The barren landscape of the isthmus that connects the city of St. John\u2019s and the Avalon Peninsula with the rest of the island portion of Newfoundland and Labrador can appear decidedly bleak. From an economic standpoint, however, this region is fast becoming an industrial hub for the province. At its centre is the Come By Chance oil refinery; but over the next year and a half, nearby communities are expected to become busy indeed as two other major projects roar to life.
At Long Harbour, Toronto-based Vale Ltd. will have a 500-person work camp ready for occupancy early this year in order to allow construction to begin on a nickel-processing plant; by the end of 2011, up to 1,200 workers will be on-site to build the facility. The plant is expected to be finished and processing nickel concentrate from Labrador in 2013.
Not far from Come By Chance, the mothballed Bull Arm fabrication site, owned by St. John\u2019s-based Crown corporation Nalcor Energy, will be made ready this year to build a concrete platform for the Hebron offshore oil project, a public\/private partnership operated by ExxonMobil Corp. of Irving, Tex. Construction of the Hebron platform is set to begin in 2012, with the first oil expected to be extracted in 2017.
These two projects are major reasons for the province\u2019s return to robust real GDP growth of 5.4% in 2010 after suffering a sharp decline in 2009. Opinions differ on expectations for the province in 2011, with the province forecasting growth of 5.4% and Royal Bank of Canada<\/b> anticipating a more modest increase of 3.8%.
If even this lower figure comes to pass, Newfoundland will probably end up ahead of several other provinces this year. The oil and mining sectors continue to drive Newfoundland\u2019s economy and dictate the strength of the provincial government\u2019s fiscal situation. In late November, provincial Finance Minister Tom Marshall said that, thanks to higher than expected oil prices, the government would record a $12-million surplus for 2010 rather than the $194-million deficit that had been predicted the previous spring. Provincial government debt has continued to rise, although not by as much as originally budgeted. It increased by $489 million rather than by the $699 million projected in 2010.
The province\u2019s offshore oilfields constitute about 35% of Canada\u2019s conventional light crude production, and the oil sector accounts for about 30% of Newfoundland\u2019s nominal GDP and 2.4% of its employment. Since development of the first oilfield in the early 1990s, the sector has comprised one-third of total capital investment in the province, with $1.6 billion spent in 2010.
The volatility of worldwide oil prices makes forecasting government revenue difficult, and overall oil production continues a downward trend as existing resources are depleted. Peak production occurred in 2007 and unless new fields are discovered, the decline will accelerate despite the addition of Hebron\u2019s estimated 581 million barrels of recoverable oil later this decade.
Improved market conditions for minerals \u2014 particularly in China \u2014 had resulted in a strong turnaround in prices and demand in 2010, conditions that saw the value of shipments from Newfoundland exceed $3.3 billion last year. Iron ore continues to be of primary importance, and the value of 2010 shipments doubled over 2009 levels.
With these improvements, Montreal-based Iron Ore Co. of Canada resumed a three-phase, $800-million expansion of its Labrador City operations, which is designed to increase annual production from 18 million to 26 million tonnes of ore by 2015.
The picture for Vale\u2019s mine in Voisey\u2019s Bay, Labrador, is not as rosy despite higher nickel prices and a 27% increase in the value of metal concentrate shipments in 2010. A strike by the Labrador workforce, which began in August 2009 and settled just on Jan. 26, was the longest in the province\u2019s history. The mine still operated with a reduced workforce.
Last fall, gold production began at the Toronto-based Anaconda Mining Inc. property in Baie Verte. A gold and copper mine may also open this year in the Baie Verte region, at a development led by London-based Rambler Metals and Mining PLC.
Another iron ore mine is slated to open this year in the former Schefferville mining region of western Labrador and northeastern Quebec. Toronto-based Labrador Iron Mines Holding Ltd. expects to open that mine in April.
Prospects for the fishery, which remains Newfoundland\u2019s largest employer, are uncertain. Lower overall fish landings in 2010 were offset by higher prices for some species \u2014 including turbot, snow crab and shrimp \u2014 and the value of seafood shipments rose by 35% for the first three quarters of the year, compared with the same period in 2009.
Newfoundland continues to have the nation\u2019s worst unemployment rate, at 14%. Despite robust economic growth, the provincial government does not expect to see a dramatic decline in unemployment in 2011. \tIE<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"
Newfoundland and Labrador predicts strong increases in its GDP this year, although the province\u2019s unemployment rate remains among the highest<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3013,3130],"tags":[3120,3197],"yst_prominent_words":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/316771"}],"collection":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/comments?post=316771"}],"version-history":[{"count":1,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/316771\/revisions"}],"predecessor-version":[{"id":362050,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/316771\/revisions\/362050"}],"wp:attachment":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/media?parent=316771"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/categories?post=316771"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/tags?post=316771"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/yst_prominent_words?post=316771"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}