Canadian Economic News, July 2024 Edition

Resources

• Calgary-based Strathcona Resources Ltd. announced a strategic partnership with Canada Growth Fund (CGF) for up to $2 billion for the development of carbon capture and sequestration infrastructure on Strathcona's steam-assisted gravity drainage oil sands facilities across Saskatchewan and Alberta. Strathcona said the signing of the definitive agreement with CGF will allow Strathcona to begin its final stage front end engineering design (FEED) work, with a targeted Final Investment Decision (FID) date for its first commercial project in mid-2025.
• Vancouver-based Lundin Mining Corporation and BHP Group Limited of Australia announced they had entered into a definitive agreement with Filo Corp. of Vancouver to jointly acquire 100% of Filo's issued and outstanding common shares not already owned by Lundin Mining and BHP for approximately $4.1 billion. Lundin Mining said the transaction is expected to close in the first quarter of 2025, subject to shareholder, court, and regulatory approvals including the approval by the TSX, and other customary closing conditions for transactions of this nature.

Wildfires

• The Government of Newfoundland and Labrador announced on June 28th that the outdoor fire ban, which had been issued on June 21st, had been lifted for the Island of Newfoundland but remained in effect for Labrador until further notice. On July 13th, the Government announced that a province-wide outdoor fire ban was again in effect in Newfoundland and Labrador. On July 20th, the Government announced that it had lifted the fire ban for the Island of Newfoundland but that it remained in effect for Labrador until further notice.
• The Government of Alberta announced on July 8th that a fire restriction was in place for the High Level and Fort McMurray forest areas. On July 10th, the Government announced it was implementing a fire ban encompassing all of the Forest Protection Area of Alberta. On July 18th, the Municipal District of Opportunity issued an evacuation order for Chipewyan Lake due to an out-of-control wildfire in the area. On July 20th, Little Red River Cree Nation issued an evacuation order for the communities of John D'or Prairie and Fox Lake. On July 23rd, the Town of Jasper and Jasper National Park issued an evacuation order for all residents, workers, and visitors due to a wildfire south of the town. The Government said at this time that an estimated 17,500 residents were under evacuation order provincewide. The Government of Canada announced on July 26th that it had approved a Request for Federal Assistance from the Government of Alberta to support their efforts to combat wildfires.
• The Government of Saskatchewan announced on July 11th that it had issued a provincial fire ban for Crown lands and provincial parks, provincial recreation sites and the Northern Saskatchewan Administration District. On July 26th, the Government announced that due to recent rainfall and cooler weather, it was rescinding the provincial fire ban.
• The Government of Northwest Territories (NWT) announced on July 17th that due to fire danger in the region, fire bans had been put into effect for Queen Elizabeth Territorial Park in Fort Smith and for Hay River Territorial Park, prohibiting open fires. On July 18th, the Government put a fire ban into effect for Little Buffalo River Falls Territorial Park near Fort Smith. The Government said the bans were effective immediately and would remain in place until July 30th. On July 19th, the Government announced fire bans had been put into effect for NWT Parks around Yellowknife and in the DehCho region, and that these were in effect until August 2nd. The Government later announced that regional fire restrictions were being implemented in DehCho, North Slave, and South Slave.

Manufacturing

• Hamilton, Ontario-based Stelco Holdings Inc. announced it had entered into a definitive agreement with Cleveland-Cliffs Inc. of Ohio pursuant to which Cliffs has agreed to acquire all of the issued and outstanding common shares of Stelco for a total enterprise value of approximately $3.4 billion. Stelco said the transaction is expected to close in the fourth quarter of 2024, subject to shareholder and court approvals, approval under the Investment Canada Act and the Competition Act, as well as satisfaction of certain other closing conditions customary in transactions of this nature.
• Montreal-based Héroux-Devtek Inc., a manufacturer of aerospace products and landing gear, announced it had entered into an arrangement agreement with an affiliate of Platinum Equity Advisors, LLC of California pursuant to which the Platinum Equity affiliate will acquire all the issued and outstanding common shares of Héroux-Devtek for a total enterprise value of $1.35 billion. The company said the transaction is expected to close before March 31, 2025, subject to customary closing conditions, including shareholder approval, the approval of the Superior Court of Québec, and regulatory approvals and clearances in Canada, the United States, the United Kingdom, and Spain.
• Montreal-based Taiga Motors Corporation announced that it and its subsidiaries (the Taiga Group) had sought and obtained from the Superior Court of Quebec an order providing them with creditor protection pursuant to the Companies' Creditors Arrangement Act as well as an order authorizing the Taiga Group to pursue a formal sale and investment solicitation process.
• On July 10th, Unifor announced that its members at Bombardier had ratified a new three-year collective agreement, bringing an end to an 18-day strike at the company's aircraft manufacturing facilities in Mississauga and Waterloo.
• Michigan-based Ford Motor Company announced plans to invest approximately $3 billion to expand Super Duty production, including $2.3 billion to install assembly and integrated stamping operations at the Oakville Assembly Complex, with production starting in 2026. Ford said that boosting Super Duty assembly will initially secure approximately 1,800 Canadian jobs at the Oakville Assembly Complex as well as approximately 150 jobs at the Windsor Engine Complex, which will manufacture more V8 engines for Super Duty.
• Saint-Jérôme, Quebec-based Lion Electric Company, a manufacturer of all-electric medium and heavy-duty urban vehicles, announced an action plan intended to streamline its operations. The company said the plan includes a reduction of the Company's workforce by 30%, representing approximately 300 employees across Canada and the United States, and adjusting the Company's truck manufacturing operations in light of a lower market demand than initially anticipated for all-electric trucks.

Retail Trade

• Texas-based Neiman Marcus Group announced that Hudson's Bay Company (HBC) of Toronto had entered into a definitive agreement to acquire Neiman Marcus Group for a total enterprise value of USD $2.65 billion. The company said the transaction is subject to the receipt of required regulatory approvals, and other customary closing conditions.
• The Ontario Public Service Employees Union (OPSEU) announced on July 4th that more than 9,000 Liquor Control Board of Ontario (LCBO) workers would be out on strike as of midnight after talks broke down. On July 21st, OPSEU said that LCBO workers had ratified a new three-year Collective Agreement and that stores were set to open on July 22nd.
• Brampton, Ontario-based Sleep Country Canada Holdings Inc. announced it had entered into an arrangement agreement with a subsidiary of Fairfax Financial Holdings Limited of Toronto whereby the subsidiary will acquire all the issued and outstanding common shares of Sleep Country for a total enterprise value of approximately $1.7 billion. Sleep Country said the transaction is expected to close in the fourth quarter of 2024, subject to customary conditions, including the receipt of shareholder and court approvals and regulatory approval under the Competition Act (Canada).
• Mississauga-based Walmart Canada announced it was investing $53 million in higher wages for approximately 40,000 of its store associates.

Other news

• The Bank of Canada reduced its target for the overnight rate by 25 basis points to 4.5%. The last change in the target for the overnight rate was a 25 basis points cut in June 2024. The Bank also said it is continuing its policy of balance sheet normalization.
• The Government of Canada released its Green Buildings Strategy, which aims to accelerate retrofits of existing buildings; ensure we are building energy-efficient, climate-resilient and affordable buildings from the start; and seize the economic opportunities associated with more efficient and lower carbon building materials and technologies.
• The Government of Canada announced the launch of the Canada Public Transit Fund, a new $30 billion investment over the first ten years to expand public transit and make it more accessible across the country. The Government said funding will begin to flow in 2026 and that to access funding through this program, municipalities will need to take actions that directly unlock housing supply.
• The Government of Canada announced that the maximum annual Canada Child Benefit will increase and that families can receive up to $7,787 per child under the age of 6 and $6,570 per child aged 6 through 17, which represents an increase of 4.7% from the previous year.
• The Government of Canada announced that as of August 1, 2024, lenders would be able to begin to offer 30 year amortizations for insured mortgages for first-time homebuyers purchasing new builds.
• The Government of Ontario announced that it is holding the annual rent increase guideline for 2025, the maximum amount a landlord can increase rent during the year for most tenants without the approval of the Landlord and Tenant Board, at 2.5%.
• The City of Toronto announced on July 17th that it was continuing to respond to heavy rainfall, flooding, and power outages that impacted residents the previous day. The City said that there were about 3,200 customers without power, down from a peak of approximately 167,000 and that all roads, including the Don Valley Parkway and Gardiner Expressway, had reopened.
• TD Canada Trust, RBC Royal Bank of Canada (RBC), BMO Bank of Montreal, Canadian Imperial Bank of Commerce (CIBC), Scotiabank, and Laurentian Bank of Canada announced they were decreasing their Canadian dollar prime lending rates from 6.95% to 6.70%, effective July 25th.
• On June 28th, the Aircraft Mechanics Fraternal Association (AMFA) announced it had directed its members to cease work at Edmonton-based WestJet and begin strike action. On June 30th, the AMFA announced that Aircraft Maintenance Engineers and WestJet had successfully negotiated a five-year contract and that the strike would end effective immediately. WestJet said it had parked 130 aircraft at 13 airports across Canada in response to the strike.
• New Jersey-based Quest Diagnostics, a provider of diagnostic information services, announced a definitive agreement with Ontario Municipal Employees Retirement System (OMERS) of Toronto to acquire Toronto-based LifeLabs for approximately $1.35 billion, including net debt. Quest said the parties expect to complete the transaction by the end of the year, subject to certain customary closing conditions and approvals, including Canadian regulatory approvals.
• Dartmouth, Nova Scotia-based Chorus Aviation Inc. announced it had entered into an agreement to sell all assets in its Regional Aircraft Leasing segment to affiliates of investment funds managed by HPS Investment Partners, LLC of New York for an aggregate consideration of approximately $1.9 billion. Chorus said the transaction is expected to close by the end of the year, subject to approval by Chorus's common shareholders, regulatory approvals, and other customary conditions to closing.

United States and other international news

• On July 10th, United States President Joseph R. Biden, Jr. declared that a major disaster exists in the State of Texas and ordered Federal aid to supplement State, tribal, and local recovery efforts in the areas affected by Hurricane Beryl from July 5 to July 9, 2024.
• The U.S. Federal Open Market Committee (FOMC) maintained the target range for the federal funds rate at 5.25% to 5.50%. The last change in the target range was a 25 basis points increase in July 2023. The Committee also said it will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities.
• The Reserve Bank of New Zealand (RBNZ) left the Official Cash Rate (OCR), its main policy rate, unchanged at 5.50%. The last change in the OCR was a 25 basis points increase in May 2023.
• The European Central Bank (ECB) left its three key interest rates unchanged at 4.25% (main refinancing operations), 4.50% (marginal lending facility), and 3.75% (deposit facility). The last change in these rates was a 25 basis points reduction in June 2024. The ECB said it intends to discontinue reinvestments under the pandemic emergency purchase programme (PEPP) at the end of 2024.
• The Bank of Japan (BoJ) announced that the interest rate applied to current account balances held by financial institutions at the BoJ will be 0.25%. The BoJ also said it will reduce the planned amount of its monthly purchases of Japanese Government Bonds (JGBs) so that it will be about 3 trillion yen in January-March 2026 and that the amount will be cut down by about 400 billion yen each calendar quarter in principle.

Financial market news

• West Texas Intermediate crude oil closed at USD $77.91 per barrel on July 31st, down from a closing value of USD $81.54 at the end of June. Western Canadian Select crude oil traded in the USD $60 to $72 per barrel range throughout July. The Canadian dollar closed at 72.42 cents U.S. on July 31st, down from 73.06 cents U.S. at the end of June. The S&P/TSX composite index closed at 23,110.81 on July 31st, up from 21,875.79 at the end of June.