Top of the world territory turns 10

As mineral-rich Nunavut Territory celebrates its 10th anniversary, Canadians and others are assessing changes made in the past decade and debating what the future will hold for Canada's newest territory.

Nunavut, which means "our land," is a vast, frozen expanse of tundra laced with lakes, inlets and bays in the eastern Arctic. Spanning three time zones, it covers 1.9 million square kilometers, or one fifth the land mass of Canada. It also dwarfs Alaska by nearly 200,000 square miles.

The territory is home to only 31,000 people living in 25 small, scattered communities with neither road nor rail connecting them to each other or the outside world. Of the relatively young population, 85 percent are Inuit and represent the largest concentration of aboriginal citizens of Canada.

Nunavut has a distinctive Inuit Qaujimajatuqangit (Inuit traditional knowledge, language and culture) and a mixed land- and wage-based economy as well as a dramatic landscape and extreme climate.

The Nunavut Land Claims Agreement signed in 1993 is the largest Aboriginal land claim settlement in Canadian history and precursor to creation of the territory on April 1, 1999. Thus, Nunavut is the only jurisdiction in Canada where all aboriginal land claims have been settled.

The NLCA gives title to 350,000 square kilometers, or 135,136 square miles, of land in Nunavut, including about 35,000 square kilometers, or 13,514 square miles, with mineral rights, to the territory's Inuit. Nunavut is in the process of negotiating with the federal government for the devolution of provincial-type responsibilities to the Government of Nunavut in order for the territory to gain more control of its resources.

Nunavut is divided into three regions: Kitikmeot, Kivalliq and Qikiqtani, where Cambridge Bay, Rankin Inlet and Iqaluit are the regional centers, respectively. Each region has a designated Inuit organization that represents the interests of Inuit residents of that region and ensures that commitments of certain provisions of the NLCA are implemented.

Wanted: A viable economy

Creating and running the vast territory is costly, requiring more than C$1 billion, or C$32,373 per capita, in federal transfers in Canada's most recent fiscal year. These funds pay for schools, health centers and territorial bureaucracy.

A recent economic report written for the territorial government cited several possible sources of public revenue, including large-scale mining and building up Nunavut's offshore fishing industry.

But mineral resource development, most observers say, offers substantial long-term economic potential for Nunavut. In the past decade, mining investment in the territory has grown ten-fold to exceed $300 million in 2008. Though successful mine development has been slow out of the starting gate, a large, open-pit gold mine is scheduled to begin commercial production in early 2010 and at least five more major mine projects are working toward startup within the next five years.

However, experts point to Nunavut's education system as a major impediment to the territory's ability to create and sustain a thriving mining sector.

Researchers report that nearly three-quarters of Nunavut's working-age population does not meet minimum requirements to participate in a modern knowledge-based economy. They say the territory's population is younger, less healthy and poorer than other Canadians; in other words, demographically similar to the population of most of Canada in the early 1900s.

In addition to lower living standards, the territory is plagued with high crime and school dropout rates as well as other social ills. Inuit males aged 16 to 25 have the world's highest suicide rate, approaching 1 percent annually.

Slow progress, but high hopes

Terry Audla, executive director of the Qikiqtani Inuit Association - the designated Inuit organization for the Qikiqtani Region where 15,000, or roughly half, of Nunavummiut (people of Nunavut) live - said the creation of Nunavut Territory for the Inuit is an "artificial line on the map, in a sense."

"There have been some changes in the past 10 years, but Nunavut is not significantly changed in living standards," he said. The real turning point came in 1993 with the Nunavut Land Claims Agreement.

"There have been glitches along the way, but they are learning experiences. We still have hope."

Audla said mining offers tremendous opportunity for his region and for Nunavut, as a whole, not only in direct employment but also for Inuit-owned contracting firms.

"The territory has huge amounts of known (mineral) potential, but 80 percent of the area is not known," he said. "The recent announcement of a federal mapping program will bring about more known mining potential."

In the past three years, six mine projects have moved close to development in Nunavut.

Qikiqtani's for-profit arm, Qikiqtaaluk Corp. is an example of an Inuit-owned firm that has taken advantage of the surge in mining activity by winning and successfully fulfilling mining service contracts.

In its 2008 annual report, Baffinland Iron Mines Corp. described the Inuit of Nunavut as its strategic partner, noting that Nunavut residents worked 40 percent of the hours completed on its massive Mary River iron ore project on Baffin Island. Mary River's iron deposits have been described as the best in the world, and the Baffinland president and CEO calls the Mary River Project the "Hoover Dam" of mine projects.

Audla said work at Mary River and for other mine projects has enabled Qikiqtaaluk to pay out C$6 million to Inuit workers.

"I think our people have a better appreciation for that money, having earned those dollars rather than just being given the money," Audla said.

Overall, employment sectors in the Qikiqtani Region include the DEW line, cleanup of contaminated sites, hospitals, offshore shrimp and turbot fishing, government and mining.

"And if the numbers are correct, the known oil and gas resources in Nunavut exceed those in the Beaufort Sea," Audla said. "With the opening of the Northwest Passage, developing these resources is closer to reality.

"(The Inuit people) have always been patient, and as times goes on, it seems this patience will pay off."

Mining boom appears on horizon

Meanwhile, government, Native and mining company leaders say an era of unprecedented opportunity lies ahead for Nunavut.

"When I started work in Nunavut in the 1990s before there was a territory, mining didn't have much of a future," said Gordon MacKay, director of the Government of Nunavut's Minerals & Petroleum Resources Division. "There were three operating mines in the territory and almost no exploration or development projects; geoscience and mapping were dramatically poor, and the mines had 10-15 percent local employment."

Though prospects for mining 10 years ago "weren't very bright" in Nunavut, MacKay said the huge territory with its Archean greenstone belts still offered the best geology in the world.

In 1999, mining investment in Nunavut totaled less than C$30 million and by 2008, comparable investment in the territory had climbed well over C$300 million. That trend is a major factor in Nunavut's unemployment rate in the territory's 10 largest communities having steadily dropped from 13 percent in 2004 to 8.2 percent in 2007 before surging to 9.8 percent in 2008.

MacKay attributes exponential growth in mining investment over the past decade to the land claims agreement, creation of the territorial government and getting the word out to industry that Nunavut is open for business.

"If the recession had hit two years ago, it would have been very bad," MacKay said. "But the message has gone out. Now, Nunavut is recognized as very prospective by industry. We have almost no private land ownership. It's all territorial, federal and Inuit-owned lands, though the land is still managed by the federal government."

Though Nunavut has no mine in production today, government leaders are hopeful that the Jericho Mine, which closed in 2008 after less than two years of production, will soon reopen. Owner Tahera Diamond Corp., a Toronto-based junior, is currently seeking a buyer or strategic partner to help transform the financially troubled operation into a profitable venture.

Cumberland Resources Ltd. and Miramar Mining Corp. spent most of the past decade working to develop gold mines in Nunavut before being gobbled up by larger mining companies as they neared their goals. As a result, leading gold producers Agnico-Eagle Mines Ltd. of Toronto and Denver-based Newmont Mining Corp. are now advancing the Meadowbank and Doris North gold mine projects, respectively, toward production.

David Smith, vice president of investor relations for Agnico-Eagle Mines Ltd., agrees with MacKay.

"The Nunavut business climate is great. We feel welcome at the community, regional, territorial levels, all the way up to the federal government," said Smith, who avers that Agnico-Eagle's Meadowbank gold project is headed toward startup in early 2010.

What benefits will Meadowbank bring to Nunavut?

In addition to production taxes and royalties, mines like Meadowbank promise the direct economic benefit of relatively high-paying steady employment for skilled workers.

But Smith also points to indirect and intangible benefits that will flow from the mine's development.

"I've lived in a community where there was a brand new mine," he said. "I spent three and a half years in Northeast Turkey. When I got there, the houses didn't have running water, and when I left, the people were driving around in Mercedes."

Smith said mining can provide real value creation. "I really believe in the long-term financial and social benefits of mining. Agnico-Eagle is the type of company that is determined to do things properly. It's one of our core values to benefit the communities where our mines are located," he explained.

But for Nunavut, mining could be even more significant, according to MacKay.

Unlike Alaska where the mainstay of the economy, oil, is isolated from most of the population in fields on the North Slope, mining in Nunavut likely will be more "hands on," he said.

"Because of the geography of the territory, there are 25 communities spread out all over Nunavut. Every one of them has an opportunity to have an operating mine nearby," he said. "We need mining to be the foundation of our economy, and we can build and diversify from there."

Training tops government priorities

Though MacKay maintains that Nunavut has progressed considerably in 10 years, he acknowledges that the territory still has a ways to go to make the next step.

"We need to have mines in production, and Nunavut's people working in those mines," he said.

To meet the challenge, the Government of Nunavut developed "Parnautit," a mineral exploration and mining strategy aimed at creating conditions for a strong and sustainable minerals industry that contributes to a high and sustainable quality of life for all Nunavummiut.

The government also brought together industry, Inuit groups and federal agencies to help identify training needs for mining and to begin working toward meeting those needs, MacKay said. From this effort, has emerged a mine training initiative for Nunavut.

Agnico-Eagle is participating in the government's mine training roundtable, mainly to advise the group on the types of jobs that are available at Meadowbank and where officials should put their efforts for urgent training. The company has said training for the trades (mechanics, millwrights and electricians) would be particularly beneficial.

Government and industry experts estimate that the mining sector will employ about 3,000 skilled workers - roughly 23 percent of Nunavut's entire labor force - within the next five years. Most of these jobs will be in the trades, which require two or more years of training. The number of jobs increases to about 4,800 if positions are included that require similar transferable skills in contaminated cleanup sites and in communities.

"In 10 more years, we look to have four or five operating mines in the territory. And from the mining industry's perspective, it is much more preferable to have a local work force. We are hoping to attract federal funds to get at the challenges in training our workers," MacKay said. "But in my experience, you can't train people for jobs that don't exist."