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

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