TORONTO (miningweekly.com) – The mining of precious metals and diamonds in Canada’s far north has been feasible for some time now, but mining for bulk commodities, such as iron-ore, has proven more difficult. Historically, the climate has precluded large-scale mining operations, while the technology and infrastructure required has not been in place.
But this state of affairs is changing and changing fast. Modern technology, such as precise global positioning systems (GPS) and geophysical mapping, has radicalised operational and exploratory procedures, while climate change has warmed far northern waters and lengthened the window of opportunity for summer shipping. In locations slightly further south, the possibility of year-round access for vessels is now feasible.
As this new frontier is developed, the level and quality of resources already delineated are mouth-watering indeed. Several significant projects already lead the way, including Arcelormittal and Baffinland’s Mary River iron-ore project on Baffin Island, or MMG’s Izok corridor zinc/copper project, in Nunavut.
It is no surprise that growth in the sector is expected to be robust over the coming years; Canada’s northern metal and nonmetallic mineral output is expected to rise by 91% from 2011 to 2020 at a compound yearly growth rate of 7.5%, according to the Conference Board of Canada.
“But as with any new frontier, huge challenges will need to be overcome,” Norton Rose partner and leader of the firm’s Canadian mining and commodities practice Dawn Whittaker told Mining Weekly Online. “The focus is on how to make this work for Canada and to make it responsible and profitable. Environmental and aboriginal issues are critical as well.”
“Condensed, the challenges of mining in the far north are threefold,” she said. “Firstly, a miner must consider the climate. Secondly, a miner has to manage infrastructure, transportation and logistics, which can be very expensive. Thirdly, a miner must factor in commodity prices and the levels required in order for a project to be viable and profitable.”
Mining companies must also carefully consider their shipping options, although fortuitously Canadian expertise is already well developed. “Transport in the Canadian north will mainly require shipping,” Norton Rose partner and leader of its Canadian transport practice Richard Desgagnés said.
“This is nothing new as northern shipping has been in place for several decades, supplying isolated communities during the small summer season. As a result, Canada already has shipping operators with excellent experience and the know-how to navigate these difficult waters.”
Both Desgagnés and Whittaker are also members of Norton Rose’s Canadian North and Arctic team, which specialises in helping facilitate far north operations.
“So the foundations are good and we’ll see an increase in traffic as northern mining projects come on stream,” Desgagnés said. “Some of the minerals will be sent south for processing within Canada. This is already happening, for example, with nickel ore transported down from Voisey’s Bay. But a large volume will increasingly be shipped across the Atlantic, to northern Europe. This will require a new species of ship, vessels that are much larger than the ones currently used.”
“These larger ships will require docks for loading operations, so the infrastructure that allows this must be built,” he said. “Aids to navigation will also have to be improved as the level of traffic in the region increases.”
“Mitigating environmental impacts of shipping is important too; it’s a big issue for any project promoter dealing with regulators who will want to know how shipping will occur,” he added.
Governments, both provincial and federal, are keen to pave the way for further mining investment and have earmarked spending on infrastructure to spur this. However, the speed and the extent to which this is coming to fruition are often points for debate. For example, Plan Nord, a major scheme by Quebec to open up the province’s north to greater exploration and resource development, is currently stalled.
“[But nonetheless] the provincial and federal governments are keen to create jobs […]. For example, the government of Nunavut has put out a report stating it wants to promote, enhance and increase the sophistication of their mining sector,” Whittaker said. “They also want to protect the environment and aboriginal interests.”
“On the flip side, and of equal importance, people who are concerned with mineral tenures, land rights and royalties etcetera, will tell you there’s still some frustration being encountered. Many mining companies feel there has sometimes been a lack of co-ordination between various departments over who is responsible for what, such as environmental aspects,” she said.
“Indeed, various reports will tell you, particularly relating to Nunavut and the Northwest Territories, that there’s concern about the lack of co-ordinating bodies,” she added.
“Still, many of the difficulties simply stem from the newness of the industry. Remember that the region doesn’t have the history of co-operation between various levels of government,” she said, adding that these teething troubles will eventually be overcome.
Meanwhile, Desgagnés also pondered the role of government. “Is the government doing enough?” he asked.
“Well Canada’s government has certainly shown a marked and increasing interest [in the far north] but it remains to be seen whether the right level of money will be invested. Unfortunately, we’ve not been seeing this coming as quickly as perhaps one would like. For example, the government announced that it would invest in safety and response equipment but this has failed to materialise at the levels promised.”
“However, almost everyone complains that the government is not investing enough in his or her sector […] we should be cautious before levelling blame. We have to be realistic,” he added.
But for all the debate surrounding government, Desgagnés was also keen to stress that commodity prices will be the key determinate for success in Canada’s far north.
“The central driver will be commodity prices. As these prices vary, the attitude of project promoters will vary also,” he said. “But taking into account the current outlook, one can still anticipate an increase in northern projects. Will it be a vast increase? Well that’s what we all hope for, but ultimately, it’s the market that decides.”