In today’s edition: The big music streamers are warning Canadians might be facing higher prices, the federal government is casting its plan to end open-net fish farms, and TD’s takeover of a U.S. investment bank puts both companies to the test.
The news now:
- Landmark human-rights claim involving Barrick mine proceeds as London gold group drops challenge
- Canada intervenes to prevent sale of rare earth metals to Chinese buyer
- Toronto semi-conductor startup Untether gears up for a big push into the AI market
- Legacy of rate hikes looms large over household spending, Bank of Canada says
STREAMING
Music streamers warn of higher prices
There might be a lot of sad songs on my Spotify Wrapped list this year.
In a letter to the Heritage Minister obtained by The Globe’s Marie Woolf, music streaming companies Spotify and Apple are among those warning a ruling by the CRTC requiring them to pay about $200-million a year to support Canadian creatives could mean raising prices.
The letter argues that forcing U.S. and international companies to pay into “funds they cannot access” risks provoking a trade war.
“We have raised this risk and concern at a recent meeting of the standing committee on international trade (CIIT) and their work on the 2026 review of the Canada-US-Mexico Agreement,” says the letter, which was written by an industry group representing the companies.
(Can I be honest with you? I actually use Apple’s service but the Music People in my life seem to prefer Spotify. I don’t want them to know about this. Any other platform suggestions? I’d like to hear them: cwilsonsmith@globeandmail.com.)
The spotlight
A big-fish story
A fish farm near Campbell River, B.C.JONATHAN HAYWARD/The Canadian Press
The Liberal government has cast its plan to end open-net salmon fish farms in coastal B.C. water. As Robert Fife reported, the government is expected to give the province’s aquaculture industry five years to transition to closed containment systems.
What’s at stake?
B.C.’s marine-based salmon aquaculture industry is a growing contributor to Canada’s economy.
- Aquaculture has made waves over the last couple of decades: Total production value grew to about $1.3-billion in 2022 from $234-million in 1991.
- B.C. is the largest contributor to Canada’s aquaculture industry, accounting for 58 per cent of total volume and 68 per cent of total value in 2022.
- Economic reconciliation will also be put to the test, as the push to phase out open-net operations runs into Indigenous nations that say they have a right to determine what works in their territories.
What are open-net salmon farms?
Also called open-pen, these farms raise large numbers of fish in marine or freshwater within confines open to the natural environment, typically located in the middle of wild salmon migration routes. Tim Kennedy, president of the Canadian Aquaculture Industry Alliance, testified before the House of Commons fisheries committee last fall that these farms are not an ecological threat.
“Modern hatchery operations have substantial biosecurity and operational systems in place that simultaneously prevent disease and dramatically improve hatchery efficiency in water and electricity use,” he said.
How do land-based farms work?
Many see the future in a technology called recirculating aquaculture systems – “closed containment” production facilities in which water is constantly recirculated. Where that solves the problem of fish interacting with their wildlife colleagues, it creates a school of others: heavy energy consumption, increased labour costs and tense stakeholder considerations are cited in one economic analysis.
A big-fish tale
Hook: You can track the debate over open-net fish farms in British Columbia to the modern industry’s inception in the seventies. Critics have long argued the farms expose the wild salmon to parasitic sea lice as they make their way to the ocean from the lakes and streams where they were born.
Line: In his re-election campaign in 2019, Prime Minister Justin Trudeau threw those detractors a line – pledging to phase out ocean-based pen farms by 2025, citing risks to the health of wild Pacific salmon. Tony Allard, chair of conservation group Wild Salmon Forever, noted in a letter last fall to the Prime Minister that Canada stands alone on the Pacific Coast for allowing ocean-based farms.
“The government has mandated this transition twice. I am confident that they will deliver,” he said last summer.
Sinker? That, of course, depends on who you ask. Proponents of the change argue it’s not only necessary for the survival of several salmon species but the province’s economy. The B.C. Salmon Farmers Association, meanwhile, says the province could lose more than 4,700 jobs and up to $1.2-billion in economic activity annually if the open-net industry cannot continue. And the transition to land-based farms will be neither easy nor cheap.
$1.8-billion
Estimate for a full transition to land-based farms
- The economic analysis, provided by an independent consulting group hired by the province, says that estimate is on the conservative side, and that it would be at least a decade before the rebuilt industry were operating at a “steady state.”
- It’s unclear how or why the mandate got shelved until now, but the pandemic likely did nothing to alleviate the complexities of navigating the time-honoured conventions of Canadian policymaking. This particular line casts across at least four jurisdictional structures, a patchwork approach to licensing and permits, and enforcement that changes from province to province. Addressing these same issues over the next few years will be a polarizing process. O, Canada!
- But the report notes that a push to remake the industry on land would create more well-paying, full-time jobs – as well as provide a jolt of tax revenue for the province.
FINANCE
A $1.3-billion deal in 20 minutes
TD Cowen president Jeffrey Solomon: “Every now and then you have a meeting that spins your head around and makes you look at the world differently."David Swanson/Reuters
It was just a 20-minute pitch. But by the end of it, Jeffrey Solomon found himself with a US$1.3-billion offer to consider.
Two senior leaders from TD Securities were offering to buy his company – Cowen Inc., a 106-year-old investment bank on the east side of Manhattan – to extend the reach of Canada’s second-largest lender in the U.S. The offer made sense for Cowen, too, as its executives were seeking ways to fund ambitious growth plans into the health care and biotech sectors.
But then came the spring of 2023. After a blockbuster year for equity markets and merger and acquisition activity, Stefanie Marotta reports, the market slowed to a crawl. The two companies now have more challenges to overcome than they bargained for.
By the time the deal had closed in March, 2023, two companies faced a slow market beaten down by high interest rates, Marotta writes. “The macro environment wasn’t too conducive,” National Bank analyst Gabriel Dechaine told Marotta. “You had a lot of inflation and market volatility. The kind of business that Cowen is skewed to, that type of activity doesn’t take place as much in the market environment that they had during the first year in which TD acquired it.”
To wit:
Also on our radar:
- Canadian job vacancies, first quarter.
- U.S. retail-sales data.
- Salmon recipes.
Morning markets
Global markets ticked higher as investors awaited U.S. economic data and comments from Federal Reserve officials later in the day for more clarity on the central bank’s roadmap for interest rate cuts.
The pan-European STOXX 600 was 0.62 per cent higher in morning trading. Britain’s FTSE 100 advanced 0.42 per cent, Germany’s DAX added 0.5 per cent and France’s CAC 40 gained 0.63 per cent.
In Asia, Japan’s Nikkei closed 1 per cent higher at 38,482.11, while Hong Kong’s Hang Seng slipped 0.1 per cent to 17,915.55.
The Canadian dollar traded at 72.74 U.S. cents.