Tuesday 27th September 2016

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Mining’s intangibles

The NWT tries to gauge social impacts of its largest industry

by Greg Klein

Does diamond mining affect rates of STDs? Tuberculosis, family violence, teen pregnancy or suicide? The Northwest Territories government actually tried to find answers to those questions and others. An exercise that arose out of socio-economic agreements with the territory’s diamond miners, many of its results were—not surprisingly—inconclusive. Even so, the report offers perspective on mining-related issues that are often overlooked.

Two diamond operations comprise the sum total of NWT mining now that a third, De Beers’ Snap Lake, went on care and maintenance last December. That shutdown followed North American Tungsten’s (TSXV:NTC) C&M decision for its Cantung mine. But during the last fiscal year, the three diamond mines paid taxes of $44 million to the territory, an 11% increase over the previous year. Miners also pay the territory royalties.

Up to 2013 the territory diverted $39 million in diamond royalties to three native governments with settled land claims, according to figures supplied by the NWT and Nunavut Chamber of Mines. In 2015, the NWT shared nearly $6.3 million with nine native groups that signed the devolution agreement. The territory says it collected $63 million in diamond royalties in 2014 to 2015, half of which went to the feds.

In 2014 diamond mines created over 3,200 person-years of employment and paid more than $653 million to northern businesses, about 33% of which were aboriginal-owned.

Those outcomes can be quantified. What’s harder to assess are changes for better or worse on individuals, communities and culture since diamond mining started in 1998. Nevertheless, the NWT tried, looking at a range of factors affecting Yellowknife and seven small communities, all roughly 250 kilometres southwest of the Lac de Gras diamond camp.

We read about the use of aboriginal languages (declining in the smaller communities but showing a slight increase in Yellowknife and elsewhere), suicide (especially difficult to track on numerical trends), teen births (declining), sexually transmitted infections (increasing in the smaller communities but not Yellowknife), TB (little change), family violence (a series of spikes and declines in the smaller communities, relatively flat in Yellowknife), school achievement (significant improvement) and so on. Again and again, the report concedes that it can’t link those issues with mining.

So what’s the point of the study? If anything, it demonstrates that communities expect mining to provide intangible benefits as well as material rewards. Those communities also show concern about how a large industrial operation might affect their society. Although mining’s by far the territorial economy’s largest private sector driver, companies can’t betray complacency about their importance.

That too was demonstrated by statements miners made during their environmental assessments. In addition to singing the praises of their proposals, companies acknowledged potential disadvantages, for example the possibility of “increasing stress and related alcohol abuse, by alienating people from traditional lifestyles and by increasing the pace of change in communities.”

That comment came from BHP Billiton, which later sold its share of Canada’s first diamond mine to Dominion Diamond TSX:DDC. Holding a majority stake in Ekati and 40% of a JV with Rio Tinto NYE:RIO in Diavik, the company looms large over NWT mining. With pre-feas complete on Ekati’s Sable kimberlite, the pipe’s scheduled to begin mine construction next year and possible production in 2019. Diavik’s fourth pipe, meanwhile, has production slated for 2018.

But the biggest diamond development story in the NWT, and indeed the world, is Gahcho Kué. The 51%/49% De Beers/Mountain Province Diamonds TSX:MPV JV has surpassed 87% completion, staying on schedule for production in H2 this year. Barring a drastic decline in demand, diamonds will likely remain the jewels of the NWT economy.


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