North

The Northwest Territories and Nunavut's share of mining exploration spending is on the decline

The Northwest Territories and Nunavut’s share of mineral exploration spending is on the decline. The executive director of the N.W.T. and Nunavut Chamber of Mines says the North can't afford to ignore it.

‘We know there’s money out there,’ says chamber executive, but the N.W.T. and Nunavut are getting less of it

An exploration camp at the Kennady North diamond exploration project in 2016. Spending on mineral exploration in the Northwest Territories and Nunavut is on the decline, according to the most recent numbers from the federal government. (Kennady Diamonds)

The Northwest Territories and Nunavut's share of expected spending on resource exploration and deposit appraisals in Canada is on the decline, and has been for a few years.

The most recent numbers from Natural Resources Canada indicate spending in the N.W.T. is expected to decline to $81.3 million this year, down from $90 million last year. Exploration spending in the territory peaked in 2007 at $194 million.

In Nunavut, the decline is more dramatic. Spending there is expected to decline by more than $58 million — from $169 million last year to $110.7 million this year. In 2007, companies spent $338 million on mining exploration in Nunavut.

The estimates represent spending on a mix of "grass roots and advanced exploration," said Tom Hoefer, the executive director of the N.W.T. and Nunavut Chamber of Mines.

Hoefer says ignoring the decline is unwise as less exploration today means fewer chances of  discovering tomorrow's new mines.

Tom Hoefer, executive director of NWT and Nunavut Chamber of Mines, said funding for exploration is up across the country, just not in the N.W.T. or Nunavut. (CBC)

"The [established] mines are doing okay," he said. "It's trying to attract that new exploration up here and getting that investment — that's the hard part."

Spending on exploration is an indicator of how likely it is that a new, mineable mineral deposit will be discovered and developed.

"It's one in a thousand [targets] that will become a mine," Hoefer said.  "You need ... lots of exploration to find a mine. And even if you do, it can take 20 [or] 30 years before that deposit actually becomes a mine."

Decline is specific to the N.W.T. and Nunavut

The decline would be more tolerable if spending were down across the country, or if commodity prices were down. But neither is the case.

Spending on mineral exploration is on the rise across Canada. In Yukon exploration spending is expected to increase to $172 million in 2018, up from $165 million last year.

In 2015 the N.W.T. captured 5.5 per cent of mineral exploration spending in Canada; in 2018 it's expected to capture less than 3.6 per cent. In 2015 Nunavut captured 11.7per cent of spending; in 2018 it's expected to capture just 4.9 per cent.

According to information published on Natural Resources Canada's website, spending across Canada on mineral exploration and deposit appraisals in 2017 increased by 29.6 per cent to $2.1 billion, from $1.6 billion in 2016. In 2018, another 6 per cent increase, to $2.2 billion, is expected.

An exploration camp at the Uptown Gold Property near Yellowknife in Fall of 2015. An increase in commodity prices has not, as many hoped, led to an increase in mining exploration in the N.W.T. and Nunavut. (Submitted by Silver Range Resources)

For Hoefer this means the N.W.T. and Nunavut can't blame the markets or general lack of interest for declining investment in the North.

"Commodity markets aren't down," he said.  "If you look at what happened in the last two years, the market has started to come back. We know there's money out there."

"We've got tremendous geology here," Hoefer said. "[But] if you look at the trend over the last 10 years, the N.W.T. … has struggled. It's flat lined in its exploration compared to the rest of the world, and even the [other] territories."

So what's the problem?

"To find a mine you have to be able to explore the ground for it," Hoefer said.

Hoefer points to unsettled land claims in the Northwest Territories, along with their interim land withdrawals, as a source of uncertainty for investors.

Large swathes of land in the Northwest Territories are temporarily not available for mineral exploration under Interim Measures Agreements with the Deh Cho and Akaitcho First Nations, as well as with the Northwest Territories Métis Nation.

Cost of exploration another hindrance

Darrell Beaulieu, CEO of Denendeh Investments Inc., agrees with Hoefer on the importance of spending on exploration when it comes to mine development. He has seen a bounce back in investor appetite, pointing out that the Indigenous investment group's Camsell River property has recently seen new renewed investor interest.

Darrell Beaulieu, CEO of Denendeh Investments, stresses the importance of settling outstanding land claims in the territory. (CBC)

But he adds that the cost of exploration in the North is another major hindrance — a dollar spent in the N.W.T. doesn't go as far as a dollar spent in the south. That can encourage investors to spend elsewhere.

"In the N.W.T. infrastructure is a huge issue," Beaulieu said. "The cost of operating up here is another item that junior mineral exploration companies consider."

Beaulieu agreed unsettled land claims are a further hindrance to investment. The way forward, he said, is to settle and fully implement land claims and make Indigenous governments partners in resource and infrastructure development.

"That lack of transportation, energy and communication infrastructure presents an opportunity for Indigenous people to take a lead in designing, building and owning that infrastructure to be part of the development of the North."

Beaulieu pointed to the partnership between the Tlicho government — which has had a settled land claim since 2003 — and the government of the Northwest Territories on the construction of the proposed Whati all-season road as an example how Indigenous governments can work with the territorial government.

"The government is working with the Tlicho government in opening up access to the communities," Beaulieu said.

"Part of that is lowering the cost of living, [but] there will be improved access to potential mineral resources that will spin off and induce benefits."

now