Nunavut adds huge Grays Bay road-port scheme to its shopping list

This map shows a route for a proposed port at Grays Bay on Coronation Gulf that would be connected by an all-weather road to a zinc mine at Izok Lake. (MMG IMAGE)

Izok Lake, since the late 1950s, the area has been know to hold a huge zinc deposit, but a proposed mine there can never be viable unless somebody builds a road-port transportation system. (MMG IMAGE)

As federal Finance Minister Bill Morneau’s budget speech looms March 22, the Government of Nunavut has added another piece of transportation infrastructure to its shopping list: the Grays Bay Road and Port Project.

That project would revive the moribund Izok corridor zinc-lead mining project touted by Chinese-owned MMG Resources Inc. and form the first phase of a long-dreamed-about all-weather road between Yellowknife and the Arctic Coast.

Without a port and road, MMG’s two proposed mines, at High Lake and Izok Lake, are not viable — and the project has been mothballed since April 2013.

Until now, MMG and the project’s long list of previous owners have proposed financing a road and port with their own money — but now they appear to have pried some potential financial help from the government.

The Nunavut Resources Corp. — a wholly-owned subsidiary of the Kitikmeot Inuit Association — would build and own the 350-kilometre road and port in a partnership with the Government of Nunavut.

The KIA, thanks to a change in federal policy last year, is now eligible, potentially, for large amounts of federal infrastructure money through the P3 Canada Fund and the New Building Canada Fund.

The GN submitted its own Grays Bay funding application to the federal government this past fall.

“This nation-building project is close to shovel ready and would require a total commitment of $34 million from Canada over the next four years in order to complete the permitting and engineering process,” Nunavut Senator Dennis Patterson said Feb. 26 in a speech in the Senate that promoted a long list of proposed Nunavut infrastructure projects that require federal funding.

“Best of all, the Inuit-owned Nunavut Resources Corp., partnered with the Government of Nunavut, would build and own the road and port, which could also serve the Royal Canadian Navy as a refueling location, as well as a safe landing area for storage and resupply needs in the region while collecting long-term lease payments from the mining company,” Patterson said.

In addition, a big review report on Canada’s transportation system, tabled Feb. 26 in the House of Commons by the federal Transport Minister, Marc Garneau, also urges that Ottawa not only support development of the Grays Bay road and port, but also an eventual all-weather road from Yellowknife to the Arctic coast.

“Finally, development of the Coronation Yellowknife Corridor is recommended, as it would tie together a number of mining projects and provide a deep-water port in the central Arctic,” said the Transport Canada report.

That national transportation review, headed by former cabinet minister David Emerson, said the Grays Bay section of that corridor should get “immediate” support.

The Government of the Northwest Territories also appears to support the Grays Bay project because of their own aspiration to create an all-weather road from Yellowknife to the Arctic Ocean.

“This project complements stated NWT priorities to ‘improve access to the Slave Geological Province that abuts this region in Nunavut, which is why [NWT] Premier Bob Mcleod has publicly stated his support for Nunavut Premier Peter Taptuna and this project,” Patterson said Feb. 26 in the Senate.

The proposed road-port system, which would run from Grays Bay on Coronation Gulf to Izok Lake near the Nunavut-NWT boundary, is part of a $6.5 billion mining proposal that MMG brought to the Nunavut Impact Review Board in August 2012.

After a screening, the NIRB recommended an environmental review under Part 5, Article 12 of the Nunavut Land Claims Agreement.

But that process ground to a halt in April 2013. MMG has yet to file a revised project description or state when it will be ready to begin work on a draft environmental impact statement.

And in September 2014, MMG said in a project update that without support from government or some deep-pocketed partner, they can’t build the project.

“Even with all the changes and finding hundreds of million dollars in savings, the enormous capital costs of building the needed regional transportation and communications infrastructure is still more than the project can support,” the company said.

In its 2012 project description, MMG proposed a deep sea port at Grays Bay, about 179 km east of Kugluktuk and about 850 km north of Yellowknife.

During the summer ice-free months, ships would depart that port laden with zinc concentrate and smaller amounts of copper and lead.

An all-weather road would connect that port to a mine at High Lake, about 50 km to the south, and to another mine at Izok Lake, about another 300 km to the south on the Nunavut-NWT boundary.

“It’s basically a big infrastructure project that happens to have two mines along the way,” Charlotte Mougeot, who then served as MMG’s environmental approvals manager, said April 19, 2012 at the Nunavut Mining Symposium in Iqaluit.

MMG did not provide specific cost figures for its Izok Lake and High Lake mining projects, but the total package, road and port included, has been estimated at around $6.5 billion.

There is no public domain information on the precise cost of a Grays Bay Road and Port.

But the federal transportation review said full development of a Coronation Gulf-Yellowknife transport corridor would require federal spending of $1.89 billion and could lead to an estimated $39.49 billion in resource development expenditures.

“It is acknowledged that the costs of planning and constructing such large-scale infrastructure are significant, but the current relatively low interest and lending rates are incentives to undertake this work as expeditiously as possible,” the national transportation review report said.