I call the meeting to order.
Welcome, everybody. We are continuing to work on our study of Arctic infrastructure. Welcome to those joining us by video conference. Pursuant to Standing Order 108(2), we are conducting a study on northern infrastructure projects and strategies.
Before we get into presentations, I'm going to ask all of us to think about Canada's commitment to truth and reconciliation and that we do that whether we're at an event or at a meeting like this. It's important for us to reflect on that to understand the truth and move towards a process of reconciliation.
We're here in Ottawa, the homeland and unceded territory of the Algonquin people. The Arctic, too, is the land of many indigenous bands and tribes. In how we move forward, it's very important to recognize the history there as well.
As for the way this works, you'll have up to 10 minutes to do your presentation. After both presentations, we will have an opportunity for the members of Parliament to ask you questions. From your testimony and your brief, a report will be written, which will be public and provided to all members of Parliament and the Government of Canada. We'll ask the government to reply to our recommendations.
Your participation is extremely important. Welcome.
Our first presenter is in Regina, where I can see on the screen what looks like the Inland offices to me.
You're speaking about AGT Food and Ingredients Inc. and you're the president and CEO. If you want to start, we will set the timer. I'll give you a signal when you're getting close to the end. You have up to 10 minutes.
Chairperson, members of the committee, ladies and gentleman, my name is Murad Al-Katib. I come to you today with the perspective of an entrepreneur and a business leader in western Canada. In addition to my role as CEO of AGT Foods, I'm the new CEO of the Arctic Gateway Group corporation, based out of Manitoba.
I come to you as a first-generation Canadian born to immigrant parents from Turkey. My father spent 52 years as a rural doctor serving the people of Saskatchewan. My mother was among the first immigrant Muslim women to serve on a rural council in Canada, elected in 1976. I come with a familial background in community economic development, and my career began in government in the area of trade promotion and economic development. I started my company, AGT, from the basement of my house in 2003 and built it into a $2-billion exporter of pulses and grains grown in western Canada.
We've also taken a strong interest in freight and logistics, being one of the largest containerized grain shippers on the globe, and we are now the largest short-line railway operator in Canada, with over 2,000 kilometres of rail track in Saskatchewan, Alberta and Manitoba. In 2017 we began a journey to invest in a generational opportunity we identified in the iconic Canadian port and rail infrastructure with access to tidewater that is located in a truly uniquely positioned Arctic northern gateway—Churchill, Manitoba, and the Hudson Bay Railway.
This area is a strategic link that will allow future access to northern supply, with this location being the closest shipping point from North America's western Canada region to Europe, North Africa, the Mediterranean, and, via the Suez Canal, to the growing market in India and South Asia.
Churchill, we believe, will become a key future stop in the northern passage. Fairfax Financial Holdings and AGT have completed a monumental partnership with a consortium of first nations communities, the Kivalliq communities in Nunavut and the northern Manitoba communities—collectively known as the Missinippi group—to acquire the Hudson Bay Railway, the Port of Churchill and the Churchill Marine Tank Farm Company. The acquisition vehicle is called the Arctic Gateway Group. There are only a handful of deepwater port accesses in North America, and Churchill is one of those.
The reason I think it's a very special vehicle and opportunity is that we were able to partner directly on equity interests with all 29 of the MKO first nation communities, and every community on the Hudson Bay Railway was given the opportunity to have ownership equity in this generational project.
Churchill is the only rail-served arctic port in North America. It provides the quickest access to the Atlantic Ocean—versus any other port—for western Canadian products. The port has been tremendously underutilized by its former ownership.
Just to give you a bit of context, Russia operates 13 arctic ports, with estimates that approximately 20% of Russia's GDP runs through these ports, six of which are rail-served and many of which operate year round with the use of icebreaker technologies. In terms of the ongoing operation of the Arctic Gateway and the assets it owns, the Government of Canada has committed $117 million in acquisition, repair and operational funds over the course of the remainder of 2018 and 2019, with operating funds available until 2027.
This strong partnership with government, the private sector and first nations and communities de-risks the project dramatically. Within the partnership group, Fairfax brings financial wherewithal in managing major infrastructure investments, AGT brings the experience in running short-line railways and as a grain exporter, and the first nations and communities bring the social licence and true inclusiveness and participation in this generational project.
The Arctic Gateway port is being eyed as a potential new transportation route for North America. The over-the-pole route would see the port of Churchill emerge as a trade and economic development zone, linked to Asia, Europe, Russia and Nunavut. It's time for an Arctic gateway initiative in our great country.
Canada has the longest coastline of any country, almost four times the next-longest coastline, and most of it is in the Arctic. For centuries that coastline was rendered inaccessible by thick, hard multi-year ice, but climate change is causing the sea ice to disappear. More than 1.2 million square kilometres were lost between September 2006 and September 2017, leaving the Northwest Passage temporarily ice-free. Soon, all of the Arctic sea ice may melt away during the summer months. Ice will still form during the winter, but it will be soft, single-year ice. This makes icebreaker-assisted year-round shipping commercially feasible. Since the earth is a sphere, Canada's northern coastline is relatively close to both Asia and Europe.
The Northwest Passage offers a 7,000-kilometre shortcut from New Jersey to Shanghai. Churchill, Manitoba, is the only commercial deepwater port in northern Canada. The shipping season is already extended from July to November. Long used for shipping grain to foreign markets, Churchill is beginning to see two-way trade, witnessing Russian vessels arriving with fertilizer from Estonia and leaving with western Canadian wheat for Italian pasta manufacturers.
An Arctic gateway initiative would embrace the north as a transportation opportunity. All-season roads would be pushed through to Tuktoyaktuk, Bathurst Inlet and Baker Lake. Deepwater ports would be built near the mouth of the Mackenzie River and at Bathurst Inlet and Iqaluit. The port of Churchill would be a bustling trade corridor of activity.
The Canadian Coast Guard would be charged with developing safe, commercially attractive all-season shipping. This work would involve maintaining navigation devices and producing detailed charts. It would also, critically, involve breaking ice for commercial vessels, including foreign ones. The Coast Guard already breaks ice for cargo ships in the Gulf of St. Lawrence and Saguenay River during the winter. A new icebreaker in Hudson Bay would add several months to the shipping season at Churchill and would provide sustainable long-term jobs and economic activity for first nations and northern communities.
Arctic hubs for the transportation of goods from North America would relieve pressure on Vancouver, Prince Rupert, Halifax and Montreal. It would create jobs and it would spur economic development, not just locally but across the country. Most significantly, providing icebreaking for foreign vessels in the Northwest Passage would cement Canada's claim to sovereignty there.
Fairfax and AGT, the consortium of first nations, Kivalliq communities, and communities on the Bay Line are committed to working with the Government of Canada, the provinces, and the private sector to build an Arctic gateway to the world. Phase one of the project is under way. We've repaired the rail line from Gillam to Churchill, a critical railway that has been out of service for a number of seasons. We're undertaking safety and rehabilitation upgrades to the port and the railway assets through the partnership funds provided by Canada.
I'm excited to be part of this initiative through a 99-year agreement that Fairfax and AGT signed with Arctic Gateway to operate the railway, the port and the Marine Tank Farm assets. The Arctic gateway, as a natural resources corridor for Canada and the world, is truly a net contributor to Canada's future economic prosperity for all Canadians.
I want to thank you for the time to give my opening comments.
Good afternoon. Thank you for the invitation to address this committee.
My name is Matt Belliveau. I am the executive director for the NWT and Nunavut Construction Association.
The association was established in the Northwest Territories in 1976 and expanded to include Nunavut in 2012. We have about 150 members here, including general contractors, trade contractors, manufacturers and suppliers, road builders and heavy construction contractors, logistics and transportation businesses, allied professionals, and government departments and agencies working in the north.
One of the primary services that we provide to our members is a summary of public sector procurement opportunities. We assemble it, put it out twice a week, and distribute it through our member email list. This summary includes all the construction projects that are put out to tender by municipal, territorial and federal governments, as well as government agencies such as housing and power corporations.
I'm not here to speak in support of a particular infrastructure project. I did want to use this opportunity to just generally stress the importance of infrastructure investment in northern Canada.
There have been a lot of studies published on the infrastructure deficit in the territories, and this impacts core areas, including housing, transport, water, sewage and solid waste management. There is a cycle of underdevelopment in the north. The lack of infrastructure is itself a barrier to building new infrastructure.
The federal government could contribute to breaking this cycle by taking a long view of its investments in northern Canada. In particular, there is an opportunity to increase the number of skilled workers in northern Canada and lower the cost of building and maintaining infrastructure over the long term.
What do I mean by this? There are a lot of companies here in Yellowknife that take on most of the construction projects in smaller communities around the north, and when they go into these communities, they look to hire local people as apprentices. However, the situation that is happening over and over is that even a large project in one of these communities typically is going to wrap up in two years, at most. That's not long enough to complete an apprenticeship, so even though there is clearly infrastructure that needs to be built in these communities, the funding for it is just trickling in.
That means that there are long periods of time in those communities when there are no projects going on that would allow that apprenticeship to continue to completion. Those apprentices have to make a decision to either leave their community or put their apprenticeship on hold. If you put it on hold for more than a year, you have to start all over again. Either way, the result is that there continues to be a lack of skilled labour in these smaller communities, which does raise the cost of building and maintaining the infrastructure that's needed there.
If the federal government is committed to making steady progress on these local infrastructure deficits, it would create more opportunities because there would be projects going on continually over a period of time that is long enough to complete apprenticeships and build up a skilled workforce at the local level, with new journeypersons who can then train more apprentices.
Every dollar you invest in infrastructure in northern Canada does help to reduce the cost of living for residents here and makes the north more accessible for investors, who can generate more tax revenue for all of Canada.
What I'm hoping you will consider is that the federal government could benefit from efficiencies and cost savings over the long term by taking a more aggressive approach to closing northern Canada's infrastructure gap and building capacity here in the north.
Thank you very much, Madam Chair, honourable members, ladies and gentlemen.
There are a few materials in my presentation, which may go beyond 10 minutes. I respectfully ask that I might be able to go a few minutes beyond, if you find it interesting, but I'll try to be rapid.
The second page to turn to is a famous statement by William Lyon Mackenzie King, who said, “If some countries have too much history, we have too much geography.” This really points to the problem of connectivity and regional disparity. If you look at the map of Canada, the red line depicts where the roads and railways stop, and the circle beyond that is where the regional disparities are the greatest.
We certainly have lots of stuff there that we'd like to get out. It's a treasure chest of minerals and deposits that we could mine economically, but we simply cannot get to them economically. They're stranded.
We have communities, as we have heard, that suffer from very high food prices, bad housing and many other illnesses, social and otherwise, that come with that isolation.
Beyond that, of course, we have sovereignty being threatened. Although it's well and fine to have the ice melting and more transportation access to the north, it also opens us up to more threats from the outside to our sovereignty, which need to be addressed.
Of course, beyond that, the ice roads are melting progressively, and we can see the day coming when they may not be around.
There is a need for a new technology. I always say that if we could do this with what we have, it would be no problem. We would have already solved it. We need to move on to look for something new, and in this case the solution, I believe, is the airships.
If you turn to the next page, I'd submit to you that airships could do for the north what the railway did for western Canada 125 years ago. Before the railways, we had a stone fort and the fur trade, and that was about it. Within 40 years of the railway, Winnipeg was the third-largest city in Canada and a bustling community, and this spread development throughout the west.
I will not try to tell you that we're going to plant wheat in the Arctic. That's not the case, but certainly we can move a long way from where we are, because today we have impassible land masses and very bad poverty conditions. With airships, we can open up mineral developments and other developments in the north.
I'll turn to the next page. You can see that there are quite a number of airship designs. Most of these are conceptual, although some have been built and tested. I would submit to you that the majority of these are not suitable for Arctic conditions. The only two that would be are the one that's been designed in Canada, at the very bottom—the red one—and the Russian airship, which is the second one from the top on the left. Other than that, these airships have not been designed for Arctic conditions, and certainly the inflatable ones would not work.
Flip over again and you'll see the next page. We're suggesting that what we need is a rigid airship. The rigid airship does not change its shape when the temperature changes. That's a great advantage. Of course, it can be built much bigger to carry much larger loads. Going back 80 years, they built airships that would carry 70 tonnes and travel at 80 miles an hour, or 145 kilometres an hour, and cross oceans.
That was 80 years ago. We can match that and do much better today, and do it with materials that already exist. We're not going to reinvent propellers and engines. These things are all certified and available, and we could do that today and do it much better.
Look at the next page, please. If you're going to have an airship carrying cargo, you must have a way of getting the cargo on and off safely and quickly.
Most airships you'll probably envision as being tied to a mast and a weather vane—if the wind changes, they're going to move. You had to have a way of controlling them. Airships are also somewhat unstable in pitch, so they're going up and down as well as moving sideways when the wind is coming. That doesn't mean they're uncontrollable. As you'll see on the bottom left, that is the Zeppelin airship landing under control with nobody on the ground holding ropes, and passengers will be getting on that airship.
Today, with modern equipment, computers and engines, we can control exactly where the airship is, but you still have to land it. There's an unfortunate landing on the one with the one-point landing. Also, at the mast, if a gust comes along and lifts it up, you're going to spill your coffee, so that's not so good.
Go to the next page, please. You can see the giant Zeppelin and its handling system.
They were aware of this. They had problems even just putting fuel on, so the Germans built a railway track. It had the radius of the airship's length. The airship was about 800 feet long, so that track was roughly a mile in length. It worked very well, because the railway car tied to the last fin would hold the airship down and reduce its speed in turning with the wind. However, it's impractical for the north. Finding a square mile of flat land and moving railway track and a rail car there is simply not a feasible solution for us, so we have to look for something different.
If you go to the next page, you'll see that our solution—an old idea put forward in the 1920s, although not built—is to land the airship on a turntable. The airship would come along and hold steady over a turntable with its engines, direct into the wind, to the turntable and to its docking system. A line would drop, and basically you would winch the airship down to the turntable deck, much like you land a helicopter on a destroyer. Once it hits the deck, obviously, clamps would grab it; then you power down and you can now control it. If anybody is on the turntable and the airship moves, they're safe—or they move with it, which is the idea.
Turntables, by the way, are very old technology. They've been around a long time, and there are some very big ones. Any revolving restaurant, essentially, is a turntable. That size would be what we'd need.
On the next page, you can see they are essentially built in pieces, which is very nice because you can bring pieces in and assemble them at a spot. It's not as though you'd have to bring it all at once. By the way, we call this a buoyant aircraft rotating terminal, a BART. What we envision is a main supply base that the airship would leave from—essentially, wherever the roads stop. In Manitoba, a place like Thompson, where the roads stop, would be the supply base. You'd truck to there, then you'd go on by airship from that point. You'd have BARTs in the various communities outside and go from there.
On the next slide, we can see the impacts of an airship. We refer to this as an electric airship. We're looking at electric motors, as opposed to engines. They're much more reliable in the cold. In fact, we're looking at an airship that we'd power eventually with hydrogen, an airship powered by fuel cells with zero carbon emissions. We're going to be one of the few who will be immune to any of these pollution charges, because we won't have any.
What can we see in terms of the impacts? In terms of northern food security, $4.99 for a kilogram of bananas was the price just this past spring in St. Theresa Point. It's only 200 kilometres north of Winnipeg, but because it's beyond the roads, the prices are high.
It's certainly an opportunity for sustainable development, new employment in manufacturing, national security, improved health. If you're poor and you're in a place with high food prices, the best bang for your buck is sugar and fat. If you live on that long enough, you'll have diabetes, and that's a problem we see in much of the north, and of course with the ice roads.
Moving on to the general benefits of the airship, we think this could be a $10-billion increase in the Canadian economy. It would come from various places—certainly from mining. Just a 5% increase in the mining capacity would be a big part of that. We could see reduced government subsidies for the north. It would make anything done in the north less expensive, because the costs would be lower. It would improve our sovereignty. It would add investment and export sales and new opportunities for transport of things such as wind turbine blades, which you cannot move now with any other means because they're so long.
Finally, of course, there's climate change—
On a larger-scale infrastructure side, the last speaker referenced current ice roads and bridges to feed those three diamond mines that we have. Those are based on a winter road that has been in place. It's a pretty impressive feat that goes on every year to move in all the products over a six- to eight-week period to supply and resupply those three mines. That is increasingly at risk as it relates to the climate change we're experiencing.
When you look at some of that key infrastructure, for us to maintain some of that socio-economic status, we need to look at things like the Mackenzie Valley and the Slave geological corridor, which is proposed to extend beyond into Nunavut, with port access, as well as some of the key infrastructure requirements around energy.
One of the major constraints that we experience here in NWT and across the three territories is that there is a very, very high cost of power generation. We're capped in terms of the hydroelectric output that we produce, and there is an increasing cost as it relates to diesel cogeneration. We have to look at opportunities so that we can drive in a cheaper electrical supply.
From an economic standpoint, if we don't have some of that key infrastructure.... We have some significant downward pressure as it relates to NWT in particular. You probably saw the Conference Board of Canada report that came out about six months ago. My understanding is that a revised one is coming out today or tomorrow. We haven't had a chance to look at that. Every indication is that we have some very weak economic prospects as it relates to the territory here.
Look at those three diamond mines. They contribute about $1.2 billion to the territorial economy here. If we're not able to sustain those mines and to produce other revenue-generating opportunities as they relate to the resource sector, there is a significant threat to the economic prosperity that not only the Yellowknives Dene First Nation and our corporation experience, because we're only one of many that positively contribute to that sector.
Along with that would come some pretty negative things, such as population decline, obviously a loss of meaningful job opportunities and a loss of the ability to provide social programming across the territory.
Paul and I were talking earlier about programming and the next steps in what we would require. We really need to have a joint effort as it relates to the federal government, the territorial government, and the impact on indigenous groups in the territory. When you look at a billion-dollar project—the Slave geological one, let's say, or hydro upgrades—in southern jurisdictions that may not be an overly large project. In a jurisdiction like NWT, Yukon or Nunavut, these are megaprojects.
We have constraints as they relate to the territorial government. The GNWT in particular is bumping up against their debt cap. Also, from an indigenous standpoint, our ability to contribute meaningfully from a capital standpoint is going to have its constraints
At a very high level for a recommendation, we're saying that the federal government needs to look at these resource projects with that risk capital and at investing for future opportunities to continue development, whether it be the resource project, Arctic sovereignty or the ability to reach some of these northern remote communities. It's very difficult for us to develop a business case that's going to support that.
The other side of it is to look at how we engage with the indigenous communities so that they can have a meaningful contribution. I think there are opportunities when we're contributing federal dollars into resource projects. Do we have the ability to convert more of that into equity positions so that the first nation has the ability to then leverage and work with third party financiers?
Is there anything you want to add to that, Paul?