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Alaska's relationship with its next-door neighbor, Canada, is one of the state's most important international partnerships. Approximately 1,500 miles of common border and many shared interests, including significant commercial and cultural ties, drive this long-standing, multi-faceted connection. There is extensive cross-border trade and, in recent years, Alaskans and Canadians have teamed up to pursue a variety of business ventures and to jointly promote tourism.
Canada's involvement with Alaska's economy is significant and takes place on a number of levels. Canada is a major trading partner of Alaska, and Canadian firms have made substantial investments in the state. In addition, Canadians themselves travel to the state in large numbers and several Canadian port cities play a key role in Alaska's growing cruise ship industry. These investments and business activity support an estimated 8,000 direct and indirect jobs across the state, according to a newly updated report by the McDowell Group that details Canada's impact on Alaska's economy.
Trailing only Japan and South Korea, Canada has traditionally been the state's third-largest export market. Two years ago, it fell to the fourth position as Alaska's trade with a rapidly developing China propelled that country into the third position. In 2006, shipments from Alaska to Canada reached a record $445 million, a dramatic 100 percent increase over the previous year. This represents 11 percent of the state's total worldwide commodity exports.
BACK AND FORTH
The increase was fueled primarily by the higher prices received for mineral exports rather than a substantial increase in the quantities shipped. Last year, minerals accounted for 72 percent of the state's exports to Canada. Seafood, at 15 percent, and energy products at 4 percent, were the other two major export categories. The trade flows both directions: in 2006, according to Government of Canada statistics, Canadian firms shipped goods worth $437 million to Alaska. The two largest categories were refined fuel products at 18 percent, and mining and oil/gas field machinery at 9 percent of the total.
Canadian companies are not only customers of Alaskan resource exports, they are, in many cases, investors in the very projects that produce the exports, whether they are destined for Canada or other markets around the world. Alaska's mining industry, in particular, has attracted considerable Canadian participation. According the McDowell Group study, in 2006 there were 34 Canadian mining companies involved with exploration or mine development in Alaska. The report indicates that since 1981, Canadian mining firms have invested and spent some $3 billion on mine development and exploration. Traditionally, Canadian companies have been the leaders in exploring for minerals and metals in the state. In 2005, for example, the Alaska Minerals Industry Report noted that approximately 72 percent of the record $103 million spent on exploration during that year was derived from Canadian sources. Among the Canadian firms engaged in exploration were Nova Gold Resources, Northern Dynasty and St. Andrews Goldfields Ltd.
Teck-Cominco Ltd, a Canadian firm, owns Red Dog Mine, the world's largest producer of zinc concentrates, located about 90 miles from Kotzebue in Northwest Alaska. To date, the company has invested more than $700 million in facilities at the mine. The company employs nearly 500 workers and more than half of these are shareholders of NANA Regional Corp, an Alaska Native corporation that is the landholder where the mine is located. Toronto-based Kinross Corp. owns Fort Knox, Alaska's largest gold mine located just north of Fairbanks. The Fort Knox Mine operates year-round and has annual average employment approaching 400 workers. A Canadian-Japanese partnership has led to the development of the Pogo Gold Mine. Teck-Cominco and Sumitomo Metal Mining own the mine. In February last year, the mine poured its first gold. Production is expected to average 400,000 ounces per year.
MORE THAN TRADE
It is not just mining that has brought Canadian enterprises to Alaska. Calgary-based Agrium Inc. bought the former Unocal fertilizer plant in Nikiski on the Kenai Peninsula in 2000. The plant produces urea and ammonia for agriculture and industrial customers. The company exports these products to buyers in Asia, Mexico and the Lower 48. In the state's oil and gas sector, Canadians also have a presence. PetroCanada, one of the country's largest oil and gas companies and Talisman Energy, through its Alaska subsidiary FEX, L.P., are actively exploring for oil in the National Petroleum Reserve-Alaska. In May, Talisman announced that they had struck oil during a series of exploratory wells on federal lands about 60 miles southeast of Barrow.
Canada is a sizable participant in Alaska's seafood industry, both as a processor and as an export destination. Alaska General Foods, owned by the Jim Pattison Group, Canada's third-largest privately owned company, is one of the larger seafood processing companies in Alaska. The Vancouver-based company produces canned salmon and salmon roe products from its plants in Naknek, Ketchikan and Egegik. During the peak season, the company employs more than 600 workers. In 2006, Canada was Alaska's sixth-largest seafood export market. Seafood shipments from Alaska to Canada totaled $67 million, a combination of both processed and unprocessed product.
There are a number of Canadian firms that offer technical and professional services in Alaska. One example is Nana/Colt Engineering LLC, a company that provides a range of engineering capabilities to Alaska's petroleum, mining and utility industries. Formed in the fall of 1997, the company was a subsidiary of NANA Development Corp. and Colt Engineering Corp. The firm is another example of a Canadian company partnering with one of Alaska's regional Native corporations. According to the McDowell report, in 2006, including contractors, NANA/ Colt had nearly 600 workers in Alaska, with about 150 of these at work on the North Slope.
It should be noted that the flow of investment and business is not entirely in one direction. A growing number of Alaska firms have set up shop in Canada, including some that are pursuing opportunities in Canada's booming energy and mining sectors. VECO, a former Anchorage-based construction and oil and gas field service company recently bought out by CH2M HILL, a Denver, Colo.-based engineering firm, has a regional office in Calgary. Another example is Lynden International that has a warehouse and logistics facility in Calgary as well as offices in Canadian cities, including Vancouver and Toronto.
LIKING ALASKA
Alaska benefits from the growing number of Canadians who visit the state each year. It is estimated that nearly 100,000 Canadians travel to Alaska each year. As with most other travelers to the state, these visits occur predominantly during the summer months. In terms of the overall summer visitor market, Canadians accounted for 6 percent last year. Looking at just the international visitors, Canadians made up nearly 40 percent of those traveling to Alaska during the 2006 summer season.
Alaska and Canada have partnered to cooperatively promote tourism. There are, for example, two important Alaska/Canada Highway promotions jointly funded by Alaska and several Canadian provinces. The "North to Alaska" partnership program includes brochures, direct-mail packages, e-mail campaigns and a special Web site. The Yukon, Alberta and British Columbia provinces, along with Alaska, provide funding for the program. Another partnership is the Alaska/Yukon Joint Marketing Program. This program seeks to expand the number of highway visitors on both sides of the border.
Canada plays a key role in the Alaska cruise ship market. Virtually all of the nearly 1 million cruise passengers who make their way to Alaska either begin or end their journey with a stop in Vancouver, Victoria or Prince Rupert. Due to a U.S. law that prohibits foreign-flagged vessels from traveling directly between two U.S. ports, ships leaving Seattle, for example, must first make a stop at a "foreign" port, in this case Victoria or Prince Rupert, before stopping next at an Alaska port of call. More than half of cruise ship passengers sailing to Alaska use Vancouver as their point of embarkation.
The relationship between Alaska and Canada is defined not only by strong commercial ties, but also by the many and varied cultural linkages that provide depth to the overall relationship. In the field of education, as an example, the University of Alaska Anchorage offers programs and scholarships for students seeking to study about, or actually study abroad, in Canada. The Elizabeth Tower Endowment for Canadian Studies provides funding support to raise the visibility of the school's Canadian course and makes possible scholarships for students seeking to study in Canada. Through the National Student Exchange Program, Alaskan students can study at a variety of universities across Canada. Some students utilize the program to do French language immersion courses. As with many aspects of the Alaska-Canada relationship, education is another area where activity flows both directions. Last fall, more than 60 students of Canadian nationality were enrolled at the University of Alaska Anchorage.
CULTURAL TIES
There are, of course, many other areas of cultural exchange, including sports and music. In addition, as strong allies, there is considerable coordination and teamwork between American and Canadian military forces that include a role for Alaska.
Looking forward, there are many reasons to be optimistic about the continued growth of this important partnership. Alaska and Canada's pasts and future are closely linked. Soon, a pipeline that enables the state to commercialize its vast natural gas resources may also connect Alaska and Canada, leading to an exciting new chapter of mutual prosperity.
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