Mineral riches leave Nunavut at a crossroads
Mineral riches draw interest, but hurdles remain
An Inuit elder pointed to a ridge on the barren landscape where Agnico Eagle Mines Ltd. had proposed to build its Meadowbank gold mine. Out there, he said, is where his ancestors were buried. But that wouldn’t stop him from supporting the miner’s development, which proved local folklore right: The area was rich with gold.
In that moment nearly a decade ago, Agnico Eagle chief executive Sean Boyd said he knew the people of Nunavut welcomed development, as long as it respected their land and provided Inuit with economic opportunities.
“We returned from that first visit and concluded quite quickly that this was a place we could do business,” he said during an interview in his Toronto office, fresh off a trip to the territory some 2,500 kilometres north. “They weren’t anti-mining and we just felt that was refreshing.”
Agnico Eagle is betting that the future of development in Canada’s least-populated territory is bright. Last month it announced a US$1.2-billion investment to develop the recently approved Amaruq and Meliadine projects in Nunavut. The Toronto-based miner is already a big player in the territory’s small economy, comprising some 20 per cent of its GDP and employing more than 400 Inuit.
Miners operating in the territory, including Agnico Eagle and TMAC Resources Inc., believe they have found the increasingly rare combination of a region with extraordinary untapped mineral potential and a mining-friendly community.
Unlike many Canadian mining jurisdictions, land claims in Nunavut were settled when the territory was created in 1993. The agreement gave the Inuit land claim organization Nunavut Tunngavik Inc. title to 18 per cent of the land and they chose the areas with the most potential for development.
Now, 25 years later, resource development in Nunavut is at a crossroads. Exploration companies are growing increasingly interested in the area, but several key barriers continue to hamper an economic boom. Those challenges include a lack of infrastructure, a controversial and undecided land-use plan and a carbon tax in an area where both industry and communities are diesel-dependent.
The Inuit people prioritize economic self-sufficiency, and responsible resource development that has concrete benefits for local communities is a big part of that plan, said Aluki Kotierk, the president of Nunavut Tunngavik Inc.
“We have high rates of poverty, high rates of unemployment and so there’s lots of hope when there’s any economic development happening in our territory,” she said in a phone interview from Iqaluit.
Mining is a hot topic on the tundra, she said, and is often discussed in the context of striking balance between respecting the land and wildlife and development that could empower the people.
The issue of how to strike that balance has been central in the politics of Nunavut since the territory’s birth, said Nunavut senator Dennis Patterson.
The Nunavut Planning Commission set out to create land-use plans by region, but changed course and decided to come up with a single plan for the whole territory, resulting in draft proposals in 2011 and 2014. After spending some $60 million, the final draft plan issued in June 2016 set aside more protected land than the previous two iterations, Patterson said.
“It has sent a negative signal to potential investors in Nunavut because some areas of very rich mineral potential have become protected areas,” he said.
“There’s been quite a lot of concern from industry about getting some certainty for investors. Mining companies want to know where they can go and where they shouldn’t go.”
The latest draft is supposed to be finalized this year, but it faces many objections, including from the Kitikmeot Inuit Association, which maintains the current plan would prevent Inuit from pursuing mining on their own lands.
Agnico Eagle and TMAC, which own the territories’ two producing gold mines, say the plan could adversely affect future economic development. “It will affect anybody wanting to do exploration in the North,” said TMAC Resources CEO Catharine Farrow.
When the plan is finalized, it will become Nunavut’s first territorywide land-use plan.
For the mining industry, the biggest issue is not regulation or anti-mining sentiment, but lack of infrastructure, said Boyd.
“That makes it challenging, makes it a higher-cost environment to do business,” Boyd said, adding that Agnico Eagle has invested hundreds of millions of its own money in building roads.
Businesses and residents alike are hoping the federal government’s upcoming budget will announce concrete investments on its long-held pledge to develop infrastructure in the North.
“We think that the federal government should be sending a message to Canada and to the people that live in the North that we’re going to work together to develop the resources here for the benefit of everybody.”
Keith Peterson, Nunavut’s finance minister, used his February budget speech to press the federal government for money for infrastructure that would help the territory become more self-sufficient. He pointed to a $2-billion all-weather road from Yellowknife to the Nunavut coast that would lead to $40 billion in development opportunities.
The other major infrastructure challenge is energy: communities and industry are reliant on diesel.
The territory is in need of cleaner energy solutions, such as a power line from Churchill, Man., or runof-river hydro projects, Agnico Eagle’s Boyd said.
That would also help take care of the industry’s third major barrier to operating in Nunavut: the steep cost of the federal government’s proposed carbon pricing plan, which miners argue would derail efforts to establish a new mining region in the territory.
Given the lack of infrastructure, almost all of the power generated in the territory is by diesel. A carbon tax would be a huge added burden to any company looking to invest there, Boyd said, adding a carbon tax would cost Agnico Eagle $20 million per year.
TMAC’s Farrow said the carbon tax is an example of how southern approaches are being pushed onto the North without a good understanding of the realities of living there — from the reliance on diesel to the sky-high cost of groceries in communities where residents are already living close to the poverty line.
“It’s not that we don’t want to be able to address CO2 emissions, but what are the options in the Arctic?” she said. “The only industry that’s there is mining and there isn’t very much of that because it’s hard to get investment in the Arctic.”
Despite such uncertainties, both miners are optimistic about the future of mining in Nunavut.
“Nunavut is one of the best if not the best jurisdictions to work in Canada,” said Farrow, a self-proclaimed “ardent ambassador” of Nunavut.
Boyd believes the region is one of the most exciting in the world and is hopeful the issues dogging development can be sorted out.
“This story is just going to get bigger and better. This is going to be front-page news for decades because of the vastness of the mineral wealth up there and we’re basically just scratching the surface.”