A 45.8% tariff levied by Canada’s International Trade Tribunal against prefabricated steel industrial components imported from China, South Korea, and Spain threatens to drive a spike through the already shaky economics of a fossil consortium’s plan to build a natural gas liquefaction and export terminal at Kitimat, B.C., the Globe and Mail reports.
Royal Dutch Shell PLC and its partners in the LNG Canada project—Suncor Energy Inc. and engineering firm Fluor Canada Ltd.—already faced a capital investment of “up to C$40-billion to construct the Kitimat terminal and related infrastructure,” the paper writes. That budget depends on the consortium being able to import massive process modules, pre-built in Asia, that will be at the heart of their proposed facility. Now, the “hefty anti-dumping duty threatens to crush” their plan by potentially adding billions to the modules’ cost.
The trade tribunal acted after the Canada Border Services Agency ruled South Korea and Spain were dumping similar prefab modules in Canada at below their market value, and that China “is both subsidizing and dumping its industrial steel goods.” Spain is a minor player in the market, the Globe states, adding that “most of the foreign products being targeted pertain to China and South Korea.”
LNG Canada asked for an exemption from the duty, which the trade tribunal refused. The company, as well as Suncor and Fluor Canada, have all filed motions before the Federal Court of Appeal seeking a review of the tribunal decision.
The Canadian Border Services Agency initiated its investigation in response to complaints from Canadian steel fabricators Supermétal Structures Inc. of Lévis, Quebec, and Supreme Group LP and Waiward Steel LP, both of Edmonton, supported by the Canadian Institute of Steel Construction, which represents the industry.
Two other LNG megaprojects proposed for the B.C. coast have been cancelled this year in the face of persistently poor prospects for their financial viability: Petronas’ C$36 billion plan for an export terminal on an environmentally sensitive site near Prince Rupert, north of Kitimat, and China National Offshore Oil Corporation (CNOOC)’s plan for a terminal in the same area.