North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Geo-political differences aside, the challenges facing those involved in mineral development in the North are remarkably similar. Whether lack of infrastructure, scarcity of skilled labor, or negative perceptions of mining, northern jurisdictions from Alaska to Greenland grapple daily with same aspects of issues created by their location in the Arctic.

This uniformity of concerns brought together about 150 participants in the inaugural Northern Regions Mining Summit in Vancouver May 28-30. Facilitated by Alaska's Institute of the North and sponsored by Alaska Native regional organizations and Canadian mining companies, the gathering highlighted issues faced by northern indigenous communities, especially those located near substantial mineral resources.

The goal of the summit was to foster meaningful conversations and idea-sharing between Alaska, Canada's three territories - Northwest Territories, Nunavut and Yukon Territory - Greenland and other Arctic jurisdictions in hopes of identifying effective strategies for sustainable development.

"We hope to develop a recipe for northern mining success," that includes effective governance, sustainable communities and social license and commercial reality, said Nils Andreassen, who opened proceedings at the three-day conference.

Featuring a participatory agenda with notables from each jurisdiction, as well as representatives of British Columbia and the governments of Canada and the United States, the summit drew speakers from across North America's Arctic, from the Bering Strait to the Kane Basin.

Presenters outlined problems faced by the various jurisdictions and the strategies employed to find solutions.

In addition to identifying conclusions drawn from outcome-oriented discussions during three days of presentations and working sessions, the summit's organizers reported that plans are already underway to hold the next summit in 2016 in Finland.

Fiscal challenges in Alaska

In Alaska, enormous economic difficulties loom as the state's oil production approaches a quarter century of decline. Mining companies and others who do business in the Far North state, must grapple with a tough fiscal environment, according to Institute Chairwoman Drue Pearce, senior policy advisor for Crowell & Moring LLP.

Bud Cribley, state director of the federal Bureau of Land Management, said the BLM as administrator of 78 million acres of federal land in Alaska, including 18 million acres currently available for mineral staking, is facing one of its most significant decisions - which of its other lands will be opened for mineral development and to provide access to mineral claims via roads and rights of way.

"It's very important for us to be a player up there and to be a help to mineral development," Cribley said.

BLM might play a role, for example, in solving the problems that have arisen recently with Alaska's "Roads to Resources" program, such as the proposals to build access roads to remote areas of Alaska.

"Everyone assumed (the proposals) would be embraced uniformly, but not so. The state has encountered significant pushback" from Alaska Native organizations, Cribley said

He said another example is the Donlin Mine, a 40-million-plus gold project currently being developed in western Alaska that "has flown under the radar and not garnered a lot of controversy."

"This project will provide access to Yukon-Kuskokwim villages, and this is viewed as being good for jobs (and the local economy) but bad to open those areas to the outside. It will present significant challenges," he added.

Geologically, Alaska is home to vast mineral riches. The state comprises only 1 percent of the global land mass but it is believed to host 8 percent of the world's gold; 2 percent of its silver; 4 percent, copper; 3 percent, lead; 5 percent, zinc; and more than 15 percent, coal, according to Steve Masterman, acting chief geologist and director of the Alaska Division of Geological and Geophysical Surveys.

In addition, Alaska comprises 20 percent of the land mass of the United States, but currently accounts for only 5 percent of the nation's mineral production, Masterman added.

Alaska's challenges include remote areas (remoteness affects the grade and size of deposits for development); negative perceptions about mine permitting in the state; poorly mapped; and lack of basic data which increases costs.

"Having a better public map database will help," Masterman said. "16 percent of the state is mapped adequately. At the current rate of mapping, it will take 400 years to complete an adequate map for Alaska."

He also said geophysical surveys have been completed on 4 percent of Alaska since the state started surveying in 1992.

Another challenge facing Alaska's six operating mines is an 18-20 percent turnover rate among workers.

The University of Alaska Fairbanks is attempting to address with this problem through various training programs, said William Bieber, executive director of UAF's Mining and Petroleum Training Service.

Overcoming remote geography

Canada's three northern territories have 113,000 residents, half of whom are aboriginal. The region boasts eight operating mines, 35 projects representing $27 billion in capital investment and more than 25,000 potential direct and indirect jobs are currently in regulatory assessment.

Describing the region as the world's treasure chest, Mitch Blum, vice president of the Canadian Northern Economic Development Agency, said it's the job of his agency to encourage this development activity in the region, and toward this end, CanNor helps to fund numerous programs, everything from geoscience to idea development, adult education.

"All federal resource development projects and programs for the North go through us, and the key to our success is we live and die on our partnerships," he said.

Blum said tough capital markets and high environmental standards have combined to make mineral development in Canada's north very costly. "But if was easy, we'd already be there," he observed.

Rick Van Nieuwenhuyse, president and CEO of NovaCopper, said projects in the north are twice as costly as similar projects in the south if they are located near infrastructure and triple as costly if they are remote.

Since most companies can't afford to develop a project on their own, they must seek partners. But instead of spending the balance sheet, Van Nieuwenhuyse said developers should use their own money as a backstop to attract funds from other sources, especially equity markets.

Mining companies are finding ways to cope with the tough markets. "We've noticed a bit of a shift - the trend to right-size projects for industry, the environment and the community, which brings the capital requirement for development down and the value of projects up," Blum said. Examples of this trend include the Hope Bay gold project in western Nunavut and the Mary River iron project on Baffin Island, Nunavut.

While Northwest Territories is currently implementing devolution, which will transfer authority for mineral resource development decisions to territorial control, the process is slow and labor-intensive, said Anja Jeffrey, director of the Centre for the North, a unit of the Conference Board of Canada.

The territory, which has lagged its northern neighbors in the pace of mineral development in recent years, has four mines in operation.

Jeffrey said the NWT's challenges include an inability to attract new residents, along with net out-migration. Like Yukon Territory and Nunavut, the NWT also must cope with low commodity prices, public policy issues, lack of infrastructure and an enduring skilled labor shortage.

She noted that Nunavut recently made its first foray in the bond market to secured funding for construction of a new airport in Iqaluit, the territory's capital.

"We have a northern strategy, but we don't have a comprehensive plan for the North," Jeffrey said. "There is no doubt that the future lies in the North, but the question is how we're going to go about it."

David Mate, chief geologist of the Nunavut Geoscience Office in Natural Resources Canada, said public geoscience targets underexplored areas to encourage industry investment. The Canadian government, mindful that every dollar invested in geoscience attracts $5 in industry investment, has implemented two five-year geological mapping programs, GEM and GEM-2, which each were funded with C$100 million in recent years.

"GEM science defines the haystacks so industry can find the needles," Mate said, describing the purpose of the programs. GEM-2 was announced by the Harper government in August 2013.

Encouraging mine development across the Far North will require new infrastructure and additional sources of power as well as leaders who can draw on the lessons of the past to create new solutions.

"The traditional public-private partnerships for develop infrastructure projects won't work. They won't stand up to a cost-benefit analysis," said Robyn McGregor, vice president of arctic transportation for Canadian consultant Tetra Tech/EBA. "But we have the opportunity to come up with a new model."

Matt Ganley, vice president of lands and resources for Alaska's Bering Straits Native Corp., said phased infrastructure development will be needed to move forward in the North.

"I think right-sizing projects is critical," he said.

Other factors such as global warming also will affect future mine development.

"Global warming has increased the unpredictability of shipping through the Arctic," said Dermot Loughnane of Tactical Marine Solutions. "There is more variability than there was 20 years ago."

The Bering Strait, meanwhile, is becoming a looming traffic concern, especially for Russia and the United States, said Jack Colonell, Ph. D., a principal of Environ, Alaska.

Solving the training riddle

Greenland's big hurdle to successful mineral development is human resources. The world's largest island with an area covering 2,166,086 square kilometers (836,109 square miles) is located east of Nunavut between the Arctic and Atlantic oceans. The least densely populated country in the world, Greenland has 57,000 residents, including 25,000 unskilled workers in a total labor force of 35,000.

The autonomous country within the Kingdom of Denmark considers adult education and training one of its top priorities.

Hans Hinrichsen, general manager of the Greenland School of Minerals and Petroleum, said some 255 people have received common core mine training in recent years and some have gone on to acquire specialized skills, including operating heavy machinery.

Though Greenland has no operating mines, some graduates have transitioned into jobs in the oil and gas industry, while others work on mineral exploration and development projects.

On May 30, the Government of Greenland, however, formally approved an exploitation and closure plan, and impact benefit agreement submitted by True North Gems for the Fiskenaesset Ruby Project, which is located on the southwest coast of Greenland, about 160 kilometers (99 miles) south of the capital Nuuk.

The school is currently planning to build a facility to train underground miners and trying to develop more specialized courses, Hinrichsen said.

In 2013, the school also teamed with Nunavut to conduct a joint education program, an initiative that met with significant success, he added.

Similar education programs across the North have met with varying degrees of success. In Northwest Territories, the Mine Training Society has met with a 90 percent success rate in its underground mine training program, which attracts 30 percent participation by women, according to General Manager Hilary Jones.

In northwestern British Columbia, Northwest Community College has 1,300 students from 186 communities across Canada. Seventy percent of the student body is aboriginal and two-thirds come from northern British Columbia.

Tiell Glover, coordinator of the college's highly successful School of Exploration & Mining, said the biggest challenge the program has faced is funding. "We've been able to secure more than C$18 million over the past 10 years," she added.

Jones said the biggest challenge facing the training effort in Northwest Territories is removing the barriers created by the difficulties of youth.

Yukon Territory, on the other hand, is coping with phenomenal dropout rates in schools, according to Shelagh Rowles of the Center for Northern Mining Innovation at Yukon College.

The Yukon Centre teamed up with Alaska's MAPTS and others in 2013 to conduct a pilot training program in underground mining at the 100-acre Delta Mine Training Centre in Delta Junction, Alaska.

Bieber said the pilot program, which trained seven new underground miners from Yukon, has exceeded his expectations. He said the incredibly competent students graduated with 20 hours seat time in the underground equipment they will use on the job.

All of the northern jurisdictions could benefit from more joint training initiatives, and developing common standards for training and safety.

Hinrichsen said this commonality would help with retention of trained mine workers in the North.

The Yukon's Rowles said the North needs more opportunities to share instructional resources, such as providing year-round employment for highly specialized mine skills instructors by sharing their services across jurisdictions.