Grassroot Projects Lead Canada to Billions' Worth of Activity Under Construction

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Written by Danny Levin, Deputy Editor for IIR News Intelligence (Sugar Land, Texas)

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Summary

Industrial Info is tracking more than US$100 billion worth of projects under construction across Canada, with grassroot efforts accounting for about 45% of the total investment value. About 30% of the grassroot spending is attributed to two major LNG export projects as well as the automotive sector.

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Canada's Two Major LNG Export Projects Under Construction

The Canadian government, which is looking to expand non-U.S. exports, said last month more of the country's natural gas will be converted to liquefied natural gas (LNG) in the future. The Canada Energy Regulator expects overall natural gas production to expand by 2050, with about a quarter of total Canadian gas production (projected to reach 32 billion cubic feet per day) tied to LNG exports. Production last year averaged 19 billion cubic feet per day.

Canada is among the top natural gas producers in the world, and a net exporter to the U.S. economy.

Industrial Info is tracking two major LNG export projects underway: the Cedar LNG and the Woodfibre facilities. The former entails a floating facility off the coast of British Columbia with a design capacity of 3.3 metric tons per annum (MTPA), while the latter would have a would have a design capacity of 2.1 MTPA. Both should be completed before the end of the decade.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can view the Cedar LNG and Woodfibre project reports.

Automotive Sector Buoys Canada's Manufacturing Projects

Also under construction are two major electric vehicle (EV) battery-related plants in Ontario that have a combined investment value of US$6 billion and are expected to begin production next year.

Volkswagen AG is building its first battery cell plant in North America, in Saint Thomas, Ontario--designed for an annual production capacity of 90 gigawatt-hours--enough for about 1 million EVs per year. Also underway is construction of Japan-based Asahi Kasei Corporation's lithium-ion battery separators manufacturing plant in Port Colborne, Ontario, which would meet demand for EV batteries and grid energy storage systems.

Also underway is the first phase of a multi-building, approximately C$300 million (US$216 million) automotive components plant in Windsor, Ontario--owned by Taiwan-based Minth Group. The plant could begin production next year, manufacturing essential components for both conventional and electric vehicles.

Subscribers can view the three project reports.

"Ontario's auto manufacturing sector is a pillar of our economy, attracting billions of dollars of investment," Vic Fedeli, the province's minister of economic development, job creation and trade, said in a news release announcing the project.

That is imperative for a country that is working to halve U.S. trade over the coming years amid trade threats from U.S. President Donald Trump.

Other high-dollar Canadian grassroot projects are in the Chemical Processing, Metals & Minerals and Power industries, among others.

State of USMCA Negotiations

One factor looming over Canada's trade framework is the future of the United States-Mexico-Canada Agreement (USMCA), which is currently uncertain.

July 1 triggers a joint review of the USMCA, at which point the countries must state their intention to extend the agreement for a 16-year period or exit the agreement--although negotiations will continue after that date.

If no agreement is reached on July 1, a process of annual reviews occurs for 10 years until July 1, 2036--after which the USMCA terminates. Any of the countries can withdraw from the agreement with six months' notice.

Both Canada and Mexico generally want to maintain the agreement as is, but they are preparing for U.S.-demanded changes.

U.S. talks with Mexico are underway, while discussions with Canada are expected to begin in May.

U.S. Trade Representative Jamieson Greer provided an outlook at an April 7 event in Washington: he doesn't expect all issues to be resolved on July 1, but talks will continue. Although the U.S. may need to exit the agreement altogether, he said, the government prefers annual reviews. In addition, talks could result in bilateral deals with Canada and Mexico, respectively, layered over the overall agreement.

He said Trump "has been clear that he is dissatisfied with a lot of the outcomes" of the current agreement, including automotive imports from Mexico and steel and aluminum imports from both Canada and Mexico.

"Our baseline is that things have to be changed," Greer said, although the existing agreement's "bunch of load-bearing pillars" function well and could stay in place.

"But we do have to have some kind of a protocol or something with Mexico, and one with Canada separately, I think, to deal with issues specific to those countries."

At a recent event on the USMCA's future at the Rice University's Baker Institute for Public Policy, Christopher Sands, director, center for Canadian Studies at Johns Hopkins University, said there's a 20% chance the parties will agree to an extension in 2026, compared with an 80% chance the U.S. will force annual reviews.

Subscribers can view a full list of grassroot projects under construction across Canada, as well as a full list of all projects under construction.

Key Takeaways

• According to IIR data, grassroot projects account for about 45% of the total investment value (US$112 billion) of Canada's projects under construction.
• More than half of the value of grassroot projects is attributed to two major LNG export projects as well as the automotive sector.
• Other high-dollar projects are in the Chemical Processing, Metals & Minerals and Power industries, among others.
• The state of the USMCA is uncertain, as the three parties must state their intention to extend or exit the agreement on July 1, although negotiations will continue past that point.

About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 trillion (USD).