Some mining companies say long waits for permits, a lack of infrastructure, and uncertainty around regulations, land claims, and protected areas are discouraging investment in the NWT.
Think tank the Fraser Institute’s 2021 survey of mining companies, published last month, aims to assess how factors like geology, taxation and regulations affect exploration investment around the world.
The Fraser Institute said it received 290 responses for the survey, including 10 for the NWT, though most questions received fewer than 10 responses related to the territory.
The report found Canada to be the second most attractive country for mining in the world, behind Australia. Among Canadian provinces and territories, ratings varied.
In terms of overall attractiveness, the NWT was ranked 35th of 84 global jurisdictions around the globe and 10th in Canada among 12 provinces and territories. Based on policy alone, the territory came in 59th place internationally, while it was ranked 25th based solely on mineral potential.
Comparatively, the Yukon was ranked the ninth most attractive mining location in the world and third in Canada, while Nunavut came in 28th place globally and seventh nationally.
Across Canada, senior mining executives said uncertainty around protected areas, disputed land claims and environmental regulations were the main areas negatively affecting investment. Survey results also indicated permit approval times were getting worse in many Canadian provinces and territories.
‘Major areas of concern’
In the NWT, not many companies with experience of operating in the territory filled out the survey – but enough for the Fraser Institute to draw conclusions. The length of time to obtain permits for exploration activities was particularly of concern, the institute said.
The territory was the only jurisdiction in Canada where no mining companies – of five to nine responding – said they were able to get the necessary permits in two months or less, compared to a national average of 27 percent. A third of respondents (either two or three companies – the institute did not specify) said they were “not at all confident” they would eventually be granted exploration permits in the territory at all, making the NWT and Manitoba the lowest-performing jurisdictions in Canada by that measure.
Two respondents out of six said the territory met its own established deadlines for permit decisions only half of the time, while another two said the NWT rarely met those timelines. Four out of six respondents said permit approval times in the territory had increased over the past 10 years.
“Regulatory duplication and inconsistencies, coupled with a lack of collaboration from regulatory authorities, are major areas of concern for investors,” the report stated one unnamed manager of a mining company had commented about the NWT.
Other areas of concern reported in the territory included uncertainty around protected areas (the NWT ranked 80th out of 84 jurisdictions on this measure), disputed land claims (74th), the quality of infrastructure (69th), uncertainty regarding the administration, interpretation and enforcement of regulations (65th), regulatory duplication and inconsistencies (63rd), and the availability of skilled labour (62nd).
Factors reported to make the NWT a more attractive location for exploration investment included the lack of trade barriers (13th), the taxation regime (21st), political stability (28th), and security (33rd).
GNWT ‘takes report seriously’
In a written statement to Cabin Radio, the NWT’s Department of Industry, Tourism and Investment said the territorial government takes the report “seriously” and the opinions expressed “underscore the need” for “solid and responsive legislation.”
“The report results mean we need to continue to tell the story of our competitive edge and strengths to those investing in and exploring for minerals across the globe,” the statement read.
“It also means we need to continue to incentivize exploration so we can secure our minerals future … while being responsive to the needs of mineral exploration projects that range from grassroots to advanced.”
The department said the benefits of investing in the territory include co-management principles, settled land claims, partnerships with Indigenous governments, planned infrastructure investments, and the mining incentive program.
ITI added the territory is “one of the world leaders” in applying environment, social, governance and Indigenous principles, and pointed out that Canada’s first critical minerals mine is located in the NWT.
The department said it had “not been idle” in addressing concerns outlined in the report, highlighting work under way to review the territory’s royalty regime and improve regulations under the NWT’s Mineral Resources Act.
How the NWT performed in 2021
Mining, oil and gas, and exploration provide thousands of jobs in the NWT, directly or indirectly. The sector is the largest contributor to the territory’s economy.
In its latest assessment of mineral exploration, Natural Resources Canada projected exploration spending in the NWT would rise to $41.5 million in 2021, a 47-percent increase from 2020 but still 30 percent lower than 2019.
Over the past year, 15 companies were actively mining in the territory, 68 new claims were staked and there were 20 active prospecting permits. The Gahcho Kué diamond mine produced 6.23 million carats in 2021, while Diavik produced 5.84 million. (Operations at the Ekati diamond mine were suspended for most of the year.)
“We are building on the history of exploration, proven geoscience and mining success that has been realized to take our mineral resources potential to the next level,” industry minister Caroline Wawzonek said in a statement.
“Thanks to our resource-rich geology and our unique and truly collaborative model for exploration and development, the NWT has an important opportunity to position itself on the supply chain for diamonds, gold and critical minerals while earning high grades for environmental, social and governance performance.”
Diamond mines in the NWT are ageing. Diavik is expected to end operations in 2025, Gahcho Kué in 2030, and Ekati – Canada’s first diamond mine – hopes to continue into the 2030s having just been granted permission to start a new open pit.
The gradual closure of those mines is expected to have far-reaching impacts on communities, affecting employment, population levels and revenue.
The territory is looking to other potential mining projects to help bolster the economy, with a particular focus on critical minerals.
The Nechalacho mine – Canada’s first rare earth elements mine, located around 100 kilometres east of Yellowknife – began operating seasonally in 2021. The owners of Nico, a proposed cobalt, gold, bismuth and copper mine in the Tłı̨chǫ region, hope to begin production by 2025.
There are plans to mine for silver, zinc and lead at the proposed Prairie Creek mine in the Dehcho, and resume mining for zinc and lead at the former Pine Point mine in the South Slave.
Junior mining company Gold Terra, meanwhile, is working to revive gold mining outside Yellowknife, though any new gold mine remains years away.