Canada’s North digs in for the good — and bad — of a mining boom

Baffinland Iron Mines Corp. wants to develop its Mary River project on northern Baffin Island into a huge iron mine. (FILE PHOTO)

Agnico-Eagle Mines Ltd. operates the Meadowbank gold mine near Baker Lake. (FILE PHOTO)

BRADLEY BOUZANE AND CHANTAL MACK
Postmedia News

You can see the effects of the mining boom in Canada’s North on the streets of its communities: There’s commotion; there’s optimism; and there’s money.

Boris Kotelewetz says he’s witnessed first-hand the changes growth in the mining sector across the three territories have brought to his community of Baker Lake, Nunavut. While he admits there’s a wave of economic prosperity sweeping through the region, he also warns of the dangers of short-sightedness, both in the industry and in the towns it leaves behind.

“I’ve seen all kinds of changes,” said Kotelewetz, who has lived in Baker Lake for 46 years.

“To me, it’s like when the whalers came and they needed fresh meat; they employed local people to take part in that. Then that industry died out. Then the Hudson’s Bay Co., came and they employed people in trapping and that industry kind of died out.

“Now we have mining coming along. Because it’s a non-renewable resource, it’s not everlasting. It’s just going to die out — certainly the gold mine will — and that will just be the end to another thing that started and stopped.”

Kotelewetz operates a lodge and other businesses in Baker Lake, a community of 1,800 located about 70 kilometres south of Meadowbank, a gold deposit being mined by Agnico-Eagle Mines Ltd., a Canadian-based gold producer with operations in Canada, Finland and Mexico.

The mine has significantly increased employment in Baker Lake, and with that comes a boost in morale associated with an influx of jobs and an increase in disposable income.

Kotelewetz, however, says he worries that a lack of preparation for the future may create problems down the road.

“It’s a party right now,” he said. “We’re having a party here, but we have to think about when that party ends. What happens then?”

The situation in Baker Lake is hardly unique.

This past week, the Conference Board of Canada said Canada’s North is poised to lead the country in economic growth over the next two years as the boom in mining projects takes hold.

The economies of the three territories are expected to grow by more than seven per cent in both 2012 and 2013. That easily surpasses the Canadian average of 2.1 per cent this year.

The conference board’s Territorial Outlook-Winter 2012 said the Yukon and Nunavut are entering a period of sustained mining development, citing several large projects that have been proposed for the current decade.

The mining boom in the Yukon is expected to continue over the next 10 years, creating a heavy demand for workers.

Nunavut’s economy grew by 6.8 per cent in 2011 and the territorial economy is forecast to grow by 16 per cent in 2012.

Employment is expected to surge by 6.4 per cent annually over the next three years.

Some of the marquee projects underway or in the works throughout the region include diamond, gold and copper deposits scattered across the three territories.

The N.W.T. and Nunavut Chamber of Mines said the effects of mining in the North provide countless benefits to the communities and its residents.

“In Nunavut, for example, there’s a baby boom happening and without opportunities, you’ve got a lot of communities with huge unemployment and significant social issues, so when you have an industry like mining come in to offer the opportunities, you can really help the communities,” said executive director Tom Hoefer.

Hoefer said the spinoff activity that results from mine-related prosperity is clearly evident over the last decade and a half, coinciding with when the diamond mining industry began to make inroads.

Diamonds were first discovered in the Northwest Territories in 1991, with the first mine starting production in 1998.

“If you turn the clock back 15 years, before that first diamond mine, there was probably a handful of aboriginal companies involved in industry somehow,” Hoefer said. “Today, there’s at least 60, and they’re creating major corporations that can go out and work in other jurisdictions. It’s really been a big boost for the North.”

He said the potential — based on pending mines that are currently going through the assessment phase or other pre-production stages — is there for many years of future prosperity in the region, noting that current projections see production lasting well into the 2030s.

Gordon MacKay, Nunavut’s assistant deputy minister of economic development, said his territory is working to build a long-term and sustainable mining industry, and with multiple projects in all stages of development, it’s hard not to get excited.

“We are optimistic about the future, but we certainly aren’t taking it for granted,” MacKay said.

“We know this mineral development is dependent on global forces that we cannot influence, so we’re cautiously optimistic.

“We’ve worked hard to make the territory an attractive place for investment and we’re determined to ensure we maintain that state . . . Our target is to get a sustainable mineral exploration mining industry that doesn’t suffer the boom or bust scenario. We want a stable, long-term industry.”

He acknowledged that social issues may surface due to economic prosperity, but noted the Northern mining industry isn’t alone in that.

“Generation of wealth, we hear from people that that generates some social problems,” he said. “The lack of wealth and poverty situation in many places — not just in Nunavut, but around the world — also generates a lot of social problems. Moving forward, we want to be able to give people the resources to be able to make their own life decisions and have a variety opportunities for what they do.”

Yukon’s deputy minister of economic development said the spinoff effects of mining, through training local residents to take greater responsibility at job sites, are also worth noting.

“As these projects develop, it will add capacity to our economy up North,” Harvey Brooks said. “Not just in the terms of (resource) concentrate, but in terms of jobs available locally and our ability to get local people to get trained, to take those jobs and to increasingly be represented in the workforce over time.”

The optimism stemming from economic potential comes with hesitancy from environmental groups, which have dire concerns about widespread mining without the proper checks and balances.

The Sierra Club said what’s needed is a broader look at mining throughout the North, instead of gauging the effects of each project one at a time, which makes them easier to justify from an environmental perspective.

“If we’re talking about extracting resources, there’s no fire,” said Sierra Club executive director John Bennett.

“Mineral resources — (such as) diamonds — only get more valuable over time, so if we take a breath and look at it in a holistic way and come back with a plan for development that can minimize and mitigate the environmental impact . . . then we can actually understand what is happening and decide if that’s what we want to do. But we’re not given that opportunity.

“If it is a big mining boom, maybe we should step back and look at how all these developments interact in terms of the environment up there and then make a reasonable decision rather than look at each project, one at a time.”

Bennett said both the federal and territorial governments have a mindset of “if you can make a buck, come on up.”

Hoefer said, however, that the cumulative effects of Northern mining are examined through a stringent assessment process required by governments to approve mining projects.

He said the size of the region must be considered when raising some environmental concerns.

“There are considerations for cumulative effects built into legislation and that’s the concept there that you start to look at the bigger picture,” Hoefer said.

“If you look at Nunavut, it’s the size of Europe and there’s eight to 10 projects being proposed and these aren’t slam-dunks. There’s no guarantees. If you look at eight to 10 projects in the size of Europe, the cumulative effects isn’t going to be as big as one might expect.”

Back in Baker Lake, Kotelewetz said he hopes residents can realize the dangers of living only for the present, but given the history of many mining operations across the country, he isn’t holding out much hope.

“They might wake up when they’re faced with the problem and say ‘Oh, we should have done this and we should have done that,'” he said. “Maybe the next mine that comes along, they might treat it differently, but not with this one.

“The longer it goes, the more comfortable people will become and the less they will think of tomorrow. That’s going to be the farthest thing from their mind. It’s like any mining town in Canada.”

Major projects included in the Conference Board of Canada’s territorial outlook report, released this week, and their estimated development costs:

Yukon:

Copper North’s Carmacks project ($150 million)

Victoria Gold’s Eagle project ($280 million)

North American Tungsten’s Mactung project ($400 million)

Selwyn Resources Selwyn project ($800 million)

Northwest Territories:

Avalon’s Nechalacho project ($900 million)

De Beers’ Gahcho Kue project ($650 million)

Fortune Minerals’ NICO project ($215 million)

Rio Tinto’s Diavik mine expansion ($250 million)

Government of NWT’s Deh Cho bridge ($192 million) (in progress)

Nunavut:

Agnico-Eagle’s Meliadine project ($300 million)

Baffinland’s Mary River project ($4 billion)

Source: Conference Board of Canada