The case for greater federal investments in northern mining infrastructure
“Support for Canada’s mining sector in the North has never been more important, given how hard the industry has been hit by COVID-19”
The old expression “If it isn’t grown, it’s mined,” is taking on new meaning as the supply of minerals and metals critical to 21st century products takes on geopolitical importance. As demand for mined materials continues to grow, there is increasing focus on what are referred to as “critical minerals”—vital in aerospace, defence, telecommunications, computing, and an array of clean and medical technologies such as solar panels, electric car batteries, ventilators and rapid testing kits.
Canada can play a larger role in this market, particularly given our leadership in sustainable mining practices and high environmental standards, and this opportunity is particularly relevant to mining in the North.
While the mining industry is truly pan-Canadian, with operations from coast to coast to coast, it is especially significant to northern Canada. Mining is the largest private sector driver in Canada’s Arctic, employing approximately 8,500 people, accounting for roughly one in every six jobs. These numbers expand when the northern regions of Manitoba, Quebec and Newfoundland and Labrador are incorporated.
Direct gross domestic product contributions in the Northwest Territories and Nunavut are 27 per cent and 28 per cent, respectively, as of 2019, and six per cent in the Yukon as of 2018. Research indicates that mining companies have invested, or have committed to invest, more than $9 billion in recent years. While these contributions are substantial, the potential is even greater.
Proportionally, mining is the largest private sector employer of Indigenous peoples in Canada and the territories host the highest per-capita demographic of Indigenous peoples in the country. Mining is also the largest private sector business partner of Indigenous-owned enterprises in the North, supporting the greater autonomy and agency that Indigenous peoples are seeking over their own destiny.
We know that the future of Canada’s mining industry lies increasingly in remote and northern regions, but infrastructure deficits continue to challenge project economics in this part of the country.
The Mining Association of Canada and mineral industry partners undertook extensive research on how remote and northern mining costs compare to those in the south. Our research indicates it costs 2 to 2.5 times more to build the same precious or base metal mine in the North (off-grid) than in a centrally located region and, most importantly, that 70 per cent of this cost differential derives from the infrastructure deficit.
The report also found that Arctic mining operational expenditures are up to 60 per cent higher than their southern counterparts, largely due to the extensive supply chains essential to input critical supplies to the mine site and then bring product to markets.
The infrastructure deficit is the largest barrier to creating new economic and social development opportunities, and the Canada Infrastructure Bank (CIB) is particularly well situated to partner in addressing it, through meaningful consideration of power, telecommunications and transportation infrastructure projects that are in the national interest. The CIB has a significant role to play in transforming remote and northern Canada—regions that are critically important to, and reliant on, Canada’s mining sector.
Support for Canada’s mining sector in the North has never been more important, given how hard the industry has been hit by COVID-19. Operations in the area have closed or reduced production and have had the longest standing disruption anywhere in the country. Recognizing this, additional supports and the government’s “Build Back Better” focus will be critical to the region’s economic vitality.
Announcements made by the federal government have demonstrated a continued commitment to Canada’s Arctic. In addition to the CIB and COVID-19 economic recovery programming, the renewal of the northern allocation under the Trade and Transportation Corridor Initiative, investments in electrification of mine vehicles, and the commitment to bring high speed internet to Arctic communities and businesses, have been welcome. These measures, the promise of the Arctic Policy Framework, enhanced investment in critical minerals and the Canadian Minerals and Metals Plan, can be platforms for transformative change.
The stage is set. The potential is there. The time is now.
Brendan Marshall is the vice-president for economic and northern affairs for the Mining Association of Canada