China’s interest in western Nunavut gold mine is commercial: legal expert

“They want to make money”

The possible acquisition of TMAC Resources Inc.’s Hope Bay gold mine by the Chinese mining company Shandong Gold is a sign that China is looking to make money in the Canadian Arctic, says Michael Byers, a legal scholar and author of “Who owns the Arctic?” (File photo)

By Jane George

The recent news that TMAC Resources Inc., a Canadian junior mining company in western Nunavut, wants to sell its Hope Bay gold mine to a huge Chinese mining company, Shandong Gold, has alarmed some Nunavut residents.

That’s understandable, but Shandong Gold, better known as SD Gold, just wants to make money, says Michael Byers, a legal scholar who holds the Canada Research Chair in Global Politics and International Law at the University of British Columbia and is is the author of “Who owns the Arctic?”

While general concerns about the probable sale of the mine to the Chinese-controlled company are justified, the Hope Bay acquisition looks more like a good business deal than a challenge to Canadian sovereignty, Byers said.

A lot of Canadian mining companies are now open to foreign acquisition due to the collapse of the economy and of commodity prices resulting from the COVID-19 pandemic, he said.

At the same time, many Chinese companies, like SD Gold, have “very deep pockets and are resilient to the downturn,” he said.

“And they are finding that Canadian mining companies are available at fire sale prices.”

SD Gold is willing to pay $207.4 million for Hope Bay, which this past year produced about 32,290 ounces of gold.

China has a “massive appetite for natural resources,” like gold, Byers said.

“But there’s a great deal of anxiety concerning China’s power and its international politics these days,” he said.

“We’re dealing with a pandemic that originated in China, and we have a couple of Canadians detained in China and, at the same time, we have China emerging as the most powerful economic force in the world.”

So when you put the China anxiety on top of the Arctic anxiety, many people become “very sensitive,” Byers said.

“I think that’s the reason for much of the concern—there is the perception that a foreign power might take over our Arctic,” he said.

However, he said gold is not “a product of national security,” such as rare-earth elements or lithium, with their high-tech applications in the energy, transportation and telecommunications sectors.

Gold is an investment product, so there’s “no immediate national security issue,” Byers said.

“They want to make money,” he said. “So far the Chinese interest in the Arctic seems to be mostly commercial.”

Chinese companies are looking for good deals in the Canadian Arctic and as this economic downturn continues, they will be looking for more good deals, he said.

Overall, what’s good about the possible Hope Bay acquisition is that it’s commercial, it involves gold, it’s relatively small, and there’s a necessary element of co-operation with Inuit, Byers said.

Another plus: the mine is located off the deep-water route of the Northwest Passage.

Here you can see the location of the Hope Bay gold mine, located 150 km southwest of Cambridge Bay. (File image)

But, while the acquisition of Hope Bay by a Chinese company doesn’t set off Byers’ alarm bells, he said “it does awaken us to a wave of further acquisition of other projects that would require closer scrutiny.”

“Canadians are right to be concerned about China in the Canadian Arctic, but my message is that this isn’t a situation where we should say no to everything Chinese companies want to do, but a situation where we need to be vigilant and do a careful review of the proposal, and impose conditions and restrictions, and then we enforce them,” he said.

If everyone is careful, there could be benefits from Chinese investments.

“It’s not about closing the door; it’s about engaging a rigorous review and continuous oversight,” Byers said.

Canada manages economic relations with more than 100 countries and not all have been democratic, he said.

“China is the new economic superpower, and the reality is we need to figure out ways to work with China that give us benefits but also protect us,” he said.

The situation with the Hope Bay acquisition might be different if the proposal did not involve Inuit, said Byers, who praised the negotiators of the Nunavut land claim who made sure that Inuit-owned lands included mineral-rich areas like Hope Bay.

If Inuit involvement through the Kitikmeot Inuit Association weren’t part of the deal, the federal and territorial government would have to ensure that the mine wouldn’t become a fly-in operation for workers from China, Byers suggested.

TMAC said earlier this year that finding a buyer for its mining operation would provide the necessary money for the mine’s development.

TMAC is in even more of a bind now due to the pandemic, having sent its Nunavut-based workers home, reduced its staff to 120 and cut its production to processing stockpiled ore.

TMAC said on May 12 that SD Gold has “the financial strength, technical capability and long-term vision to maximize the value of the Hope Bay property.”

Without the deal with SD Gold, the mine may simply close down operations, which would be a loss to Nunavut workers, businesses, Inuit organizations and governments.

“If the risk of COVID-19 continues, TMAC may execute a controlled transition into temporary care and maintenance and resumption of full operations would likely begin with a period of rebuilding ore stockpiles,” said Jason Neal, president and chief executive officer of TMAC, this week in a news release.

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(26) Comments:

    • Posted by Same old complaints on

      And yet it’s not, why do you think that is?

    • Posted by Spend Some Money on

      Then get the Inuit orgs in there to spend some money – nothing is stopping them.

      Why do you think that they have no interest? Oh yeah, mining in Nunavut is going to be dead dead dead for the foreseeable future.

  1. Posted by Miner on

    China does not have a good track record for hiring local, they bring in their cheap workers from China and they also do not have a good track record for the environment, this is in other countries, I am not sure if they have mines in other parts of Canada but they tent to do things as cheap and quick as possible, environment damage and hiring from their country seems to be their policy.
    I would be concerned too if I was from that area.

  2. Posted by Uvaali on

    From what I’ve heard, check out the Northern Lights star-gazers business out of Yellowknife. Who owns it and who is now employed, You’ll get a good sense of how the Chinese deal with locals after buying out businesses.

  3. Posted by utube on

    Do a google search on the Chinese government buying up mines and other business around the world, you will be shocked at how they do things.
    Aggressive people that take and take. Destroying the environment and breaking rules to get things done as cheap as possible.

    • Posted by James on

      Hmm. People who take, take and take.
      .
      I’m by no means in support of a TMAC sale to SD Gold, but I feel the sentiment ‘take, take, take’ is one that should be acknowledged as already being in place.
      .
      Even in these current comments, and one I’ve been hearing since 1994, Nunavut belongs to Inuit and nobody else. That’s a tough cookie to swallow given that non-Inuit individuals and businesses are making significant investments of time and money, provinces are literally funding the Territory and the Federal Government is fulfilling it’s per capita responsibilities to Nunavut.
      .
      Under a ‘Canada First’ model, governments should facilitate investment by domestic ownership.

  4. Posted by Roy Donovan on

    Sort of a funny comment. Legal scholar says China interest in gold mine is commercial. Well go figure.

  5. Posted by Pj on

    Yikes, I wouldn’t touch China with a 3000km pole

    Watch a vice video on what they are doing to their people. Taking kids from families at nIght to brainwash by the thousands. Sending adults to re-education camps and taking their kids too. for years now. It would be like bringing in communism worse than our own

  6. Posted by Traveling OBM on

    Selling China fish is one thing, would you let China on YOUR land and fish for you? Do you think they would be honest about how many fish they caught? There are powerful people at work here who probably receive money from communist regime to side with them. This “scholar” says that china has no interest other than gold is complete BS. It is well known that China wants complete control of the arctic and its resources. NATO warned allies NOT to let china buy up resources during this pandemic. This is the biggest travesty in Canadian history and our government is doing nothing about it. Nunavut belongs to Inuit and nobody else.

  7. Posted by The Old Trapper on

    Mr. Byers is quite well educated and despite his left leaning views (he was once a NDP candidate) seems to have a blind spot for China.
    .
    Yes China is an economic powerhouse, now with the second largest economy on the planet, and likely to surpass the U.S. at some point. With the world’s largest population it is no surprise.
    .
    But one must look at how this has been accomplished. China is ruthless when it comes to their internal policies, they allow no dissent, and are not above using any means to control their population. Remember the “one-child” policy that China enforced for 15 years? What about Tibet? And the Uyghurs?
    .
    This sort of thinking, this mindset, is also prevalent when it comes to business, especially international business. While there may be some independent small business in China, anything of any size is state owned and/or controlled. It is the Chinese state buying this mine, not a “for profit” free market company.
    .
    Any Chinese international mining company, and basically any resource related company is state owned. China needs these raw materials, and they will go to any length to get them. Just search for China’s influence in Africa when it comes to resource extraction. Bribes and payoffs are just the cost of doing business to the Chinese. China is also becoming more active in South America as well.
    .
    Do you not think that China would wine and dine members of the KIA? What else would they do? A few thousand shares here, a new truck there?
    .
    Environmental disaster also seems to follow China’s investments in third world countries. This is not as prevalent where they invest in the west, but it is not unknown. Many times the Chinese company, when they are done with the resource, will just walk away, and leave it up to the host country to do their clean-up.
    .
    “Miner” makes a very good point, China will also try to bring in their own workers to resource projects. Is this what the KIA wants? Obviously the federal government should be more involved, but we have seen that they have zero clout with China, and China is not afraid to call them on the issue. Two Canadians remain in Chinese prisons on false charges, all because China wants to teach Canada a lesson.
    .
    As I have noted before China takes the long view. I do not believe that it is in our national interest to let China own any resource company in Canada. Let your KIA member know that selling and dealing with China is a hard “NO”.

  8. Posted by Michael Rayner on

    Canadian mining companies also have a terrible reputation globally. Let’s not forget that. We also have a terrible history and present when it comes to our relationship with indigenous people. Our neighbours to the south also have a history of deceit and exploitation in their dealings with us. I’m not saying China is great or that we shouldn’t be vigilant but we should be holding ourselves to a high standard as well.

  9. Posted by NTI Invest in Inuit on

    $207.4 million to buy the mine. Maybe NTI should buy the mine at that steal of a price then they could keep more than just the royalty and be owned and operated by Inuit! NTI has enough money to buy that!

  10. Posted by pissed off on

    This is not the Red Cross , Unicef or the Salvation Army. For sure they are there to make money. Why would any business invest anywhere?
    But over and above that fact , the Chinese government is behind the great majority if not all these so called “ Companies“ They are spending their way around the world in order to acquire ressources and more to the point influence around the world. They are doing that by salting away money in all kind of insidious ways to acquire connections with the well placed . Remember their offer to build a seaport in Qikiqtarjuaq a few years ago. THat would have been a real money maker , isn`t it. No it would have been a way to h=get their foor in the door.

    I watched an excellent program on Netflix named America Factory. This should be mandatory viewing for anyone willing to listen to their song and dance.

    Need I say anything about our Chinese made disaster in Iqaluit being built at the moment?

    The truth please ?

    • Posted by Dave on

      I too saw American Factory.

      I found it interesting how the Chinese discussed American laziness as a “matter of fact”. The Chinese are not politically correct at all, and clearly their worldview is that Chinese are much harder workers than westerners.

      They also scoffed at US labour and safety laws that are softer than Canadian laws.

      I wonder how many Nunavut residents will be willing to work for a Chinese mine? It will definitely involve a clash of cultures.

  11. Posted by WB on

    The amount of anti-Chinese sentiments that have boiled to the surface lately is really really depressing.

    Do you honestly think Canadian mining companies are any better? The companies based in our country have a reputation for human rights abuses overseas. What’s worse, our government refuses to hold them accountable for the crimes they commit in the global south.

    At the end of the day, does it really matter if its a Canadian, French, Dutch, or Chinese company? They’re all based outside of Nunavut. They’re all designed to make money for their shareholders, not to support local development. They all export the resources out of Nunavut. At the end of the day, they’re all colonial institutions, whether its Canadian or Chinese capitalists that reap the benefits.

    • Posted by David on

      The short answer is yes.

      Wait and see what the difference is. I think you are in for a really big surprise.

      For example Victoria Gold mining corp just donated $100 k to a Yukon Food Bank this week. https://www.cbc.ca/news/canada/north/whitehorse-food-bank-victoria-gold-donation-1.5570712

      I think a lot of northern residents take this type of thing for granted and assume it is normal. That will change very fast when Nunavut residents work for a Chinese corporation. ……. or more likely, don’t work for the Chinese corporation.

      Be ready, the Chinese will not change…… they will expect you to change if you want to work for them.

  12. Posted by Larry Simpson on

    I still think the strategic interest of the Chinese in buying the mine is not economic but clearly geopolitical and it will help them claim their interest in the Arctic, right on the Northwest Passage or not. Why not require an MOU from them that the investment in no way constitutes any legal rights to future sea passage or any activities in the Canadian Arctic, beyond the status quo?

  13. Posted by Pump and Dump in reverse on

    Canada should block this and every other Chinese acquisition until market prices return to some semblance of normal.

    Not saying China did this, but it would be easy enough for them to orchestrate this kind of strategy: release virus, world economy tanks, take advantage of low stock prices to convert existing CAD/USD financial assets (and they have lots of those due to longstanding trade deficits with Western countries) into investments like this at bargain basement prices. Massive transfer of wealth, totally by the book.

    So, to dis-incentivize that kind of strategy, Canada must exercise its discretion to BLOCK THE SALE.

    • Posted by The Old Trapper on

      Interesting take on what happened, but a bit risky. I’m assuming that the Wuhan infection was just cover. Why not just create a virus that turns everyone not vaccinated into mindless zombies?
      .
      I prefer my theory China takes a long view and will enact policies that take decades, even generations to come to fruition.
      .
      They will also jump on any targets of opportunity knowing that you çan win some and lose some, but the name of the game is to be the only one standing at the end of the day.
      .
      I also think that owning a second resource company that will utilize Grey’s Bay will allow China to put more pressure on the Canadian government to put money towards this project.

    • Posted by Do some research on

      Interesting narrative, except the price of gold and gold mining stocks are trading at near all time highs right now.

      • Posted by You do some research on

        What you say is generally true for gold, but TMAC’s price history tells a different story.

        • Posted by Gold Investor on

          We are in an environment where gold is likely to tap $2,000 an oz within the next month or two, and potentially move much higher than that. I won’t even quote the most extreme projections, because we don’t want to live in a world were those come true, even as gold investors. What really matters here is the resource, not so much the history of a poorly run company.

  14. Posted by Goldy Buzzard on

    China already has money to burn. They want access to the Arctic to send their ships and other things to keep there. China’s global agenda is to be everywhere when a war breaks out to have the advantage against their enemies, remember this is a powerhouse communist godless state.

  15. Posted by Tracey on

    Don’t let this happen. It will be catastrophic for the Inuit communities and all of Canada. Don’t sell off our natural resources to a country with a proven track record of terrible human rights, deceit and immoral control over others. I worked at this site for years and years. It will break my heart if this goes through. Our govt should not allow this. Anyone involved with the KIA stop this!

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