Seeking the next big mine
Mining Symposium speakers show costs will be high
NNSL (Mar 01/99) - When it comes to early digging in the Arctic, history shows explorer Sir Martin Frobisher paid an embarrassing price for his mining efforts.
In the 1500s, Frobisher, seeking the Northwest Passage, twice took back ore thought to contain gold.
The rock turned out to be worthless. Frobisher's patron Michael Lok was ruined.
And so the first big bucks were spent on mining in what is now Nunavut. Who knows how much this unfortunate mining blunder cost. Today, mining figures are a bit easier to come by.
Economic Development's senior minerals advisor Bernard MacIsaac in Iqaluit says in 1997, mining in Nunavut generated revenues of $387 million and employed 958 people. Last year's numbers will be lower due to the mothballing of Lupin mine.
And the cost of mining in the North remains expensive.
Bob Jacko, Cominco's general manager of Northern operations, offers up some figures to illustrate the North's expensive conditions.
Jacko, as well as MacIsaac, were among speakers at the Nunavut Mining Symposium held Feb. 25-27 in Iqaluit.
Polaris' ore recovery plant cost $7 million to build. Down south, that same structure would have be constructed for $450,000, Jacko said.
At Polaris, one tonne of cement costs $110 while at the Sullivan mine in B.C., that same cement costs $23. Polaris burns through 9,000 one-tonne bags of cement each year. It takes $110 a tonne to bring in chemicals while at Sullivan, it costs $50 a tonne, he adds.
Overall, transporting 50 kilograms to Polaris costs $252 compared to Sullivan's $20 for that same quantity of goods, Jacko said.
Mirroring the high financial costs, are some big numbers on the employment side.
On staffing, Cominco, which owns the Polaris mine on Little Cornwallis Island, "feels there is a factor of three on cost for people," Jacko said.
Citing a Resources, Wildlife and Economic Development report, Jacko also said 30 per cent of Resolute's residents are employed in mining activity.
"Resolute has one of the highest rates of average income and the second lowest unemployment rate in the region," he said.
Social assistance between 1981 and 1994 has gone down 29 per cent, he adds.
Jacko also cited employment figures linked to the mines operation.
In 1981, the Inuit employment rate in Resolute was 34 per cent. Some 22 per cent were unemployed and 44 per cent were casual.
By 1994, the Inuit employment rate jumped to 73 per cent while the unemployment rate was 13 per cent and 14 per cent of the community's Inuit had casual employment, he said.
Polaris, which went into production in 1982, currently has an estimated life of about two years.
Jacko was not the only speaker who pointed to the dramatic numbers associated with mining in the North.
It takes "50 per cent more capital to build a project in the Arctic," Mervyn Hempenstall, Nuna Logistics president and chief operating officer, said.
"Working capital is one item that killed most marginal projects in the North."
For equipment, mine builders will need to eat big equipment costs. Mining equipment will sit at the site for three years but only be used for six to eight months.
Hauling fuel to the Lupin mine hikes the cost by 21 cents a litre.
The proposed Bathurst Inlet port and connecting road system would cut Lupin's fuel costs by 19 cents a litre, Hempenstall said. Nuna Logistics continues to promote the proposed port and ice road system.
When BHP has to fly fuel in to the Ekati diamond mine, the cost of fuel doubles from 50 cents a litre to $1 a litre, Hempenstall said.
Without an all-weather road, the need for storage space doubles, Hempenstall also said.
"In Nunavut, forget an ice road from the south. You're going to have to come in by sea...ship in summer and build the (linking) ice road in winter," he said.
Nuna Logistics, 51 per cent Inuit owned (26 per cent by Nunasi and 25 per cent by the Kitikmeot Corp.), has been involved in numerous operations in the North. The company built BHP's 600-metre runway at Ekati and pre-stripped the mine site. Nuna Logistics also builds the Lupin ice road for Echo Bay Mines. The company is a big promoter of the proposed Bathurst Inlet port and road system.
Hempenstall also noted diamond developments have opened up along the Lupin ice road.
"I don't think it's a coincidence. You can never say enough about what infrastructure can do for the Arctic. The ice road allowed for more exploration."