Cooperatives within heavy industry: Oxymoron or a sign of the times?

Cooperatives within heavy industry: Oxymoron or a sign of the times?
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November 26, 2012

 

Large private corporations are neither the only players nor the only major investors in the production and trade of commodities. In the last few years, state-owned corporations and sovereign wealth funds have invested in foreign heavy-industry projects. And now, more discreet agents are also getting involved: cooperative enterprises.

Consider these three projects that have made headlines in Canada during the last few months:

  • Oil Refinery: In October 2012, Co-op Refinery Complex completed a $2.7 billion project to expand its oil refinery in Regina, Saskatchewan. Its production capacity of 145,000 bpd makes it the fourth-largest oil refinery in Canada. The company is a subsidiary of Federated Cooperatives (based in Saskatoon), a network of more than 250 retailers in Western Canada.
  • Nitrogen Fertilizer Plant: Indian Farmers Fertiliser Cooperative (IFFCO) and the Coop Fédérée have joined forces to build a $1.2 billion urea plant near Three-Rivers, Quebec. Based in New Delhi, India, IFFCO is a federation of more than 40,000 cooperatives. The Coop Fédérée (headquartered in Montréal) will market a portion of the plant’s output through a network of more than 175 points of sale in Canada.
  • Liquefied Natural Gas (LNG) Terminal: BC LNG is building a $400 million LNG terminal on the west coast of British Columbia. A principal partner in the project is the BC LNG Export Co-Operative, comprised of Haisla First Nation (situated near Kitimat), a dozen gas producers of intermediate size from both British Columbia and Alberta, and several Asian purchasers. The partnership  will facilitate the transportation of, and international trade in, natural gas.

Although the general public often associates cooperatives with other sectors (e.g. agri-food, financial services), several are now involved in heavy industry. In the three examples provided, the cooperative formula provides a market independent from the large international private corporations that have tended to dominate the production and trade of commodities. The cooperative model facilitates access to resources (e.g. energy, fertilizers) and reduces price volatility, to the benefit of members.

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