WINNIPEG, Manitoba/OTTAWA (Reuters) – Teck Resources Ltd’s surprise decision to cancel a planned C$20.6 billion ($15.6 billion) oil sands mine in northern Alberta, citing uncertainty about Canada’s climate policy, underscores a global struggle to balance energy growth with environmental concerns.
FILE PHOTO: Visitors pass a logo of Teck Resources Ltd mining company during the Prospectors and Developers Association of Canada (PDAC) annual convention in Toronto, Ontario, Canada March 4, 2019. REUTERS/Chris Helgren/File Photo
It is the latest blow to Canada’s reputation as a predictable place to invest, but the project itself was not viable under current conditions.
The miner withdrew on Sunday its application to the Canadian government to build the Frontier project, saying broader issues around resources and climate change needed to be resolved. Protests by indigenous groups linked to a planned gas pipeline have disrupted railways, leading police to clear an Ontario blockade.
“Investors are feeling terrible about the (Canadian energy) space,” said Tim Pickering, chief investment officer of Calgary-based Auspice Capital Advisors, an asset and fund manager. “It’s pretty clear that the political climate and lack of cohesive agreement on how to address energy policy and climate is scaring investors away from Canada.”
Opposition to building new pipelines has delayed those projects for years, forcing the Alberta government to curtail production.
Teck Chief Executive Don Lindsay said last month that Frontier required higher prices, expanded pipeline capacity and a partner to proceed.
Teck shares were down 4.4% on Monday morning and have lost about one-fifth of their value since Wednesday.
An Alberta source directly familiar with the matter said Teck’s board had recently expressed concern that Frontier could become a protest target, which would draw attention to its coal business.
A Teck representative was not immediately available for comment.
“Investors and customers are increasingly looking for jurisdictions to have a framework in place that reconciles resource development and climate change,” Lindsay said in a letter Sunday to Canadian Environment Minister Jonathan Wilkinson. “This does not yet exist here today and, unfortunately, the growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved.”
Teck’s withdrawal highlights the need for a credible climate plan for Canada to become carbon-neutral by 2050, two Canadian ministers said.
“To meet this challenge here in Canada and internationally, we need to work together across jurisdictions and in partnership with industry,” Wilkinson and Natural Resources Minister Seamus O’Regan said in a statement late on Sunday.
Pickering said he blames Ottawa for industry fears of abrupt policy changes. Frontier was approved by a joint Canada-Alberta regulatory panel, but Prime Minister Justin Trudeau’s Cabinet was divided on whether to give it final approval this week.
($1 = 1.3220 Canadian dollars)
Reporting by Rod Nickel in Winnipeg, Manitoba, and David Ljunggren in Ottawa; Editing by Matthew Lewis