Is history repeating itself? A tale of two territories
“We need healthy exploration today to find the mines that will carry on the jobs and benefits”
They say that history repeats itself, and that’s not a good thing if it’s negative. Some of us are afraid that’s where we are headed.
Let me explain.
Mining in the Northwest Territories has been a tremendous success story, with four diamond mines over the past 20 years generating 58,000 person years of employment, $20 billion in spending, training of seven per cent of the total workforce, significantly reduced social assistance payments, significant IBA [impact and benefit agreement] payments, and billions paid in a pile of taxes and royalties to governments to help them look after their residents.
However, in 2007 the N.W.T. began to lose focus on keeping mineral exploration strong. Exploration is the very work that is needed to find new mines and their great benefits. Since 2007, the N.W.T. has missed out on at least $1.4 billion in lost investment.
Exploration has still not recovered and economists are now saying the N.W.T. is facing an economic crisis due to its aging mining industry. It isn’t looking good for N.W.T. residents, businesses, or public and Indigenous governments.
Turning to Nunavut, less than 10 years ago there was no mining industry—zero production, zero employment, zero business, zero taxes, zero IBA payments.
Thankfully, the Meadowbank mine came on stream in 2010 and started creating significant benefits for Nunavummiut. Remember, this was after 25 years of significant investment by a number of companies.
Meadowbank was followed by the Mary River iron mine with 50 years of investment, and most recently, the Hope Bay gold mine opened in 2017 after an exploration and evaluation period of 30 plus years.
Mines at Back River and Meliadine are now in the works, both with over 25 years of investment in exploration, engineering and environmental studies. Like the N.W.T. in its early diamond years, Nunavut is now celebrating mining success.
Everyone is optimistic about the tremendous mineral potential in Nunavut. There is a mine in each region and life is good and improving every day.
Nunavummiut are being trained, jobs are abundant, there are significant business opportunities, millions in royalty payments are flowing to Inuit organizations, and taxes are flowing to governments.
So what’s the problem?
Well, it began in 2015 when mineral exploration investment in Nunavut started to fall. It’s fallen every year since—both in real numbers and in relation to the rest of Canada—and our investment attractiveness falls as money leaves. Nunavut exploration investment is now the same as in 2005, back when mining in Nunavut was dying.
Is N.W.T. history repeating itself in Nunavut? It appears so.
The problem began in one Nunavut region where explorers faced some surprises. Failure to renew an existing exploration permit forced one company to halt its plans.
One of Nunavut’s own Inuit prospectors even had to fight for renewal of his exploration permit.
They say that money is a coward and it goes where risk is low. Investors have been watching Nunavut, and they’re feeling that investment here is now riskier. They’re starting to take their money elsewhere.
You might ask, why should we care?
It’s because exploration today is needed to find the mines that can open 20 years from now, when our existing mines are going to close.
Mines aren’t found easily, or fast. Only one in a thousand projects becomes a mine. Exploration alone takes time, then there’s environmental and engineering studies required to ensure safe and responsible development.
Only after lengthy regulatory processes and approvals can construction begin, and then finally production. It’s not for the faint-hearted.
We need healthy exploration today to find the mines that will carry on the jobs and benefits when our current mines eventually close. We can’t afford to go back to 2009 when we had no mining, no mining jobs, no mining business, and no mining taxes and royalties.
Let’s learn from the N.W.T. and quickly correct the dangerous course we are starting on. Let’s not let history repeat itself. There’s just too much at stake for the economic well-being of Nunavut and all Nunavummiut.
It’s time for our leadership to renew investor confidence in Nunavut, and keep our mining industry sustainable.
Kudos to the Government of Nunavut for starting a conversation on investor confidence. We all need to join in now to help renew investor confidence in Nunavut.
Terry Dobbin is the Nunavut general manager for the NW.T. and Nunavut Chamber of Mines.
These industry scare tactics are comical at best. There is a reason these permits are getting hard to come by. The industry has claimed the majority of known deposits in this region, the ones that are left available are in area’s inuit have opposed development in since the first round of exploration in the 50’s (the invention of the helicopter). Also, spending is down because exploration activities are now based out of both producing and prospective/ permitted mines lowering the costs of exploration. Nunavut’s own prospector was almost denied his license because the team he is prospecting with does not want to negotiate IBA’s and have actually proposed blanket IBA’s for all of their claims. It also happens to be in a location where once a road comes in, you can kiss caribou good bye. Its no coincidence that the herds with the most developed ranges are the ones that are at a point of no-return.
You say lets learn from NWT, I say good idea. Look at the complex social issues that the Dene face today post development. They’ve faced a bust and no longer have access to the wildife they’ve subsisted on. Imagine having that happen to the caribou people of Nunavut.
We must find a solution that is best for the majority of our people. As mentioned before I am a bookkeeper (private sector and LHO) and have received many resumes in search for jobs the past 15 years. Always wish them all the best especially those that have children to feed. My community knows I love hunting. I do have one of the best hunting location so yes, we must protect our habitat while finding ways to create jobs for my people. Inuit population is growing we cannot ignore the need to create jobs.
The mines in Nunavut have created lots of jobs. But most of those jobs have gone to non-Inuit. And those workers pay their income taxes to the provinces where they live, not to the GN.
The royalties rate is 1%.
Those who “invested” in exploration were gamblers, who were able to write off their losses against other income. Canadian taxpayers really financed that exploration.
Today’s mine owners know exactly how they will get back every penny they “invested” and make a huge profit, too. When the mine closes they will have made a fortune in Capital Gains and Depreciation Allowances.
If they follow the old way of doing business, they will sell their shares in the mine a few years before it closes. The new owners will be a shell company with no money to pay for clean-up. The caribou will be gone, the waters will be unfit to drink, the land will be contaminated, the Inuit will be unemployed and the government will be stuck with the bill.
Nunavut needs sustainable mining, with the ore processed in Nunavut and used for the production, in Nunavut, of items we can sell around the world. Nunavummiut need to provide, and benefit from, the “value added”. We will have to learn how, even if it takes a while.
Another part of history is repeating itself. Not once but several times.
In the 1950/60’s, and 50 years before that, and further down into the Canadian history, people have continually concluded that caribou were going extinct.
First it was the “natives” slaughtering too many, then the white trappers, then the whalers killing too many, then Tourism as the main risk. Now mining. Lo and behold, a few decades after a decline we end up seeing millions of them.
Even present day reality does not stand in the way of this thinking.
That the Porcupine Caribou herd, having numerous harvesting groups, a highway, other roads, tourism, mining and oil and gas developments on its range – and still having the healthiest herd status of any- is ignored.
Somehow, other herds are “threatened” with even one development.
Predicting the end of caribou is easy to say when it justifies your world view, even when history has repeatedly proven you wrong.
The only thing at risk here is someone’s idealized perception of what is pristine, “unspoiled” wilderness.
It might be time to watch a re-run of Never Cry Wolf to put these attitudes in perspective.
Back then, the go to solution to “saving the caribou” was to destroy the wolves. You have to ask, was it necessary and did it work? No on both counts. Caribou just kept cycling up and down like they always have; a complete mystery to agrarian people in the south.
The modern take on this is to get Inuit to accept systematic, multi-generational poverty. To turn our backs on development. We should be asking the same questions of this solution to a repeatedly fictitious problem.
The threat to caribou is overrated. I’ve seen pics of caribou roaming through the oilfield on the Alaska North Slope and caribou have been a problem straying onto the runway at Sonderstrom.
All animals get used to disturbance (within reason), which in any case is local.
The intent of the Chamber’s correspondence and communications is to provide factual information on the industry and what is happening in it.
In regards to our letter, the fact is that NU exploration investment is declining and given it takes 20 years before the results are felt with mine discovery, it’s worrisome and we believe it should be addressed.
Let me also provide some clarity to statements made by some commenters:
To “ours not yours” IIBAs are not required for exploration projects as per Chapter 26 of the NU Land Claim Agreement, Article 26.1.1 (b) which explains IIBAs are for “projects involving development or exploitation, but not exploration, of resources wholly or partly under Inuit Owned Lands”.
And to: “former miner”, not sure where you found 1%, but simply google “royalty rates Nunavut” and you’ll get to the AANDC website which explains: “The royalty rate applied to the annual mine profit is the lesser of 13% of the total profit and the sum of the marginal royalty rates given in the table below.”
In regards to caribou, there is a really good summary essay just released on November 28, 2018 by Russell, Gunn and Kutz titled “Essay: Migratory Tundra Caribou and Wild Reindeer” which provides these four highlights for all caribou and wild reindeer herds in the world:
• The abundance of migratory tundra caribou and wild reindeer has continued to drop since declines were detected in the mid‐1990s.
• Of the 22 herds monitored, only two herds are at historic peak numbers and have not declined.
• Recent analyses link caribou productivity, particularly declining calf and adult survival, to changing climate conditions.
• Current low numbers of caribou and wild reindeer have imposed hardships for northern communities.
Development is considered a small contributor.
If people have questions about our industry, please don’t hesitate to contact the Chamber of Mines. We are here to help with factual information.
NWT & Nunavut Chamber of Mines
Toe, they’ve never recovered from declines like we’re seeing today. You need to put some perspective into it. 2.2 million down to 800k Canada wide with just 1 herd not declining. There are definitely areas on the range where it’s acceptable (those areas are already claimed, nunatsiaq can easily access maps that show claims in this region) there are areas where it is not.
Prospector, even your own family complains about caribou not being where they’re supposed to because of some cabins and generators, I guess large scale development doesn’t have that same kind of impact?
I have not received complaints directly to me but those who do not adapt or have not opt to go where caribou is more plentiful (ie. cabin hunting location) do complain of odd spots. No one in their right mind would not ignore opportunities to provide for their immediate families. Lets go directly where this concern lies in regards to this article, our very own KIA, I believe protection for our habitat is utmost importance but to ignore the need to work together to create jobs for my people is stupid, instead of fighting due to examples of crab mentality (if you getting out of this boiling pot I’ll pull you in if I dont get out). I’ll say it cuz I’ve seen it! But for KIA to create this nonsense of scaring away our investors and future opportunities for all inuit, maybe even your children or close relatives, to receive much needed job for them. Its time to change gear! To get better royalties for inuit, the dream stands to let inuit owned business do their own exploration and produce their own mines!!! This is my dream… inuit mining their own ground.
To Tom Hoefer: “Lesser of 13% of total profit or…” can be anything or even nothing at all.
The Royalty is payment for the raw material, still in the ground. As such it is a cost. Profit is after costs, not before costs.
The 1% refers to 1% of sales. But the proper way to pay for raw material is $ per ton.
If you prefer to share the profit, then negotiate a joint venture agreement. The Inuit contribute the metal in the ground. The Other Party contributes their money and their know-how. Neither party gets anything back except profit and experience.
At least 10% of the ore must be sold on the open market each month, to determine its true value. The difference between cost and value is the PROFIT, and that is split between the parties, 50% – 50%.
Which do you prefer, sir?