Canada's poorest province gets its day
With vast oil and mineral wealth, Newfoundland and Labrador is finally emerging from obscurity.
TORONTO — "I am inclined to regard this land as the one God gave to Cain," wrote French explorer Jacques Cartier in May 1534 when he first saw the coast of Labrador, now a part of the province called Newfoundland and Labrador.
Cartier's unflattering description seemed to have stuck - until recently. Once the poorest province in Canada, this vast, snow-covered, and heavily wooded area may see the country's fastest growth this year, with a projected 5.2 percent increase in gross domestic product, eclipsing even that of oil-rich Alberta.
While several new industrial and transportation developments have bolstered this once remote and icy region, the real engines behind its sudden growth are China's booming economy and the resulting global thirst for industrial commodities like oil and nickel. Last November saw the openings of a new oil field off the coast of Newfoundland and a giant nickel project in Labrador - the province's largest mineral excavation effort in 60 years. The industrial windfall is exciting economists and locals alike.
"This is the best thing that has happened to me," says Sybella Daniels, an Inuit, from her home in Goose Bay. "It has allowed me to buy a house, something I never thought I would have done. Before the mine all we had was seasonal work here." Ms. Daniels has worked at the site since 2002 and earns $38,500 a year driving a giant Caterpillar truck moving ore.
Voisey's Bay, which sits on the isolated Labrador coast about 220 miles north of Goose Bay, is one of the largest nickel deposits in the world. The Canadian-based global minerals giant Inco Ltd. started processing and shipping nickel concentrate from the open-pit mine for the first time last November.
"Voisey's Bay is the first major nickel development to come on stream globally in several years. It couldn't have come into production at a better time for Inco and for the nickel market," says Scott Hand, chairman and chief executive of International Nickel, from his head office in Toronto.
During talks in the 1990s to develop the site, the price of nickel was consistently below $2 a pound on the London Metal Exchange. These days, nickel costs around $6.70, just off its high.
"With growing demand for nickel, particularly from China ... we believe nickel demand growth will remain strong for the foreseeable future," says Mr. Hand.
As part of its arrangement with two native groups, the Inuit and the Innu, Inco had to promise to hire local aboriginal people. The work force of about 400 is half local natives - the highest percentage of aboriginal workers of any new project in Canada.
Since there is no permanent settlement at Voisey's Bay, Daniels and other workers are flown in and out every two weeks and live in a camp on site.
Despite newcomers like nickel, oil remains the main driver of prosperity in Newfoundland and Labrador. The White Rose oil field is about 220 miles offshore in the North Atlantic. The first crude started flowing in November 2005 and White Rose now produces 70,000 barrels of oil a day. Two other offshore fields started production in 1997 and 2002. Husky Energy of Calgary, which operates the project, says the White Rose field has a life span of 10 years. Husky continues to search for more oil.
The latest plans for a new energy project are for a second oil refinery in Newfoundland. Newfoundland and Labrador Refining Corp. is lobbying provincial leaders for the rights to launch a $7-million feasibility study.
"There's a lack of refining capacity globally and we would see a natural market for refined product in the northeastern United States," says Brian Dalton, director of Labrador Refining, from his office in St. John's, the provincial capital. Whereas the current refinery has a capacity of 105,000 barrels a day, a potential new facility would be capable of refining three times as much petroleum.
The economy of the province is growing - it has doubled in size since 1997- but the population has shrunk about 10 percent in the past 15 years, and the unemployment rate is still Canada's highest, at 15.2 percent. Many Newfoundlanders have left to find work.
"The population shrinks due to fewer children being born and a continuing rate of out-migration," says Doug May, an economist at Memorial University in St. John's. "The oil industry, especially offshore, needs lots of capital but it doesn't need a lot of workers."
Dr. May credits the high unemployment rate with the fact that many of the fishing industry's seasonal workers are listed as unemployed during the off-season while they wait for fish processing plants to reopen.
In spite of the mineral and oil wealth in Labrador, the business hub of the province is the capital of St. John's. One sign of its newfound riches is the price of residential real estate. Though the compact city is still affordable - the average house is just $177,500 - housing values have jumped by 35 percent since 2002, according to broker Royal LePage, as the city becomes the administrative center for oil and mineral development.
For most of its history, the area's stark beauty was isolated and accessible only by air or one railroad line built in the late 1940s to the iron-ore mines. Now, Labrador is connected to the rest of North America by the Trans-Labrador Highway, a wide two-lane gravel road that opened in the mid-1990s.
The rustic roadway links what were once a series of mining and logging roads from Quebec to Goose Bay. But even with the newfound interest in this mineral-rich no-man's land, travelers on the 325 miles between Labrador City and Goose Bay will only see one gasoline station.