Monday 19th November 2018

Resource Clips


Posts tagged ‘norway’

Reaching arctic mines by sea

September 10th, 2018

Operating in northern Canada often means creating your own transportation routes

by Greg Klein

Amid all the controversy over spending $4.5 billion of taxpayers’ money to buy a pipeline project whose $9.3-billion expansion might never go through, Ottawa managed to come up with some good, if relatively minor, infrastructure news. Rehab work will begin immediately on an idled railway connecting with a port that together linked Churchill, Manitoba, with the rest of Canada by land and the world by sea. Should all go to plan the private-public partnership would be one of just a few recent success stories in northern infrastructure.

Operating in northern Canada often means building your own infrastructure

The arctic Quebec riches of Glencore’s Raglan mine
justify an especially roundabout route from mine to market.

Denver-based owner OmniTRAX shut down Churchill’s deep-water port in 2016, blaming the demise of grain shipping through that route. The following year the company said it couldn’t afford rail repairs after a flood washed out sections of the line. Now the railway, port and an associated tank farm come under new ownership in an “historic” deal involving the Missinippi Rail Limited Partnership and the Fairfax Financial Holdings & AGT Limited Partnership.

“The consortium brings together First Nations and community ownership and support, along with significant private sector leadership and global investment capacity, and further, short line rail operation and shipping experience,” Ottawa enthused. As stakeholders heaped praise on the federal government, the source for much of the money seemed clear. But not even the purchase price, let alone details on who pays how much, have been disclosed.

Still the revitalization program, which could re-open the railway this coming winter, heightens the potential of resource projects in northern Manitoba and Nunavut’s Kivalliq region. As such, the apparent P3 success contrasts with a northern infrastructure setback to the northwest.

In April Transport Canada rejected a request to fund the bulk of a $527-million proposal to build another deep-water port at Grays Bay, Nunavut, along with a 227-kilometre year-round road leading to the territory’s former Jericho diamond mine. The Northwest Territories offered to build its own all-weather link, where a winter road now connects Jericho with three operating diamond mines in the NWT’s portion of the Lac de Gras region.

However the federal refusal prompted Nunavut to pull its support for Grays Bay. Undeterred, the Kitikmeot Inuit Association joined the NWT and Nunavut Chamber of Mines at last month’s Energy and Mines Ministers’ Conference in Iqaluit to argue the case for Grays Bay and other infrastructure projects. Chamber executive director Tom Hoefer said that with the exception of the NWT’s 97-kilometre Tlicho all-season road, the two territories have gone more than 40 years without government support for major projects. The last came in 1975, when Ottawa partnered with industry to build the world’s first ice‐breaking cargo ship, serving the former Nanisivik and Polaris mines in present-day Nunavut, he said.

With no power grids to our remote mines, [companies] must provide their own diesel-generated power, or wind in the case of Diavik. Being off the highway system, they must build their own roads—whether seasonal ice roads or all-weather roads. The ice road melts every year and must be rebuilt annually for $25 million…. Some of our mines must build their own seaports and all provide their own airports.—Tom Hoefer, executive director
of the NWT and Nunavut
Chamber of Mines

Hoefer compared the Slave geological province, home to deposits of precious and base metals along with rare earths and Lac de Gras diamonds, to the Abitibi. Kivalliq, he added, also offers considerable potential in addition to the regional operations of Agnico Eagle Mines TSX:AEM.

But while mining plays an overwhelming role in the northern economy, he stressed, it’s been up to northern miners to build their own infrastructure.

Baffinland’s Mary River iron ore mine co-owners ArcelorMittal and Nunavut Iron Ore want to replace their hauling road with a 110-kilometre railway to the company’s port at Milne Inlet, where ore gets stockpiled prior to summer shipping to Europe. Now undergoing environmental review, the railway would be part of a proposal to increase extraction from four million tonnes to 6.2 million tonnes annually and finally make the mine profitable. An environmental review already recommended rejection of the increased tonnage proposal, but the final decision rests with Ottawa. (Update: On September 30, 2018, Ottawa approved the increased tonnage application for a one-year trial period.)

The rail line, if approved in its separate application, could be in operation by 2020 or 2021.

That would make it Canada’s only railway north of 60, except for a CN spur line reaching Hay River, NWT, from Alberta and a tourist excursion to Carcross, Yukon, from the Alaska Panhandle town of Skagway. (Also connected by highway to the Yukon, Skagway provides year-round deep-water port facilities for the territory, including Capstone Mining’s (TSX:CS) Minto copper mine.)

Projected for production next year, Amaruq comprises a satellite deposit for Agnico’s Meadowbank gold mine in Nunavut. The company has built a 50-kilometre all-weather road linking Amaruq with Meadowbank’s processing facility and the company’s 110-kilometre all-weather road—by far the territory’s longest road—to Baker Lake. Interestingly that’s Nunavut’s only inland community but the hamlet has seasonal boat access to Chesterfield Inlet on northwestern Hudson Bay. From there, still restricted to the ice-free months, ships can reach Churchill or the St. Lawrence Seaway.

Also primed for 2019 gold production is Agnico’s Meliadine, 290 kilometres southeast of Meadowbank. The company’s 25-kilometre all-weather road connects with summer shipping facilities at Rankin Inlet, 90 klicks south of Chesterfield Inlet.

With its Doris gold operation only five kilometres from the Northwest Passage port of Roberts Bay, TMAC Resources TSX:TMR hopes to mine two more deposits on the same Hope Bay greenstone belt by 2020 and 2022 respectively.

But the most circuitous route from northern mine to market begins in arctic Quebec using trucks, ship, rail and more rail, then another ship. Glencore hauls nickel-copper concentrate about 100 kilometres by road from Raglan to Deception Bay, roughly 2,000 crow-flying kilometres from Quebec City. That’s the next destination, but by water. From there the stuff’s offloaded onto rail for transport to a Sudbury smelter, then back by rail to Quebec City again. Ships then make the trans-Atlantic crossing to Norway.

This is Part 1 of a series about northern infrastructure.

Related reading:

Urban dependence

November 6th, 2014

The livelihood of city dwellers relies more on resource industries than many people realize

by Greg Klein

People in Dawson Creek, Sudbury and Val-d’Or get it. But what about those living in larger, southern Canadian cities like Vancouver? How many people realize how much we depend on resource extraction, and not just for the commodities we consume? As a new report points out, Greater Vancouver’s economy relies heavily on British Columbia’s resource industries.

That’s the message of Community Impacts: Exploring the Natural Resource Sector’s Economic Impact on B.C., Its Regions and Urban Centres. The study was released last month by Resource Works, which considers the campaigns for B.C.’s November 15 municipal elections an opportunity to influence public debate.

The livelihood of city dwellers relies more on resource industries than many people realize

Just how far removed is Vancouver
from British Columbia’s resource industries?

Even so, Resource Works executive director Stewart Muir says the organization’s “not choosing candidates.” Calling the study impartial, he tells ResourceClips.com, “We don’t believe it’s political in itself.”

The non-profit group was founded in March with seed money from the Business Council of British Columbia. It’s now looking for donations from individuals and organizations, he says.

The group is backed by an advisory board representing “a coalition of people who would advise and, through their participation, show their support for what we’re trying to do. They include leaders from first nations, labour, business, multicultural groups, academia and the environmental movement. They meet quarterly, advise us and are central to our success.”

Report author Peter Severinson emphasizes his study is illustrative, not representative. Without trying to estimate the full extent of economic impacts, his research presents some examples that might otherwise be overlooked or taken for granted. The three-part study, which underwent independent academic reviews, evaluated the impact of B.C.’s top three resource industries of forestry, mining, and oil and gas.

Severinson used BC Stats data to look at province-wide impacts, while using industrial property assessments to gauge the sector’s regional prominence. Part three focuses on eight Greater Vancouver municipalities “where the connection with the resource sector is least obvious.”

There, Severinson evaluated the spending of seven companies: Catalyst Paper TSX:CYT, Copper Mountain Mining TSX:CUM, Encana Corp TSX:ECA, New Gold TSX:NGD, Taseko Mines TSX:TKO, Teck Resources TSX:TCK.A and TCK.B, and Western Forest Products TSX:WEF. Alberta-headquartered Encana made the list due to its heavy B.C. expenditures.

Again, this approach gives illustrative examples that might otherwise be overlooked, not a fully representative study. “The economic impact of the entire resource sector will be greater than the impacts described in this report,” Severinson writes.

Those seven companies alone poured $1.3 billion into Greater Vancouver last year. More than half, $732 million, went to the city of Vancouver itself, mostly to “professional service providers including lawyers, accountants, engineers, consultants and educators.” That’s in a city whose incumbent mayor opposes local pipeline expansion.

Next door, the municipality of Burnaby got $41.6 million from the seven companies. Burnaby’s entire city council sides with Vancouver’s mayor on pipeline expansion.

North Vancouver, a generally affluent mountainside suburb that sometimes approximates an urban ecotopia, got $162 million last year. Surrey, a ’burb that’s forecast to overtake Vancouver’s population, got $230 million. Richmond, where large new homes contrast with the remaining farmland, got $63 million.

As for Greater Vancouver’s Tri-Cities, Coquitlam got $13 million in 2013, Port Coquitlam got $19 million and even little Port Moody got $8 million.

Muir points to the “profound effect on the Vancouver economy” of an estimated 800 to 1,200 mining and mineral exploration companies headquartered in the city. “What we’ve got now is a real sense of what just seven companies can do in a year in terms of local impacts. What if next time we study 50 companies and look at their impact?”

With a $22.2-billion GDP contribution that took up nearly 12% of the provincial total, resources make up B.C.’s second-largest sector after real estate and leasing. 2010 numbers show about 184,000 jobs representing one-tenth of B.C.’s total jobs come from resources, the study points out. And that’s “only counting those jobs that are either directly within resource industries or that can be closely tied to outputs from those industries.”

We’ve got a high-tech economy because we’ve got a resource economy. And it’s also a green economy because these environmental technicians and people working to protect the environment and improve practices—guess what they’re doing? They’re doing resource jobs to protect the environment.—Stewart Muir, executive director
of Resource Works

So while people in Dawson Creek, Sudbury and Val-d’Or need no explanation, the value of resources can be lost on those living in bigger southern cities. Muir talks of “a divide between the real economy and what lots of people, for good reasons, wish the economy was. The economy we see people wishing for is high tech and green. It’s an economy that’s modern and a departure from the past. And for a lot of people, that’s an economy that’s post-resources.”

But, he says, of the FP 500’s top 50 companies, “15 of them are resource companies. And those 15 have 2013 revenues of almost $300 billion, which means they produce more revenue than all the finance, banking and insurance companies in the top 50.”

Nor does the resource economy fit another misconception.

“We see in British Columbia $250 million a year in R&D spending for mining and petroleum,” he says, citing a recent report from B.C. Stats. “That report is waved around by people who say we need this high-tech economy to replace the resource economy. But I look at the same data and say we’ve got a high-tech economy because we’ve got a resource economy. And it’s also a green economy because these environmental technicians and people working to protect the environment and improve practices—guess what they’re doing? They’re doing resource jobs to protect the environment.”

Muir portrays this high-tech, green resource economy as “a way of being a leader on the world stage. We can continue to export our regulatory know-how, our technical know-how, our strong ability to raise capital for mining projects, and develop not just our own resources but help other countries develop theirs responsibly. That’s modern Canada.”

What’s next for Resource Works? The group hopes to produce two to four papers per year, similar in substance to Community Impacts. A backgrounder on the B.C. government’s proposed LNG-backed Prosperity Fund will look at royalty schemes in Alaska, Alberta, Norway and Kuwait. Slated for December release is a detailed report resulting from eight discussion sessions involving 120 people with wide-ranging views on resources. The group also plans to present its findings to municipal council meetings across the province.

“Our most important issue is how the environment and the economy concerns the average person,” Muir says. “That’s where we have this great disconnect today and that’s where the work is needed.”

Not surprisingly, the non-profit hopes for more support from industry. “Our movement is directed at people who aren’t in the resource industries but we do need people who already get it, who already see the linkages that validate our work.”

Download Community Impacts: Exploring the Natural Resource Sector’s Economic Impact on B.C., Its Regions and Urban Centres.

Sign up for the Resource Works newsletter.

Rating the risks

February 28th, 2013

A Fraser Institute survey shows how miners and explorers see the world they work in

by Greg Klein

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“Great mineral assets, highly corrupt government….” That’s sometimes the conundrum under which exploration and mining companies operate. And that was just one comment published by the Fraser Institute as it evaluated a world of challenges and opportunities in its annual Survey of Mining Companies released on February 28.

Between October 2012 and January 2013, 742 companies rated 96 jurisdictions which included countries and, in the case of Canada, Australia, the U.S. and Argentina, provinces, states and territories. Respondents considered 15 policy factors affecting investment decisions in those jurisdictions, for a possible maximum score of 100. Some factors included regulations, corruption, taxation, aboriginal land claims, infrastructure, the local workforce, political stability and physical security.

While the full report provides breakdowns by category, here are the top 10 jurisdictions for overall scores. The 2011-to-2012 rankings are in parentheses.

A Fraser Institute survey shows how miners and explorers see the world they work in

The Fraser Institute’s annual survey rates jurisdictional risk
for a number of factors concerning mining and exploration.

1. Finland (New Brunswick)
2. Sweden (Finland)
3. Alberta (Alberta)
4. New Brunswick (Wyoming)
5. Wyoming (Quebec)
6. Ireland (Saskatchewan)
7. Nevada (Sweden)
8. Yukon (Nevada)
9. Utah (Ireland)
10. Norway (Yukon)

Last but least, here are the bottom 10:

87. Greece (Vietnam)
88. Philippines (Indonesia)
89. Guatemala (Ecuador)
90. Bolivia (Kyrgyzstan)
91. Zimbabwe (Philippines)
92. Kyrgyzstan (India)
93. Democratic Republic of the Congo (Venezuela)
94. Venezuela (Bolivia)
95. Vietnam (Guatemala)
96. Indonesia (Honduras)

Utah and Norway knocked Saskatchewan and Quebec out of the top 10. Greece was added to the survey for the first time, only to join Zimbabwe and the Democratic Republic of the Congo for their bottom 10 debut. Another first-timer, French Guiana placed 27th overall, a fairly impressive ranking for a newcomer and non-First-World country.

Crisis-torn South Africa dropped to 64th place overall compared to 54th last year, retaining its fourth-from-last spot for “labour regulations, employment agreements and labour militancy or work disruptions.”

Of Canadian jurisdictions, Nunavut ranked worst at number 37.

Some anonymous concerns listed under “horror stories” ranged from uncertainty about native rights in Ontario to potential corruption in Quebec. One response stated that “endless ‘community consultation’” in the Northwest Territories costs the company more than exploration. Others noted confiscation of mining rights in Indonesia and expropriation in Bolivia.

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