For regions that rely heavily on a healthy mining sector, the industry’s cyclical fortunes and fluctuating commodity prices can make the difference between economic boom and bust. For the Northwest Territories (NWT), the most populous of the three territories that make up the icy expanse of Northern Canada, taking advantage of local geological riches, particularly the diamond for which the region is known, has been an economic lynchpin for nearly a century.
In 2013, the mining industry contributed C$1.67bn in production value to the territory, with diamonds – which can be marketed free from the complexities of the conflict diamond issues surrounding many African producers – representing more than 90% of the total estimated value of the NWT’s mineral and non-mineral production.
In recognition of mining’s central role in the region’s economy and in response to flagging investment in recent years, the NWT’s Minister of Industry, Tourism and Investment David Ramsay this summer announced the creation of the Mining Incentive Program (MIP), a C$400,000 annual fund designed to encourage companies and individual prospectors to undertake exploration in the territory.
"The Mining Incentive Program is an important step towards attracting new investment and encouraging grass-roots mining exploration, which is essential for ensuring the long-term growth of the mining industry," said Ramsay.
The MIP’s summer launch was successful, drawing applications from 11 companies and three prospectors, requesting a total of just over C$1m in funding to support exploration for diamond, gold and various base metals. We spoke to NWT Geoscience Office director John Ketchum to discuss the MIP, the NWT’s mineral potential and the importance of supporting northern and Aboriginal-owned businesses.
Chris Lo: Could you characterise the mining investment climate in the NWT in recent years?
John Ketchum: The 2008 global financial crisis resulted in investment declines in most mineral exploration regions, including the Northwest Territories (NWT). However, in the NWT there has been a recent resurgence of interest in the Slave Geological Province and its diamond potential. We are beginning to see a strong interest in that region in particular.
CL: What prompted the ministry to set up the Mining Incentive Program?
JK: The Mining Incentive Program was a key recommendation of the NWT Mineral Development Strategy, released in 2013 by the Government of the Northwest Territories. The program helps to offset the higher cost of mineral exploration in northern Canada and serves as an incentive to increase exploration and investment in the territory.
Canada needs to attract a new generation of miners to its underground operations as its ageing workforce prepares to retire.
CL: How much potential for significant mineral and metal discoveries remains in the NWT?
JK: The NWT has excellent potential for new mineral discoveries given its vast land area, favourable geology and the fact that it has not yet been fully mapped or explored in terms of geology and mineral potential. I think it’s fair to say that many regions of the NWT have only seen limited grass-roots exploration and remain open for more detailed exploration and new discoveries.
CL: How have mining incentive initiatives in other regions of Canada influenced the formation of the MIP?
JK: The MIP was modelled after other successful incentive programs offered by other Canadian provinces and territories. We took the best features and practices of those programs and adapted them to the NWT situation. We expect that the program will evolve as successive offerings are made and feedback is obtained.
CL: In July the MIP handed out its first round of grants to explorers and individual prospectors – what are your hopes for the economic sustainability of these projects?
JK: There are a number of factors that influence the economic sustainability of a project, and these factors will of course vary from project to project. Applicants to the MIP are evaluated on a number of criteria, several which address whether the project is well conceived and realistic. Attracting high quality proposals is important for a number of reasons, including the potential to generate ongoing economic benefits.
CL: Since July, what updates have you received on how the supported projects are progressing?
JK: The program requires that funded applicants provide a final report by 1 May. The successful applicants also provide information on their projects through an interim report, informal discussions, public presentations – such as at the annual Yellowknife Geoscience Forum – and press releases.
CL: From the NWT Government’s perspective, what are the most important requirements for a successful funding application under the MIP?
JK: Applications are evaluated based on a number of criteria, including innovation, exploration approach, use of NWT goods and services, overall project plan, anticipated economic impact and past MIP performance of the applicant. The overall goal is to fund strong, innovative projects that effectively test resource potential while maximizing use of NWT goods and services.
CL: How does the MIP assess the environmental sustainability and social responsibility of applying projects?
JK: The program requires that projects submitted for MIP funding comply with existing laws and regulations. Land use permits and water licences must first be obtained before MIP funding can be issued to a successful applicant. The NWT regulatory process provides for a detailed examination of environmental and socio-economic issues, and concerns can be addressed through that process.
CL: What are your hopes for the MIP in terms of supporting northern and Aboriginal-owned businesses and encouraging a "new generation of prospectors", as NWT and Nunavut Chamber of Mines president Brooke Clements put it?
JK: The program has already provided direct and indirect support to NWT businesses, including an Aboriginal-owned exploration company called DEMCo that received MIP funding. The company has had some initial success exploring an old mining camp in a geological domain known as the Great Bear Magmatic Zone. As the MIP becomes better known, we hope that both seasoned and up-and-coming prospectors will take notice of the opportunities that the program provides.
CL: How can mineral exploration projects and mining operations spread economic benefits to the widest possible section of the NWT population?
While not quite a buzzword, geosynthetics are clearly on the mining industry’s radar.
JK: The mining industry has been a pillar of the NWT economy for more than 80 years and continuously provides employment and economic benefits for NWT residents and businesses. In 2013, the industry contributed $1.67bn in production value, and diamonds currently account for over 90% of the total estimated value of both mineral and non-mineral production.
CL: Is the Canadian federal government also investing in supporting mineral projects and geoscience research in the north?
JK: Yes, the Federal Government has provided ongoing funding support for NWT geoscience research projects through The Canadian Northern Economic Development Agency. Their investments have allowed a large number of mineral-related research projects to take place over the past decade. It’s also important to acknowledge the programs currently being conducted by the Geological Survey of Canada, a federal research organization. Their Geoscience for Energy and Minerals (GEM) program is the largest of these and is focused on addressing geoscience knowledge gaps in northern Canada. The GEM program is yielding a lot of valuable new information.