Rewards balance hardships in the North

Taking as its theme, "Building a Resourceful Future," the 15th annual Nunavut Mining Symposium held April 16-19, 2012 in Iqaluit, Nunavut, featured several presentations that examined the challenges facing mining and the importance of regulatory reform to the industry's future in Canada's northern territories.

Pierre Gratton, president and CEO of the Mining Association of Canada, led the discussion by citing mining's significant contributions to the North, which include 30,000+ person years of stable, high-wage employment, C$16 billion in diamonds production, C$10.2 billion in capital and operating spending, and C$8.5 billion in business development, of which C$4.5 billion involves aboriginal enterprises.

"In the North, mining is the largest private sector employer (all workers, including Aboriginal) and does more business with Aboriginal companies than any other industry," Gratton told participants in symposium.

In addition, mining has been instrumental in the development of rail lines (Pine Point mine, NWT, roads (Ft. Resolution, Yellowknife (NWT), hydro projects (Blue Fish generator, Yellowknife), shipping (Port facilities Polaris, Nanisivik, Nunavut, ice roads (NWT & Nunavut) and communities across the North as well as aboriginal skills training and education.

The industry, however, faces major challenges in the North, including the remote locations and high costs of most projects and the need for very high-risk investment.

"But, as I have pointed out, the rewards and benefits to northerners have been equally high," Gratton said. "Industry has worked closely with the Northern resource boards, and in recent years, we are encouraged by the development of new guidelines and policies, and the professional approach board staff has begun to adopt."

However, the mining industry still views the regulatory process in the North to be unduly complex and overly time-consuming, compared to other areas of Canada (e.g., BC, Quebec), he said

Gratton also observed that Northern regulatory regimes have, in large part, originated out of settled land claims agreements, resulting in a generally more predictable regulatory process; however, in regions with unsettled claims, resource development may become politicized and a source of leverage in negotiations with government.

Among Gratton's recommendations:

Establish clear timelines for the length of an environmental assessment; appropriate thresholds for referral to EA; clarify the requirements and procedures for Aboriginal consultation; and complete land use plans for development in the North;

Develop new infrastructure such as road access to regions of high mineral potential ("projects in waiting"); access to power (electricity) and to port facilities, all of which are critical elements for future mineral development, particularly in Nunavut and NWT

Economic driver in Nunavut

Patrick Borbey, president of Canadian Northern Development Agency, focused his remarks primarily on Nunavut though his agency was created in 2008 to spur business development north of the 60th parallel throughout Canada with C$50 million in spending over five years, beginning in 2009.

Specifically, CanNor oversees the C$90 million Strategic Investments in Northern Development Program; manages C$11.8 million in annual funding supporting economic development in Northern Aboriginal communities and Aboriginal businesses and entrepreneurs in the North along with investments made in the North through the Municipal-Rural Infrastructure Fund, the Canada Strategic Infrastructure Fund and Recreational Infrastructure Canada; and oversees a C$33 million allotment for the territories contained in the Community Adjustment Fund, a new, two-year program that helps Northern communities create job opportunities and adjust to changing economic and market conditions.

Borbey said mining is an important long-term economic driver in Nunavut. The Meadowbank gold mine, for example, contributes15 percent of the territory's gross domestic product, he said.

Though significant challenges face mining in Nunavut, mining investment continues to rise, climbing to nearly C$400 million in 2011 and is projected to set a new record in 2012 at about C$585 million, he said.

Borbey, who was appointed president of CanNor in December, said Nunavut currently has the potential for up to 10 new mines with projected capital investment of about C$12 billion combined. This mining activity could create about 5,000 direct jobs, with total employment exceeding 88,000 person years and investment topping C$30 billion.

Among changes in Nunavut's regulatory regime currently being considered are: The Nunavut Planning Commission is looking at adopting a one-window approach for those seeking to enter the regulatory process, establishing a fixed timeline for the commission to review project conformity, legislating timelines for all stages of an EA; enforcing land use plans once approved and project certificates issued by NIRB at the conclusion of an EA.

"These changes will improve the overall timeframes for reviews as well as provide clear direction to prospective proponents as to where they can explore and where they cannot," Borbey said. "Finally, the addition of a project certificate will lead to better clarification of the terms and conditions that the project proponent must abide by while operating."

He also noted that Aboriginal Affairs and Northern Development Canada will continue to lead on further refinements to the regulatory regime in Nunavut, including introducing the Nunavut Planning and Project Assessment Act.

Window of opportunity

Elizabeth Kingston, general manager of the recently created Nunavut office of the NWT & Nunavut Chamber of Mines, told the symposium audience that the time is now for Nunavut to build mines in order to weather the inevitable decline in mineral prices.

She observed that the majority of current mine projects have deposits that were discovered more than 20 years ago, with some older than 40 years.

"The challenge has been cost of access," Kingston said.

Compared to Canada's southern jurisdictions, like Ontario, an ore body in Nunavut tends to be smaller because costs are higher and average mine life is shorter.

Industry analysts recently cited the difficulties that mining faces in the North. In January, Veritas Investment, for example, said: "Agnico-Eagle Mines Ltd.'s big bet on the Arctic, where it now has over half of its reserves, is not a good one because operating costs there are turning Agnico into the highest cost producer in the sector."

Some companies, including Sabina Gold & Silver Corp., have even acknowledged the growing skepticism among investors toward their northern projects.

Kingston said that in addition to already high capital and operating costs dues to due to remoteness and lack of infrastructure, Nunavut is beleaguered by unnecessary duplication of costs through double bonding, uncertain future of tax incentives, royalties on quarry rock, community pressures, community tipping fees and the impact and size of private land owner costs.

She said remedies would include accelerating enactment of the proposed NUPPAA legislation, allowing phasing of predevelopment work, focusing assessment on key environmental and social issues, improving public and community consultation processes, addressing capacity issues in the northern boards and in the other federal regulatory agencies and increasing the technical expertise of the Nunavut Impact Review and Nunavut Water boards.

In addition, she said mining companies can work to reduce costs and increase ore body size in their projects, while government can work to increase certainty.