Perspectives on the future of the mineral exploration industry in the NWT

Transcription

1 Perspectives on the future of the mineral exploration industry in the NWT Donald S. Bubar, President &CEO April 16, 2015 With acknowledgements to Tom Hoefer, Executive Director, NWT and Nunavut Chamber of Mines

2 2 Mining drives the NWT economy NWT GDP (2013) Other 16% Public administration 15% Health & social 7% Education 5% Real estate 9% Mining 28% Trade 8% Transportation 7% Construction 5% DIRECT contributions alone from mining make it the largest private sector contributor to the NWT GDP INDIRECT contributions from mining and exploration add even more to other sectors of the economy

3 3 There are only 4 operating mines in the NWT. Newer Northern mines are in Nunavut Ekati (diamonds) Diavik (diamonds) Mary River (iron) CanTung (tungsten) Temporarily shutdown Snap Lake (diamonds) Meadowbank (gold)

4 4 Northern Mineral Development Opportunities Izok (base metals) Ulu (gold) High Lake (base metals) Hackett River (base metals) Hope Bay (gold) Note that most of these deposits were found at least 20 years ago Mactung (tungsten) Selwyn (base metals) Courageous (gold) Roche Bay (iron) Indin Lake (gold) NICO (gold, cobalt, bismuth) Prairie Creek (base metals, silver) YK Gold (gold) Pine Point (base metals) Nechalacho (rare earths) Gahcho Kue (diamonds) Lupin (gold) Jericho (diamonds) Back River (gold) Angilak (uranium) Kiggavik (uranium) Meliadine (gold) Chidliak (diamonds)

5 5 Diamonds account for 94% of NWT production NWT, Nunavut and Yukon Mining Production $2,500 $2,000 NWT Nunavut Yukon $C Millions $1,500 $1,000 $500 $ (p) Natural Resources Canada March 2015 NRCan March

6 6 Diavik and Ekati are outlier deposits Super Giant in terms of size, grade and quality of diamonds produced In 2010, they ranked #5 and #7 in the world in diamond production Such exceptional deposits are very rare While there are more diamond deposits in the NWT, few are as high quality and few will be economic with lack of infrastructure and rising costs Gahcho Kue is the only major new diamond deposit currently in the NWT production pipeline

7 7 Mining creates opportunities for people In 2011, mining accounted for 32% of direct private sector employment in NWT (3,500 jobs) largest employer of Aboriginal people Using a 2x multiplier, 7,000 jobs out of 22,600 jobs (30%) are estimated to be indirectly related to mining Roughly half of all NWT jobs are directly or indirectly related to mining (including many in the public sector)

8 8 Percentage of Workforce employed in the NWT Public Sector (45.9%) Percentage of Workforce 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% Question: how many public sector jobs are now directly related to mining? 0.0% CANAD NFLD PEI NS NB QUEBE ONT MAN SASK ALBER BC YUKON NWT NU A C TA % 20.4% 26.7% 27.7% 24.4% 25.1% 21.5% 19.0% 25.6% 24.7% 16.3% 17.8% 40.8% 45.9% 34.5% 0 Provinces & Territories Source: GNWT ECE Annual Plan

9 9 Mining employs a lot of non-residents (fly-in, fly-out operations) Only 46% of the 3500 workers employed at NWT mines in 2014 actually resided in the NWT Direct impact on the $30,000/resident annual subsidy provided by federal government to GNWT Does not support population growth (it actually declined in 2014 by 389 people) Less justification for infrastructure investments Some local resident (Aboriginal) mine workers choose to leave to become non-resident mine workers Low number of resident mine workers results in lower visibility of mining in the NWT community Reduces political support for mineral industry

10 10 Mineral Exploration is not Mining Early stage mineral exploration is a very low impact transient land use activity Typically run out of temporary camps removed after work is completed Strict regulations govern waste disposal and water use in camps Field work typically involves data collection by passive sampling methods, progressing to a drilling program if results are positive. Environmental impacts similar to tourism except the work is less seasonal, being carried out year round except during freeze-up and break-up periods Supports hospitality and aviation industries

11 11 Exploration is a RENEWABLE Industry In the current government system: Explorers cannot own the land They must do work on the land every year They must give government information they have learned That information becomes public for others to use They must use it or lose it, i.e., do the work or give the land back to the government Creates a competitive and creative system There is also transparency on what activities take place through the land use permit and inspection system, which insures compliance

12 Exploration only 1 in 1,000 prospects becomes a mine Exploration is a long shot! It takes many exploration projects to find one mine. It takes a long time to find and develop a new mine 20 years+!

13 13 BUT investment in NWT exploration is declining but increasing elsewhere Exploration boom period Not reflected in NWT Source :NRCan March 2015

14 Claim staking in the NWT is steadily declining Source: GNWT ITI Mining Recorders Office

15 15 Mineral Tenure increased in the Yukon in boom period but did not in NWT 30,000,000 NWT Mineral Tenure vs Yukon 300,000 25,000, ,000 20,000, ,000 15,000, ,000 10,000, ,000 5,000,000 50, NWT Claims (ha) NWT Lease (ha) NWT Prospecting Permit (ha) Yukon # Claims 0

16 16 Some other indicators Charter aviation companies are selling off cargo aircrafts due to lack of business Just 7 helicopters based in Yellowknife vs. 60 or more 5 years ago Expediting service comparison: Flights serviced Fuel drums shipped 14, Camps serviced 25 5

17 17 Consequences of Exploration Decline Exploration service businesses (aviation, expediting, geophysical surveyors, hospitality, logistics) suffer loss of revenue or go out of business No new prospects for future development are created to feed into the pipeline for the mines of tomorrow Once existing resources are exhausted, the mining side of the industry contracts or even dies out There have been no significant new grass roots discoveries in the NWT since the diamonds

18 18 Why is Exploration in the NWT declining Post-devolution? Partly due to commodity prices cycles, But there disincentives: Infrastructure deficit is a continuing major cost disadvantage Unsettled land claims. Leaves much uncertainty Ongoing land use planning process creates more uncertainty Feds retain responsibility for MVRMA which includes land use permits, water licences and environmental assessments Up to 5-10 years to get through process with no certainty and high cost Early stage projects with little impact are often referred for EA delaying the project for years and discouraging investment 2013 Mineral Development Strategy: Good intentions, but Growth strategy promoted by ITI is being undermined by burdensome new legislation from ENR and Lands such as environmental management plans (eg; WHPP and WEMP)

19 What Are People Saying Minister Miltenberger said in February: We are on a fiscal cliff Gary Vivian, VP of the Chamber of Mines wrote last week: Events since then have taken us right to the cliff's edge Conference Board of Canada says it isn t good: The medium to long term economic outlook for the NWT is the weakest of all three territories, the mining industry is more mature Investment in shale oil & gas has faced challenges and is uncertain going forward. Overall economic growth is expected to be minus 3% in 2015, and 0.9% in

20 20 Summary Mining is very important to the economy and the basic system for granting mineral tenure and conducting exploration is sound: It is renewable and sustainable but cyclical The system works well in other jurisdictions Yet investment and participation in mineral exploration in the NWT is steadily declining even compared other Northern jurisdictions The cause must be related to disadvantage created by unresolved land claims and regulatory uncertainty

21 21 Conclusion Lack of proportionality in Environmental Assessments and referring early stage exploration projects for EA will discourage future investment Husky Energy sand project the latest example Early stage projects should never be referred for EA There is adequate regulation of exploration activities under the existing land use permit and inspection system Risk capital for exploration goes where it is welcome and such decisions signal that it is not welcome in the NWT

22 What to do? Express Concern! 22