Nunatsiaq News
NEWS: Around the Arctic March 12, 2018 - 9:30 am

Western Nunavut’s Grays Bay would generate big benefits for southern Canada: report

But road-port project would still be "a potential watershed" for Nunavut

Here's the site on Grays Bay where the Government of Nunavut and the Nunavut Resource Corp. want to build a port that will be connected to the interior by 227-kilometre all-weather road. (HANDOUT PHOTO)
Here's the site on Grays Bay where the Government of Nunavut and the Nunavut Resource Corp. want to build a port that will be connected to the interior by 227-kilometre all-weather road. (HANDOUT PHOTO)

Though most of its economic benefits would flow to southern Canada, the Grays Bay Road and Port project, if built, would still represent “a potential watershed” for the Nunavut economy, a Yellowknife-based economist said in a recent report.

Gjoa Haven MLA Tony Akoak tabled the report in the Nunavut legislature March 6, saying the project is “very important to the economic future of the Kitikmeot.”

The Grays Bay Road and Port project also enjoys strong backing from the Kitikmeot region’s political leadership, including the Kitikmeot Inuit Association.

A KIA-owned subsidiary company, the Nunavut Resource Corp., teamed up with the Government of Nunavut in 2016 to propose the project, which would see a 227-kilometre all-weather road running from the site of the defunct Jericho mine to a deep sea port at Grays Bay on Coronation Gulf.

The report, done for Nunavut Resource Corp. by Impact Economics of Yellowknife, said the $527-million road and port would open up access to rich mineral resources that have been stranded for many decades.

“The road will pass through rich geological regions that are currently difficult and expensive to access and where known deposits are left stranded. The presence of a road and port will lower the future cost of mine construction and operations,” the report said.

The biggest of those are zinc and copper properties located at the Izok Lake and High Lake properties, controlled by MMG Ltd., a company that is majority-owned by the Chinese government.

“These zinc-copper properties contain an indicated resource worth more than US $10 billion at today’s prices. If developed, these properties would have a significant effect on the region’s economy,” the report said.

But MMG can’t figure out how to finance a transportation system on its own and at the same time, run a profitable mining operation.

But if a road and port were built with government money, the economic benefit to Nunavut would be significant, the Impact Economics study said.

The construction phase of the project, over two-and-a-half years, would generate an average of 900 full-time jobs and increase Nunavut’s gross domestic product—the total value of goods produced and services provided in the territory during one year—by $189.5 million, or $75.8 million annually, the report said.

But even more benefits would flow throughout all of Canada in the construction phase of Grays Bay, the report said.

“When considering the Canada-wide benefits, it is important to recognize that a majority of goods and services (including labour) needed are expected to originate from southern Canada, meaning almost all indirect and induced benefits will accumulate there,” the report said.

And 75 per cent of the construction labour force will reside outside Nunavut, while Canada’s GDP would rise by $487 million.

“Ontario and Alberta will benefit the most. GDP in those two provinces will increase by $110 million and $103 million while employment will receive a boost of 910 and 570 FTE [full-time equivalent] jobs, respectively,” the report said.

But it’s the mining developments after construction that would trigger the greatest benefits for southern Canada and Nunavut alike.

Mineral production at the two main copper-zinc properties would last for 11 years, increasing Nunavut’s GDP by about $500 million a year.

“Should Nunavut labour participation in the project grow to 25 per cent of all direct and indirect jobs and 100 per cent of all induced jobs, this project would bring about an increase in employment equal to 365 full-time equivalent jobs.”

(Indirect jobs mean all jobs created by the economic impact of the development.)

As well, the road and port could also trigger more mineral exploration in the area, an activity that would also deliver economic benefits to Nunavut and Canada.

“It is estimated that for every million dollars spent in Nunavut on exploration, GDP is given a $518,000 boost and 5.2 direct FTE [full-time equivalent] jobs are created in the territory.”

The current proposal is the first phase of a plan that, in the future, would see an all-weather road extended all the way to the boundary between Nunavut and the Northwest Territories. Also in the future, the N.W.T. government envisions building their own all-weather road from Yellowknife to connect with it, to create a unbroken road link all the way to the Arctic Ocean.

The Grays Bay project is now before the Nunavut Impact Review Board, which is doing work aimed at defining the scope of the environmental impact statement that the Grays Bay proponents will be asked to submit.

The NIRB will hold community consultations this March 26 and March 27 at the Luke Novoligak Hall in Cambridge Bay, with an open house from 2 p.m. to 4 p.m. each afternoon and meetings from 7 p.m. to 9 p.m. each evening.

The GN put $2 million into the project last year to help pay for environmental and engineering studies in preparation for an environmental impact statement.

Meanwhile, the GN and the KIA still don’t have the funding they need to finance Grays Bay, but they’re hoping the federal government will contribute 75 per cent of the $527-million cost.

To that end, last fall the GN have pinned their hopes on the federal government’s National Trade Corridors Fund, and submitted an application this past fall.

But they’ll likely have to wait many months for a response.

“In the fall, they hope to announce the southern projects that have been approved and after that, they plan on looking at the northern projects,” said Elisapee Sheutiapik, Nunavut’s minister of economic development, on March 6 in response to a question from Akoak.

  Economic Assessment of the Grays Bay Road and Port Project by NunatsiaqNews on Scribd



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(14) Comments:

#1. Posted by Northern Guy on March 12, 2018

To examine the economics of a project proposal like Grays Bay without looking at basic things like opportunity cost and base metal price trends is incomprehensible, and goes to show that you can get a consultant to write just about anything. In any other part of Canada a project like this would be funded almost exclusively by the private sector that intended to derive benefit from it. Only in Nunavut would a consortia of well funded major mining companies expect government to fully fund a road and port for their use. I sincerely hope that the Federal Government tells the GN and KIA (and the mining companies) to go pound sand.

#2. Posted by arctic man on March 12, 2018

Northern Guy.

The Federal government has the mandate to build canada. The Canadian Government under Sir John A Macdonald had the trans Canada national railway built across Canada and issues government bonds and freight gurantees to any railroad being constructed over 120 miles long. The saint lawrerence seaway was also built with the governments funding assistance, and army corp labour.  why? to open up the country to development, to access resources to BUILD THE COUNTRY. Its no different in the arctic and thats why we see such significant infrastructure in Alaska, Russia, and may circumpolar countries EXCEPT Canada. Build it and they will come. Lets spend some money in the Canadian Arctic as priority instead of a lot of other places our government in Ottawa invests in around the world. Pound Sand???....maybe you should reconsider your words.

#3. Posted by Up Coppermine River Without a Paddle on March 12, 2018

Kugluktukmiut, demand for infrastructure for your community.  As a community most directly impacted by GBRP, demand an airport and an airstrip that can accommodate jet service.  You can get the old 737 but as soon as that is decommissioned you are SOL. No other jet can land on your gravel strip.  You need a paved runway.  This will spin off many other benefits to your beautiful Community.

#4. Posted by Advantage North on March 12, 2018

It should be remembered that the economic assessment report being discussed is just one of many inputs into establishing the viability of the GBRP. There are many other factors to be considered including outcomes from the ongoing NIRB EA and a final federal funding decision. I have read the report and find the related modelling methodology, assessment and exclusion criteria credible and defendable.

With regard to the comments from #1 on opportunity costs and base metal prices I understand there has been considerable work done on alternative transportation systems that have concluded that the GBRP is the only transportation system that can work for the projects being proposed.

The comment on base metal prices is valid but one should remember that only a few years ago economists were predicting $200 a barrel oil prices. Lastly it should be noted that all industry users of the road and port will be paying a toll that will go towards operating costs and amortization of the capital debt.

#5. Posted by Let industry pay on March 13, 2018

Baker Lake got a 100 kilometre road paid for by the mining company.  If there are resources the industry will access it.  We do not need to subsidize China as we have enough infrastructure challenges.

#6. Posted by Kitikmeot on March 13, 2018

Why would Kitikmeot Inuit Association want to build something that will benefit Southerners?
Is there not higher priority items such as housing that can be built to try reduce current shortage of over 600 units in the Kitikmeot Region?
Look at TMAC and mines in the region truly how many Inuit has jobs at those location other than janitors and labourers?
#5 you are so right, if China and other mining companies want to build a road then please go ahead.
What about the impact on the Tuktu migration? Does KIA really care about this if they did they would listen to the Inuit of the region and not their southern consultants.

#7. Posted by Northern Guy on March 13, 2018

#2 Nation building denotes building infrastructure that benefits “Canadians” and not infrastructure that benefits only mining companies. I am so tired of hearing the nation building argument used to defend infrastructure projects that go from nowhere to nowhere and only help the companies who have properties adjacent to the road. Grays Bay isn’t a nation building exercise it is corporate welfare.

#8. Posted by Winnepig Southerner ( Native Type ) on March 13, 2018

#6 ,
Why should Southerners pay taxes to benefit Northeners?
3 billion dollars a year so Northeners can play at being Inuit!
Move south and get a life!

#9. Posted by Larik!!! on March 13, 2018

I agree with #8. Always the whining about money going to southerners, it’s like a broken record.

You’ve asked the right question though, because in reality those dollars came from those same southerners.

So who should be the ones bitching?

#10. Posted by arctic man on March 13, 2018

Northern Guy

The arctic will never be developed under your narrow view of when Canada should invest. The national railroad was built to nowhere too at the time.

so lets just do nothing and hope the arctic developes by itself. Have a look at northern russia with a network of railroads and roads….....transportation infrastructure OPENS UP THE REMOTE PARTS OF THE COUNTRY SO DEVELOPMENT CAN HAPPEN. Do you think the rest of the country was built solely on the economics of a private interest and project?  Use your head man .

#11. Posted by Gobble Gobble on March 14, 2018

No, arctic man, the national railroad was not built from nowhere to nowhere at the time.  It was built from the end of a pre-existing railway in Ontario to British Columbia, as that is what had been promised to BC for joining Confederation.

It also passed through Winnipeg, Manitoba, another part of Canada at the time.  So, the railway was built to connect Canadians.

You said that the federal government has a mandate to build Canada.  You’re wrong, that is not one of the 364 mandates the Liberal government has identified.

Can you please stop making stuff up?

#12. Posted by arctic man on March 14, 2018

gobble gobble…an appropriate name for a turkey lol. The Federal Government is not just the liberal party hello!!!! Please proceed to Infrastructure Canadas website and look at their mandate especially as it pertains to rural, northern and indigenous communities.

and the 3000 mile rail road did connect Winnipeg and BC and all the empty places in between hence development.

Diefenbakers Roads to Riches is another example of vision (and mandate) by Canada and it produced the Dempster highway and other northen roads.

#13. Posted by Northern Guy on March 14, 2018

Arctic Man

Your example of the national railway is a perfect example of MY POINT. It was built to connect the remote settlements of Manitoba and coastal B.C. with Upper and Lower Canada and to encourage immigration into the empty parts in between. Grays Bay will never do this for Nunavut. There are any number of major infrastructure projects that would help build Canada and connect Nunavut. The Manitoba-Kivalliq corridor and Iqaluit deep water port spring immediately to mind. No matter how much you yell nothing you can say justifies using public money to build a road and port from nowhere to nowhere so already wealthy mining companies can make more money. THIS IS NOT NATION BUILDING, IT’S CORPORATE WELFARE (I started yelling there, it seems to be the only to get a point across to you because logic obviously doesn’t seem to working).

#14. Posted by Gobble Gobble on March 14, 2018

Arctic man, the federal government’s mandates are determined by the governing party.  You know how Taptuna’s government had “Sivumut Abluqta” as the mandate?  And how Quassa’s government is coming out with their mandate, “Turaaqtavut”? 

Well, Infrastructure Canada’s mandate is in their mandate letter, sent from the Liberal Prime Minister to the Liberal Minister for Infrastructure and Communities.  I encourage you to look it up and to figure out what the word “mandate” means.

While there is a portion on “strategic and trade enabling infrastructure” at the national level, the focus in the mandate letter on Indigenous communities is on housing, domestic violence shelters, and transition houses.

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