OTTAWA, ONT – The Financial Post is reporting that the LNG Canada project on the West Coast is warning that Ottawa’s steel safeguards will have a direct impact on the viability of their venture — one that may cause delays, investor uncertainty and a scaling back of production targets.
LNG Canada Development Inc. (the joint venture behind the largest private sector investment project in Canadian history) argues that extending the current, temporary safeguards on steel would also have serious negative repercussions on Canada’s “attempts to develop a reputation as a leader in global energy markets.” is reported by The Financial Post
“The various procurement decisions and actual Project construction are expected to take place over the next five years, almost all of which would be while the provisional or, if imposed, definitive safeguard measures are in place,” according to documents seen by the Financial Post.
“Subsequent phases of the Project (including the construction of two additional trains, doubling Plant capacity) require continued investor certainty, which is at risk due to safeguarding measures that have a significant impact in isolation, and compounded by other recent trade-restrictive measures taken by Canada.”
Finance Minister Bill Morneau introduced immediate provisional safeguards on seven different steel products in October. As an attempt to block a potential flood of imports from being diverted into Canada because of U.S. steel and aluminum tariffs.
The combination of tariffs and quotas are to remain in place for 200 days pending an independent investigation by the CITT — the quasi-judicial body charged with making a recommendation on whether the evidence warrants the imposition of “final safeguards” lasting three years, reports The Financial Post
LNG Canada it is committed to providing opportunities to Canadian firms yet says it has been unable to find an alternate solution to this problem using domestic suppliers.
This project requires certain steel products, such as energy tubular steel, which falls under the safeguard restrictions (many of which cannot be produced in Canada, the filing states. Example, 40 metre “inner rib piles”) used to build the port infrastructure in Kitimat, which are not fabricated in Canada. Even if they were, the filing states, they could not be safely transported to the remote project site.
“To the extent LNG Canada will need to use imported steel products, it will be because they are required due to a lack of capacity or expertise among domestic producers, and where it is not commercially feasible or physically possible to transport steel products across Canada to the Project site in Kitimat,” the filing states.
Morneau’s safeguard announcement has prompted concerns about potential supply shortages in various downstream industries. The LNG filing suggests the restrictions could harm primary steelmakers too.
“Canadian steel manufacturers that currently serve the energy industry have an entirely new sector in which to specialize and grow,” according to the document. “If Canada makes decisions that result in the inability of major projects to deliver on investment promises, including cost certainty, future investment will look elsewhere. This risk will impact all interested parties, including domestic producers, which are currently well positioned to take advantage of a growing demand for steel as a result of future investment in Canada’s oil and gas industry.”
“We continue to listen to the concerns of some in the sector and are assessing ways to minimize the impact of safeguards in certain specific import situations while maintaining the broad objectives of the provisional safeguards,” a spokesperson from the Ministry of Finance said Wednesday.
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