Nunavut mining firms get some rent relief from Ottawa

Chamber of mines “grateful” for federal help

Northern Affairs Minister Dan Vandal

Northern Affairs Minister Dan Vandal says the federal government appreciates the “good will” that mining firms have shown in their response to the COVID-19 pandemic. (File photo)

By Jim Bell

(Updated, 4:30 p.m.)

The federal government will provide some relief to cash-strapped mining firms who might be about to fall behind on mineral lease payments for Crown lands in Nunavut, Northern Affairs Minister Dan Vandal announced yesterday.

The Northern Affairs department says this is to prevent companies that hold Nunavut mineral leases from defaulting on the rent money they owe to their federal landlord.

“Hopefully, the companies will get through this difficult time, and hopefully there’s an end in sight to this pandemic,” Vandal told Nunatsiaq News.

Vandal also said the federal government “appreciates” the efforts Nunavut mine operators have made to accommodate Nunavut workers after the pandemic tore through Canada last March and April.

“We understand the good will they’ve shown through enhanced testing, and sending their Inuit workers home to prevent infections,” he said.

In its second quarter financial statement this year, issued last month, Agnico Eagle reported spending $1.4 million a month on wages for hundreds of Nunavut workers who were sent home last March and have yet to be called back to work.

The company has also been spending $450,000 a month on COVID-19 prevention measures.

And the financially troubled TMAC Resources Inc, owner of the Hope Bay gold project in the Kitikmeot, sent 60 Nunavut workers home last March and has recently bought 2,000 Health Canada–authorized COVID-19 detection kits, along with swabs, tubes, PPE and laboratory time.

But the rent relief applies not only to larger companies. Vandal said it applies to all companies with mineral leases on Crown lands, including small junior firms doing early exploration work.

The federal rent relief involves the following two measures:

• For mineral lease rent payments that become due between March 13 and Oct. 29 this year, an extension of up to six months, but not extending beyond Oct 30, 2020.

• An amendment to the Nunavut Mining Regulations allowing for a one-year waiver of annual rent for the period between March 13, 2020, and March 12, 2021, after a mining company makes a written request.

Time limits for the start of rent collection activities on Crown mineral leases are extended the same way.

Industry group “grateful”

Vandal said Nunavut mining industry players, including the NWT and Nunavut Chamber of Mines, have been talking to people in his department about COVID-19 relief measures for several months now.

“We appreciate that we’re in uncharted territory here and we appreciate the tough times they’re going through,” Vandal said.

Not surprisingly, the president of the NWT and Nunavut Chamber of Mines, Ken Armstrong, said his organization is “grateful” for Ottawa’s help.

“Mineral exploration is competitive, and Canada’s actions announced today in relation to mineral leases are in line with earlier relief provided by CIRNAC for mineral claims and prospecting permits in Nunavut, as well as with relief being provided by other jurisdictions in Canada,” Armstrong said in a news release.

Mineral exploration plummeting

The chamber also pointed out that, even before the pandemic, mineral exploration expenditures in the three territories have fallen sharply over the past nine years.

Statistics from Natural Resources Canada show that in 2011, mineral exploration spending in Nunavut peaked at well over $500 million that year.

Since then, such spending has plummeted. This past February, a few weeks before the pandemic triggered a countrywide lockdown, NRCan projected mineral exploration expenditures of just over $100 million for Nunavut in 2020.

This graph, based on statistics that Natural Resources Canada gathered prior to the COVID-19 pandemic, shows the rapid decline in mineral exploration expenditures across the three territories that has occurred since 2011. (Image courtesy NWT-Nunavut Chamber of Mines)

But that could drop even more, the chamber said.

“The COVID-19 pandemic and the appropriate actions taken to protect the territory of Nunavut have further affected exploration investment and there are fewer companies exploring today than in previous years,” the chamber news release said.

The rent relief announced yesterday applies only to companies with mineral leases on Crown lands in Nunavut. They do not apply to Crown lands in the Northwest Territories and Yukon.

That’s because those territories have devolution agreements with Ottawa that give them control over public lands and resources. Nunavut has yet to negotiate such a deal.

And the measures do not apply to Inuit-owned lands in Nunavut.

Lands on which Inuit own fee-simple surface rights are controlled by regional Inuit associations. Lands where Inuit own subsurface rights are controlled by Nunavut Tunngavik Inc.

It’s not clear right now whether those Inuit land-rights holders will also provide relief on the separate commercial leases that they’ve negotiated with mining developers.

Correction

An earlier version of this story stated that mineral lease rent payments that become due between March 13 and Oct. 29 this year would be given a six-month extension of the due date. In fact, it’s an extension by up to six months, but not extending beyond Oct 30, 2020.

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