Why Is Ontario A ‘Have Not’ Province? Some Possible Clues
June 5, 2011
Queen’s Park – NDP MP Howard Hampton … gave some examples of just how, in his words, “out of touch” the McGuinty Liberals are on hydro-electricity rates compared to Manitoba and Quebec. Hampton cited the decision by Xstrata Mining to close its copper smelter in Timmins last year and the decision by Inco (now Vale) to close its copper smelter in Sudbury four years ago.
“Both of these companies continue to mine the copper ore in Ontario, but both of them now ship the ore to smelters and refineries in Quebec to have the ore processed there because they save millions of dollars each year in hydro-electricity costs due to Quebec’s much lower industrial hydro rates,” Hampton said. …
Hampton noted that Xstrata was paying hydro bills of $70 Million/year at its Timmins smelter, and now is paying less than half that amount in Quebec ($33.5), but the shutdown of the smelter in Timmins meant the loss of over 2000 direct and indirect jobs in the community.
I seem to recall Jack Layton feverishly decrying these ‘greedy’ corporations during the recent election campaign. Turns out, they had a very good reason for closing down. Why stay in Ontario just for the privilege of getting gouged.
Now ‘The Ring Of Fire‘ project is considering their options:
Representatives from mining company Cliffs Natural Resources Inc. announced plans to process ore mined in the Ring of Fire in Ontario.
Bill Boor, presidents of ferroalloys for Cliffs, explained during a conference call Friday morning the project has “great potential” in Northern Ontario, creating up to 1,300 jobs.
An important component of the operation is a ferrochrome production facility (FPF) — a smelter using electric arc furnaces to refine ore into ferrochrome, which will then be sold to steel makers in North America and around the world.
Although the company is hoping for an FPF in Ontario, Boor said there is a roadblock in that plan.
“We’ve identified a few places in Northern Ontario where this would theoretically be viable, but at the current provincial power rates, there isn’t a place where it’s feasible,” he said.
It seems apparent that his provincial NDP cousins don’t echo ‘Layton’s Lament‘. They seem to understand that these companies are just making astute business decisions and it is the McGuinty government ‘Green Fairy‘ policies that are standing in the way:
MPP Gilles Bisson (NDP — Timmins-James Bay) agrees. While he said the announcement the company is willing to process the ore in Ontario is good news, but will not happen without co-operation from the provincial government.
“They’re looking at four sites in Ontario to process the ore, and it’s great they’re acknowledging the pressure we’ve been putting on, but they won’t be able to build a refinery or a smelter in any of those sites if Ontario doesn’t deal with its energy price issue.
“What this company’s doing is they’re trying to send a warning shot to the government that they’re positioning themselves, they want to build in Ontario, but they cannot economically build and operate in Ontario without a better deal on electricity.”
More on the Rural/Urban divide here :
Northerners are tired of having government (a) ignore them or, worse (b) foist on them unpopular programs that sell well with latte-loving eco-babblers in downtown Toronto*, but which wreak havoc in the North.
Last year, the government rammed through its Far North Act, over the strenuous objections of northern mayors, chambers of commerce and aboriginal groups who said it will hamper development.
* Those would probably include all those Bull Frog aficionados who actually jump at the chance of paying higher electricity bills.
Hudak is promising to repeal the Far North Act:
He (said) that a new PC government would get Northern Ontario back to work by cutting back on red tape and repealing the Far North Act to ensure unfettered mining and logging development. He said Ontario would once again become the “economic engine that drives this great country” and Northern Ontario would provide the fuel for that engine.
Related: There is a proposal that the First Nations in the area develop their own hydro system to provide ‘off the grid’ electric power for the mining industry and their own communities.
I wish them luck with that but for the rest of us, I think the best case scenario is for Dalton’s power to be cut off this October.
June 5, 2011 at 4:49 pm
McGuinty has got to go.
June 6, 2011 at 6:52 am
You do realize that both Que and MB sell their power at far below market rates to local consumers – both industrial/commercial and residential?
This giveaway by the crown-owned MB Hydro and Quebec Hydro means that these provinces underreport earrings to their provincial coffers and this they receive far more in equalization payments than they should – 8.5 billion per year in the case of que.
Had they sold the power at market rates Ontario would have been classed as a Have not province years sooner and those smelters likely would have stayed in Ontario.
This is not to say that Ontario hasn’t made a complete mess of it electricity system – it has, but your post implies that Quebec and mB are some how better at it. They are not. They are gaming the equalization system and have not been called on it.
Perhaps they soon will be. Perhaps the Hudak administration will lead the charge in insisting that they not be allowed to rip-off the equalization system any more. After all Ontario is arguably the biggest loser in that deal – certainly on a gross dollars basis.