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The Northwest Territories: defining new rules for "the frontier".

Despite the tough times that juniors are currently experiencing, mining has been the economic backbone of the Northwest Territories for almost 80 years and its legacy continues as the industry contributes to over 25% of the GDP directly and is the largest private sector employer. Mining employs more than 2,000 people, including a substantial number of aboriginals. In 2013, GDP grew 1.9% in the Northwest Territories, which is equal to the growth the Territory saw in 2012.


Known for its diamond reserves, mining and production of this precious stone increased 6% in the Northwest Territories in 2013. "In terms of resource potential the Northwest Territories has always featured prominently in the top few jurisdictions. The Northwest Territories currently produces close to 15% of the world's diamonds by value," said the Northwest Territories' government minister of Industry, Tourism and Investment, Hon. David Ramsay. Its reserves are of top quality, as explained by Patrick Evans, president and CEO of Kennady Diamonds, who operates the Kennady North project close to Mountain Province Diamonds and De Beers' joint venture Gahcho Kue diamond mine: "The highest grade can be found in Russia (8 carats/mt). There are also similarities between Kennady North and Gahcho Kue in terms of the quaity of the diamonds that have been recovered. However, Kennady North has a higher grade and better quality."

In this same area, Proxima Diamonds is also encouraged by data obtained by preliminary studies. "The company's assets consist of 16 claim blocks covering 178,000 acres in an area extending from the Ekati mine in the north to the Gahcho Kue deposit," said Mike Power, CEO of Proxima Diamonds. "We believe that the greatest value in diamond exploration is realized when the discovery of a diamond bearing kimberlite is made. Our strategy is to concentrate on this phase of the business by capitalizing on our database to generate exploration targets, and by using our experience and expertise to define and test drill targets."

Over the last 16 years, diamond mines in the Northwest Territories have generated close to $10 billion in business contracts, of which over $4 billion have benefitted aboriginal-owned businesses. As Gary Vivian, president of Aurora Geosciences, said: "Diamonds are one of the few commodities that is still generating positive market sentiments."

Although diamonds are the backbone of mining industry, the Northwest Territories' mining potential also includes precious and base metals, rare earth elements and more. There are exciting advanced exploration projects that may lead to mines in the near future. Minister Ramsay said: "In the mining sector, the Northwest Territories has significant opportunities other than diamonds and we want to try and diversify our portfolio. The Northwest Territories is very interested in seeing new mines open. There is significant exploration for gold in and around Yellowknife. The Northwest Territories has a mining heritage and the resources, and all that we needed was a strategy to help us attract more investment into the Northwest Territories."


First Nations regulations in the Northwest Territories differ from those of Yukon. On April 1 2014, land and resource management responsibilities in the Northwest Territories were devolved to the government of the Northwest Territories, mirroring federal regulations but in a system that better meets current administrative, industry and legal requirements.

Though devolution in the Northwest Territories has taken place relatively peacefully, there are some ripples in the devolutionary pool. One point of contention has been the creation of the new Mackenzie Valley Land and Water Superboard, which requires the inputs of four land and water boards that administer the Gwich'in, Sahtu, Wek'eezhii and Mackenzie Valley jurisdictions. As Gary Vivian, president of Aurora Geosciences, said: "Industry is worried how communities react due to the new Mackenzie Valley Land and Water Superboard that will be based in Yellowknife. This Superboard will now determine the issuance of permits in areas where permits used to go through the Sahtu or Wek'eezhii land and water boards. Devolutions have been peaceful overall, but some aboriginal groups have tried to take the federal government to court over the Superboard."

The devolution of power from the federal government to the territorial government aims to provide new opportunities for Northerners to work together to manage the Northwest Territories' land, water and natural resources. In this framework, resource revenues will be shared according to the Northwest Territories Intergovernmental Resource Revenue Sharing Agreement. These coincide with Impact and Benefits Agreements between developers and the impacted aboriginal community and stipulate the terms of employment and economic benefit throughout the mining operations. While devolution has been peaceful, the fact that the Northwest Territories is still in a development phase as far as governance is concerned, it is likely that there will be a few "trial-and-error" agreements in the future. This may slow down the pace of the development of the mining sector in the short-term, but as these problems are ironed out, mining in the Northwest Territories holds undoubted potential.

Infrastructure and Investment

In the coming years, the Northwest Territories will need major investments in infrastructure if it is to keep up with Yukon, its western neighbor. "Nearly all areas of the Northwest Territories have infrastructure challenges," said Donald Bubar, president and CEO of Avalon Rare Metals Inc. This is the case throughout the Territories and, the government of the Northwest Territories plans to spend $600 million over the next decade to improve the Territory's all-season roads, highways and bridges as well as its marine and airport infrastructure.

As far as the Territory's energy infrastructure is concerned, hydropower generation could be a game changer in the region enabling operating mines in the region to move away from diesel generators to renewables. "The Government of the Northwest Territories has a strategy to invest in expanding hydropower generation capacity and the transmission grid in the North to provide lower cost energy to consumers north of Great Slave Lake," said Bubar.

Fortunately, the transition to low cost and environmentally friendly energy generation will not be limited to consumers north of Great Slave Lake. As mapped out by the governement of the Northwest Territories, an Energy Action Plan is to be rolled out over the next three years, that represents investments of over $31 million. Apart from hydro-power, the development of solar, wind and biomass energy facilities will be central to this action plan.
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Publication:E&MJ - Engineering & Mining Journal
Geographic Code:1CNOR
Date:Nov 1, 2014
Previous Article:Yukon: paving the way for Canada's North.
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