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Large energy, mining projects to drive Canadian construction industry

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by Peter Kenter last update:Oct 7, 2011

At the CanaData Construction Industry Forecasts conference, Reed Construction Data Canada general manager Mark Casaletto said a slate of mega projects could create a long boom in construction. As examples, he cited the Lower Churchill Development and Hebron oil projects in Newfoundland, Site C Clean Energy Project in British Columbia, the Kemag Mining Project in Quebec, Suncor Energy Inc.'s Firebag 4 oil sands projects in Alberta.

A slate of Canadian mega-projects could create a decade-long boom in domestic construction, says Mark Casaletto, Vice-President and General Manager, Reed Construction Data.

“The bottom line is that the Canadian construction industry is absolutely primed for some significant growth,” he says. “It could double in 10 years.”

Many of the projects are driven by foreign demand for mining products, fossil fuels and hydroelectricity.

Current and planned construction will provide significant near-term opportunities, including such hydroelectric projects as the $6 billion Lower Churchill Development at Gull Island and Muskrat Falls, Newfoundland and the $7.9-billion Site C Clean Energy Project below British Columbia’s Peace River Dam, with other significant projects in B.C., Manitoba and Quebec.

Mining projects include the $3.5-billion Kémag Mining Project in Quebec, and the $2.9-billion Schaft Creek Copper-Gold-Molybdenum-Silver Deposit Project in B.C., with other large projects in the Northwest Territories and Quebec.

Fossil fuel projects include Suncor’s $10-billion heavy oil processing plant, and $3.6-billion Firebag 4 oil sands projects in Alberta, and Chevron’s $10-billion Hebron oil refinery in Newfoundland.

A modest but continued demand for commodities by developing economies and domestic demand for new energy sources are one of the keys to construction of Canadian mega-projects

A predicted stable demand for commodities to mid-2013 will encourage such projects to move forward, says Derek Burleton, Vice President and Deputy Chief Economist (Canada), TD Bank Financial Group.

“The upside for commodities is that there will be no underlying shortages,” he says.

“The downside is that it’s a symptom of a slowdown in the world economy and particularly in China, so prices will remain elevated, but constant.”

Burleton sees oil no higher than $120 a barrel, and natural gas prices edging up through 2013. Copper, nickel and coal prices will moderate as 2013 approaches. Steel will remain flat through 2012 and lumber prices will not see a recovery until 2014.

Barring an unforeseen political or economic crisis, Burleton says he does not expect to see a sudden boom or bust in commodities.

A relatively robust Canadian economy, fueled by those same commodities should see continued spending on domestic projects ranging from more than a $1 billion in construction for the 2015 Pan American Games to the $1-billion Toronto-York Region Spadina Subway Extension, and arena projects across the country.

Casaletto notes that many of the large resource projects will place a premium on the ability of Canadian builders to service large operations at very remote sites.

“Because they’re so remote, builders will literally have to put cities and towns next to them,” he says.

“That will create almost as much work as the total projects over their lifetimes.”

last update:Oct 7, 2011

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