Transportation Requirements for Economic Sector Development in Northern Ontario: Presentation of Draft Final Report

Transportation Requirements for Economic Sector Development in Northern Ontario: Presentation of Draft Final Report Stakeholder Workshop, Sudbury December 4, 2013 Elizabeth Drake Principal Consultant, CPCS T: +1 613 237 2500 edrake@cpcs.ca

Presentation Outline Study Purpose and Approach Sector summary: Mining Sector summary: Forestry Sector summary: Agriculture and Aquaculture Sector summary: Manufacturing Sector summary: Tourism Summary of Strategic Needs 2

Study Purpose and Approach The purpose of this study is to gain insight into: The competitive marketplace and future prospects in the north How sectors operate in relation to the transportation system The future transportation requirements for these sectors Study examines economic outlook and transportation requirements of five emerging priority sectors: Mining Forestry Agriculture and Aquaculture Manufacturing Tourism 3

Study Purpose and Approach Study methodology: Data gathering and literature review 1:1 interviews with companies, organizations and agencies (117 interviews carried out) Supply Chain Analysis and Mapping Validation of results (ongoing) A number of common economic factors influence all sectors: Strengthening Canadian dollar Importance of highly cyclical resource based industries (metals mining, forestry) Increasing oil and energy costs over past 20 years Transportation costs typically represent larger share of costs of goods produced in Northern Ontario 4

Northern Ontario Multimodal Transportation System 5

Sector Use of Transportation System Summary of Modal use across study sectors (darkness of shading=importance)

Mining: Economic Context, Trends and Issues Sub sectors include: Metallic mineral mining (base metals, precious metals) Non metallic mineral mining (diamonds, aggregate) Mining service and supply Trends and Issues: Mining is highly cyclical Labour supply shortages affect growth (skilled and unskilled) Planned transformation of Ontario Northland Railway concerns some shippers Legislative challenges associated with exploration of new mines 8

Mining: Key Mining Areas

Mining: Transportation Flows 10

Mining: Transportation Flows (2011) and Forecast (2026)

Mining: Transportation Needs More passing lanes / four laning on key roads Selective replacement of winter roads by all season roads Monitor traffic volumes on highways in areas where recently developed mines have opened/are opening Highway 652: Cochrane to Detour Lake Gold project Highway 105: Red Lake Vermillion Bay Connections to the Ring of Fire: road/rail, airport Address Sudbury inner city road congestion Select upgrading of airport infrastructure 12

Forestry: Economic Context, Trends and Issues Sub sectors include: Lumber Manufactured wood products (OSB, veneer, plywood, etc) Pulp and paper products Alternative / niche products Trends and Issues: Impacts of changes in in U.S. housing market High value of Canadian dollar affects competitiveness Digital revolution lowering demand for traditional paper products Ontario Northland railway transformation has concerned some shippers 14

Forestry: Transportation Flows 15 15

Forestry: Transportation Needs Maintain existing funding levels for forest Road Access Program ($75m / year) Identify areas for additional passing lanes and/or four laning on key roads Highway 11/17 between Nipigon and Shabaqua corners Highway 17 between Kenora and Winnipeg Highway 11 between North Bay and Hearst Selective construction of all season roads to replace Winter Roads in northerly Management Units 16

Agriculture: Economic Context, Trends and Issues Sub sectors include: Dairy Cattle farming Field crop production Aquaculture Issues and Trends: Long distances to / from markets and lack of scale affect competitiveness Labour shortages and low replacement of retiring farmers Rising cost of agricultural inputs (fuels, fertilizer) Lack of processing facilities Growth in aquaculture production somewhat constrained by regulatory uncertainty 18

Agriculture: Transportation Flows

Agriculture : Transportation Needs Additional Passing Lanes / Four Laning on Key Roads Four laning of the 150 km Highway 11 from North Bay to New Liskeard Add passing lanes on Highway 11 between Thunder Bay (Shabaqua Corners) and Rainy River (via Fort Frances) Add passing lanes on Highway 71 between Emo and Kenora (180km) More grain handling rail connections around New Liskeard; but success dependent on significant volumes 20

Manufacturing: Economic Context, Issues and Trends Majority of manufacturing firms directly serve the resource based mining and forestry sector General Manufacturing includes three sub sectors: 22

Manufacturing: Economic Context, Issues and Trends Remoteness relative to large markets increases transportation costs and production costs Emergence of Asia as low cost hub Smaller companies face challenges in expansions Just in time manufacturing challenging Lack of road/rail intermodal facility inhibits greater use of containers Any increase in mining activity typically increases demand for manufacturing 23

Manufacturing: Transportation Flows 24

Manufacturing: Transportation Needs Additional passing lanes / four laning on key corridors: Highway 17 between Manitoba border and Thunder Bay (540 km) Highway 71 between Emo and Kenora (180km) Highway 144 between Sudbury and Timmins (290km) Investment in Sault Ste. Marie harbour: Facility currently owned by Essar Steel Algoma, primary user Investment would enable growth for Essar Steel Algoma, Tenaris Algoma Tubes (secondary user) and other third party users 25

Tourism: Economic Context, Trends and Issues Key products / activities: Angling and hunting Soft or broader outdoor products (e.g. camping) Cultural tourism (museums, theatres, festivals, etc) Aboriginal experiences products Touring products and motorcycle touring City / urban attractions (growing sub sector) Winter tourism (snowmobiling, sledding) 27

Tourism: Economic Context, Trends and Issues Trends and Issues: Sector hit hard by global economic downturn, higher fuel prices, and rising value of the Canadian dollar Entrance of new airlines positive, but airfares within/across Northern Ontario still relatively high Increased competition from more and increasingly affordable global getaways Aging and changing demographic / tastes of tourists Technology and infrastructure shortfalls Great Lakes cruising faces challenges attracting vessels to region and overcoming regulatory barriers New RTOs expected to result in improved tourism product development and marketing approaches 28

Tourism: Use of Transportation System Road: Most heavily used infrastructure mode The journey is part of the tourism experience, so road conditions are doubly critical to sector development Air options: Hub and spoke, with key airports in Thunder Bay, Sudbury, Timmins, Sault Ste. Marie and North Bay Rail : VIA Rail s Toronto Vancouver service Agawa Canyon Tour Train Algoma Central Railway VIA Rail tourism focused train (Sudbury and White River) ONTC Polar Bear Express between Cochrane and Moosonee (mostly local residents) Marine : OSTC Chi Cheemaun Ferry Great Lakes cruising (Little Current, Thunder Bay, Parry Sound, Sault Ste. Marie) 29

Tourism: Priority Transportation Needs Investment in new and improved rest stops Continued four laning of highway 400/69 up to Sudbury (100 km remain with construction ongoing) Additional passing lanes and/or four laning Highway 11 from North Bay to Hearst Highway 17 from Sudbury to Sault Ste. Marie Highway 71 between Emo and Kenora Improved signage and way finding tools (TODS/Logo, GPS apps) 30

Summary of Strategic Needs More passing lanes and four laning across the region Monitoring of roads that are expected to see a significant increase in traffic (652 to Detour Lake Gold, 105 to Red Lake) Expansion of port at Sault Ste. Marie Enhance capabilities of airports for mining growth (extending runways to 4,000 ft and improved warehousing facilities) 32

Questions and Discussion 4S Exercise 1. Given all of the things that you heard, what s sticking What was the big message or messages that you took away? 2. What was surprising? 3. What was strategically imperative to the Northern Ontario Multimodal Transportation Strategy? 4. What was stressing what, if anything, made you anxious or raises concerns? Other Considerations What are the implications of the findings for the upcoming phase of the Northern Ontario Multimodal Transportation Study? 33

APPENDIX (Sector Fact Sheets) 34

Mining Fact Sheets: SWOT Analysis and Sector Outlook Sector Growth Outlook Sector SWOT Analysis

Mining: Current Use of Transportation System Road and rail primary modes used to move inputs and outputs to and from base metal mines Road and air primary transport modes used for movement of inputs and outputs to and from gold mines Air mode used primarily in the early development stages of mines, and throughout the entire life cycle of most mines in remote, northern areas. Personnel are also often flown in to more remote sites. Road mode used for ~ 90% of aggregate moves, within 100km of pit or quarry Marine mode is also important for moving aggregates to and from Northern Ontario (~10% of production) 36

Mining Fact Sheets: Truck Traffic Origin Destination Patterns Origin and Destination of Daily Mining Truck Traffic in Northern Ontario (excludes traffic transiting Northern Ontario) Analysis of O D Pie Chart Graphic Graphic shows origins and destinations of 624 daily metals and mining related truck trips that take place in Northern Ontario* Nearly half (297) of all trips occur within Northern Ontario (origin and destination in Northern Ontario) Of the 119 daily truck trips which originate from Northern Ontario, 64% are destined to Southern Ontario and 15% to Central United States (primarily Michigan) Of the remaining 207 daily truck trips destined to Northern Ontario from outside of the region, over half (52%) originate from Southern Ontario Commodities included: Aluminum, alumina, bauxite Base metals and articles of base metal Cement and non metallic mineral products Iron ore and concentrates Minerals, ores and concentrates * Data is from MTO Commercial Vehicle Survey 2011

Mining: Transportation Flows (2011) and Forecast (2026)

Forestry Fact Sheets: SWOT Analysis and Sector Outlook Sector Growth Outlook Sector SWOT Analysis

Forestry: Current Use of Transportation System Transportation needs still driven by traditional products (lumber, manufactured products) Road transport used for moves between logging sites (Management Units) and forest resource processing facilities (e.g. sawmills) Combination of road and rail transport used to move products from resource processing facilities to customers Most large sawmills and processing facilities are located with rail access The marine and air modes are largely not used by the forestry sector (may change with new developments) 40

Forestry Fact Sheets: Truck Traffic Origin Destination Patterns Origin and Destination of Daily Forestry Truck Traffic in Northern Ontario (excludes traffic transiting Northern Ontario) Analysis of O D Pie Chart Graphic Graphic shows origins and destinations of 1,154 daily forestry related truck trips that take place in Northern Ontario* 683 (59%) of all trips occur within Northern Ontario (origin and destination in Northern Ontario) 258 (22%) daily truck trips originate from Northern Ontario and go to areas outside of the region, with 49% are destined to Southern Ontario Of the remaining 213 (19%) daily truck trips destined to Northern Ontario from outside of the region, 33% come from Central Canada and 19% from Central USA. Commodities included: Lumber Newsprint Paper Wood Pulp Other Raw and finished forest products * Data is from MTO Commercial Vehicle Survey 2011

Forestry: Transportation Flows (2011) and Forecasts (2026)

Agriculture Fact Sheets: SWOT Analysis and Sector Outlook Sector Growth Outlook Sector SWOT Analysis

Agriculture and Aquaculture: Farm Type and Size

Agriculture: Current Use of Transportation System Road is dominant means of transport for all agriculture sectors Majority of transport is by truck, using primary highways wherever possible Limited inputs arrive by rail to region, then distributed by wholesale farm supply companies / co ops (fertilizers, chemicals, etc.) The marine mode is used to move large volumes of western (prairie) grain through the port of Thunder Bay for export outside of Canada 45

Agriculture Fact Sheets: Truck Traffic Origin Destination Patterns Origin and Destination of Daily Agriculture Truck Traffic in Northern Ontario (excludes traffic transiting Northern Ontario) Analysis of O D Pie Chart Graphic Daily Truck Trips with Start and/or End in Northern Ontario 500 450 400 350 300 250 200 150 100 50 183 217 59 50% Origin of Products Destined to Northern Ontario 75% 13% 2% 1% 1% 1% 9% Destination Outside of Northern Ontario 14% 15% 17% 0% Atlantic Provinces Central Canada Central USA North East USA Quebec South East USA Southern Ontario Western Canada Western USA Atlantic Provinces Central Canada Central USA North East USA Quebec South East USA Southern Ontario Western Canada Western USA Graphic shows origins and destinations of 459 daily agriculture related truck trips that take place in Northern Ontario* 217 (47%) of all trips occur within Northern Ontario (origin and destination in Northern Ontario) 183 (40%) of daily truck originate from Northern Ontario, of which 75% are destined to Southern Ontario 59 (13%) daily truck trips are destined to Northern Ontario, of which 50% come from Southern Ontario Commodities included: Wheat and other cereal grains Potatoes Meat, Fish and Seafood Other Agriculture and food products * Data is from MTO Commercial Vehicle Survey 2011 0 0% Originating in Northern Ontario Within Northern Ontario Destined to Northern Ontario

Agriculture: Transportation Flows (2011) and Forecasts (2026)

Manufacturing Fact Sheets: SWOT Analysis and Sector Outlook Sector Growth Outlook Sector SWOT Analysis

Manufacturing: Current Use of Transportation System Use varies considerably by company no typical use Road Vast majority of manufacturers use trucks Hub and spoke system typical for smaller companies LTL also common for smaller companies Rail Requires large volumes used by some larger companies Volume requirements preclude smaller manufacturers from accessing competitive rates Marine Volumes concentrated in Sault Ste. Marie at Essar Steel Algomaowned facility Air Small volumes associated with niche / high tech markets 49

Manufacturing Fact Sheets: Truck Traffic Origin Destination Patterns Origin and Destination of Daily Manufacturing Truck Traffic in Northern Ontario (excludes traffic transiting Northern Ontario) Analysis of O D Pie Chart Graphic Graphic shows origins and destinations of 770 daily manufacturing related truck trips that take place in Northern Ontario* 331 (43%) of all trips occur within Northern Ontario (origin and destination in Northern Ontario) Of the 159 (21%) daily truck trips which originate from Northern Ontario, with 54% of these destined to Southern Ontario 280 (36%) of daily truck trips originate from outside of the region, with 53% of these coming from Southern Ontario Commodities included: Electronics, Electrical and Office Equipment Machinery Mail Other Manufactured, Miscellaneous goods Telecommunications Equipment, Materials * Data is from MTO Commercial Vehicle Survey 2011

Manufacturing: Origin of Truck Trips, by Destination

Manufacturing: Transportation Flows (2011) and Forecasts (2026)

Tourism Fact Sheets: SWOT Analysis and Sector Outlook Sector Growth Outlook Sector SWOT Analysis

Tourism: Number of Visitors and Average Spending

Tourism Fact Sheets: Origin Destination Patterns Origin and Destination Region of Passenger Vehicles Destined to Tourism Activities In Northern Ontario, or Passing Through Northern Ontario (Fall 2011) Graphic illustrates origin and destination area of vehicles completing tourism related to or through Northern Ontario in fall season Data received from Ontario license plate trace surveys (e.g. excludes U.S. licence plate holders) Fall (2011) Origin Area Destination Area Kenora Other Rainy River Thunder Bay Other Algoma Sault Ste. Marie Algoma Other Sudbury Greater Sudbury Sudbury Other Manitouli n Cochrane Timmins Cochrane Timiskami Other ng Nipissing Nipissing North Bay Other Parry Sound Other regions of Canada and US (via Northern Ontario survey points) Central Ontario 2 12 97 9 68 103 30 35 4 33 38 58 94 25 609 23% Nipissing North Bay 63 157 160 379 14% Parry Sound 16 10 15 13 65 16 156 71 362 14% Southwestern Ontario 9 4 12 5 37 32 10 5 27 8 7 70 9 235 9% Sudbury Greater Sudbury 5 19 202 227 9% Eastern Ontario 10 15 32 9 14 3 25 13 18 29 37 205 8% Nipissing Other 21 27 41 67 156 6% Muskoka 4 16 4 8 4 5 3 6 8 3 60 2% Algoma Other 57 57 2% Timiskaming 3 44 47 2% Manitoba 24 15 0 40 2% Sudbury Other 38 38 1% Kenora Other 35 35 1% Manitoulin 24 9 34 1% Thunder Bay Thunder Bay (City) 28 28 1% Western Canada 2 9 15 0 27 1% Kenora Kenora (City) 21 21 1% Algoma Sault Ste. Marie 20 20 1% Cochrane Other 4 15 19 1% Haliburton 4 5 4 0 13 0.5% Thunder Bay Other 12 12 0.5% Eastern Canada 3 4 7 0.3% Other USA 5 0 5 0.2% Cochrane Timmins 4 4 0.1% Total to Destination 28 25 20 140 54 170 167 62 38 38 88 161 217 570 860 2638 % of Total from Destination 1% 1% 1% 5% 2% 6% 6% 2% 1% 1% 3% 6% 8% 22% 33% Total from Origin % of Total from Origin

Tourism Fact Sheets: Origin Destination Patterns Origin and Destination Region of Passenger Vehicles Destined to Tourism Activities In Northern Ontario, or Passing Through Northern Ontario (Summer 2012) Graphic illustrates origin and destination area of vehicles completing tourism related to or through Northern Ontario in summer season Data received from Ontario license plate trace surveys (e.g. excludes U.S. licence plate holders) Summer (2012) Origin Area Destination Area Kenora Kenora (City) Kenora Other Rainy River Thunder Bay Thunder Bay (City) Thunder Bay Other Algoma Sault Ste. Marie Algoma Other Sudbury Greater Sudbury Sudbury Other Manitouli n Cochrane Timmins Cochrane Timiskami Other ng Nipissing Parry Nipissing Other North Bay Sound Other regions of Canada and US (via Northern Ontario survey points) Central Ontario 13 10 9 85 138 160 214 250 20 22 98 118 300 150 97 1685 24% Sudbury Greater Sudbury 1 18 89 181 299 327 86 380 1380 20% Southwestern Ontario 26 6 15 17 57 83 146 88 6 10 22 22 101 92 58 748 11% Parry Sound 6 4 19 21 33 22 24 148 52 147 51 526 8% Nipissing North Bay 9 1 2 9 11 237 231 500 7% Eastern Ontario 2 22 35 36 15 31 32 10 11 67 262 4% Thunder Bay Other 11 62 111 1 11 33 229 3% Sudbury Other 76 5 65 83 229 3% Thunder Bay Thunder Bay (City) 122 27 20 12 29 210 3% Muskoka 6 7 6 4 14 13 7 31 66 13 17 1 184 3% Manitoulin 83 4 1 4 22 68 183 3% Algoma Other 12 4 46 2 11 3 13 4 77 172 2% Algoma Sault Ste. Marie 4 13 13 28 4 7 96 164 2% Nipissing Other 2 1 9 6 41 74 132 2% Timiskaming 4 11 101 117 2% Cochrane Timmins 38 38 1% Kenora Other 24 2 4 5 35 1% Western Canada 5 4 23 31 0.5% Haliburton 7 6 4 8 0 25 0.4% Manitoba 7 5 8 21 0.3% Cochrane Other 11 0 11 0.2% Kenora Kenora (City) 4 4 8 0.1% Minnesota Cook 6 0 6 0.1% Rainy River 4 0 4 0.1% Michigan Other 3 0 3 0.1% Michigan Chippewa 3 0 3 0.04% Eastern Canada 2 0 2 0.03% Total to Destination 4 64 2 109 346 222 361 712 764 746 33 49 186 359 508 919 1526 6908 % of Total from Destination 0.1% 0.9% 0.0% 1.6% 5.0% 3.2% 5.2% 10.3% 11.1% 10.8% 0.5% 0.7% 2.7% 5.2% 7.4% 13.3% 22.1% Total from Origin % of Total from Origin