.
“It’s time to admit that [the project] is a bad idea and to cut our losses by cancelling this white elephant before it becomes a stranded asset.”
Oil companies, however, remain supportive of the pipeline expansion.
Cenovus Energy Inc. president and CEO Alex Pourbaix said he believes the business case for the project remains sound, and looks forward to it coming online.
“While no one wants to see cost increases, they are often a fact of life with projects of this size, and in this case were largely beyond Trans Mountain’s control,” he said in an e-mail.
“Getting this pipeline built will provide a significant boost to the Canadian economy while helping to solidify investor confidence in our oil and gas industry.”
Suncor Energy Inc. president and CEO Mark Little said in an e-mail that while he was disappointed with Friday’s news, the pipeline remains “vital to Canada’s long-term economic success and energy security.”
Trans Mountain president and CEO Ian Anderson will retire April 1. On Friday, he said progress on the pipeline expansion over the past two years has been “remarkable when you consider the unforeseen challenges we have faced including the global pandemic, wildfires and flooding.”
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TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
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