A Return to the Commodity Economy

Published in the Telegraph-Journal 12th March 2012

For all of the trumpeting of the new knowledge-based economy, with its innovation-driven post- manufacturing industries, New Brunswick never really left the commodity economy behind. The numbers don’t speak the whole story. A substantial segment of New Brunswick exports are related to the oil and gas industry while forestry and potash mining industries also occupy an important export role. The key question is: will the resource sector provide the jobs and revenue needed to turn New Brunswick around?

There are reasons to believe that the exploitation of natural resources could become more prominent in New Brunswick’s economic future. Courtesy of the Fraser Institute, New Brunswick is today being touted as one of the most mining friendly jurisdictions in the world. New Brunswick was given good marks for its competitive tax regime and “minimal uncertainty around disputed land claims” and lauded for its consistent environmental regulations. All of this is good news for two companies seeking to expand their operations in New Brunswick.

In 2007, Potash Corporation announced a $1.67-billion plan to develop a two million tonne mine. The company recently signed a two-year agreement to explore the Millstream potash deposit and investigate other development opportunities in New Brunswick. Currently more than 300 people are employed at the potash mine. The company estimates that an additional 140 full-time jobs will be created when the new mine begins its operations in 2012.

Vancouver-based Geodex Minerals has proposed a high-volume, open-pit tungsten-molybdenum mine in the Stanley area. The deposit has easy access by road and railway from all parts of New Brunswick, including deep sea ports to the north at Belledune and to the south at Saint John. No definitive estimates yet exist of the number of jobs that will be created or how much New Brunswick can hope to realize from royalties.

The prospects of shale gas drilling are still in their exploratory stages. If sufficient quantities of shale gas are found, New Brunswick could become a significant source of natural gas exports from the hundreds of wells that could dot the countryside. The job-creation potential of the extraction of this natural resource are still preliminary and depend in large measure on how many wells eventually will be needed and over what period of time they will be operational.

A pan-Canadian pipeline stretching from the West Coast to the Irving Oil refinery in Saint John has the support of the Canadian Energy Pipeline Association. The group is calling on the federal government to lay the foundation for the expansion of pipeline infrastructure to meet the demands for Canadian oil. The logic of this project is predicated on the permanent shelving of the Keystone XL pipeline from Alberta to the Gulf of Mexico as well as the potential failure of the proposed Northern Gateway pipeline from Alberta to British Columbia.

The Crown Land Task Force report was submitted to government in November 2011 with the objectives of establishing policies and practices to improve the competitiveness of the forestry industry. Although the government “see[s] no easy solution to overcoming the imperfect market conditions for wood from private woodlots in New Brunswick,” it is under extreme pressure to provide the forestry industry with concessions to maximize the use of timber on Crown lands. While this measure may keep a number of mills open today, it is difficult to establish whether this will mean growth in jobs in this industry going forward.

If New Brunswick indeed is moving to greater dependence on natural resources, it will have an impact not only on the importance of regulations and their enforcement, but on the future of education, training, and ultimately on all government policymaking decisions that will affect generations of New Brunswickers.

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