AK, Canada's North shine in mining survey
Rich mineral potential offsets northern mining policy issues North of 60 Mining News – March 8, 2019
Last updated 9/25/2020 at 2:16pm
When it comes to attracting mining investment, Alaska, British Columbia and all three Canadian territories rank among the top 20 jurisdictions in the world on the Fraser Institute Survey of Mining Companies 2018.
This report asks industry professionals from around the globe to score mining jurisdictions based on their mineral endowment and various policy topics important to mining.
"The mining survey-now in its 21st year-is the most comprehensive report card on government policy decisions that either attract or scare away investors from around the world," said Kenneth Green, chair of Fraser Institute's energy and environmental studies and co-author of the report.
The five jurisdictions covered by North of 60 Mining News all moved up in ranking this year. Three of these jurisdictions landed among the top ten most attractive places on Earth to invest in mining – Alaska (5), Yukon (9) and Northwest Territories (10) – and two made the top 20 – Nunavut (15) and B.C. (18).
The most attractive place on Earth for mining investment, according to the mining executives that participated in the survey, is Nevada.
This American Southwest jurisdiction ranked high in both mining policy, second only to the Canadian province of Saskatchewan, and mineral potential, where Nevada is considered to cover the richest mineral real estate on Earth.
It is this balance of attractive mining policy and rich mineral endowment that has kept Nevada in the top five on Fraser Institute's Investment Attractiveness Index, a measure of both, for at least a decade.
Western Australia, Saskatchewan, Quebec and Alaska round out the top five on the 2018 Investment Attractiveness Index.
The bottom of this list was dominated by Latin American countries – Venezuela (83), the Argentina province of Neuquén (82), Nicaragua (81), Guatemala (80) and Panama (79) – that are rich in minerals but poor in mining policy.
"The evidence is clear-mineral deposits alone are not enough to attract precious commodity investment dollars," said Ashley Stedman, a senior policy analyst at the Fraser Institute and study co-author. "A sound regulatory regime coupled with competitive fiscal policies is key to making a jurisdiction attractive in the eyes of mining investors."
Rich in minerals, average policies
On the mineral potential side of the equation, North of 60 Mining News' jurisdictions are considered among the richest on the planet.
In its annual survey, the Fraser Institute asks mining executives to set aside any policy considerations and provide their views of the pure geological endowment of the global mining jurisdictions.
Alaska always ranks highly on this part of the survey, dubbed the Best Practices Mineral Potential Index, and 2018 was no different. Respondents to the Fraser Survey ranked Alaska as third richest mineral province on Earth, behind Nevada and Western Australia.
Alaska was followed closely by its northern Canadian neighbors Northwest Territories (fourth); Nunavut (fifth); Yukon (10th); and British Columbia (13th).
Middle of the road mining policy, however, weighs on overall investment attractiveness in all these jurisdictions.
Yukon ranked 24th on the "Policy Perception Index" section of the Fraser survey, a compilation of responses on a broad range of policy topics important to miners.
Alaska (26th); Northwest Territories (42nd); British Columbia (44th); and Nunavut (45th) round out the policy rankings of the regions covered in Mining News.
The biggest policy-related issues for Alaska and the Canadian territories is infrastructure or, more accurately, the lack thereof.
Mining executives ranked Yukon's infrastructure at 51st. While well into the bottom half of the 83 world mining jurisdictions included in the 2018 Fraser Institute mining survey, this is still a much better grade than Alaska (61st); Northwest Territories (64th); and Nunavut (78th).
Roads into Canada's North
The lack of roads, ports, power and telecommunications north of the 60th parallel in Canada dominated discussions at an annual gathering of energy and mining ministers, held last August in Iqaluit, Nunavut.
"Our opportunities are hindered by infrastructure, the lack of fiber, the lack of roads. These are various things that helped develop the country east to west. Canada needs to focus up North, be it Yukon, NWT or Nunavut," said David Akeeagok, Nunavut's minister of economic development and transportation.
This sentiment is echoed by Northwest Territories Premier Bob McLeod, who believes building infrastructure into Canada's Last Frontier is advantageous to all Canadians.
"Roads and pipelines into the North are not just northern projects. They benefit our country as a whole," he said.
In recent years, the federal government has been heeding the call for improvements to infrastructure into its territories.
In 2017, Ottawa pledged C$247.8 million to the Yukon Resource Gateway project, a program that will upgrade more than 650 kilometers of roads; and build or replace numerous bridges, culverts, and stream crossings in two minerals-rich regions of the territory.
"Modern infrastructure is key to developing and properly managing the incredible natural resources we have at our fingertips," Prime Minister Justin Trudeau said during a visit to the Yukon to introduce the transportation plan.
The federal government is also putting money towards the construction of the Tlicho All-Season Road, a 97-kilometer (60 miles) gravel road that will extend from Highway 3 to the Northwest Territories community of Whati.
This road extends into a mineral-rich region on Northwest Territories.
Fortune Minerals Ltd.'s proposed Nico cobalt-gold-bismuth-copper mine and Nighthawk Gold Corp.'s Indin Lake gold property are two projects that could benefit from the Tlicho Road.
The Canadian federal government is providing up to 25 percent of the C$213.8 million needed to build this road, Northwest Territories is funding the balance through a private public partnership structure.
On March 4, the Canadian Northern Economic Development Agency committed C$2.7 for preliminary work on the Slave Geological Corridor, an infrastructure project that would provide better access to the region where the Northwest Territories' three operating diamond mines are located.
This is part of a C$5.1 million investment that also includes funding for aerial geophysical surveys of the diamond-rich Slave Geological Province.
"Knowing where mineral deposits exist and being able to access them is the first step in attracting investment and growing the resource development sector," said Canada Minister of Innovation Science and Economic Development Navdeep Bains. "We know that similar projects in NWT in the past have led to significant economic development activity."
Ottawa, however, rejected a big infrastructure project in Nunavut.
The proposed Grays Bay Port and Road Project would construct a 227-kilometer (141 miles) all-season road to connect a proposed deep-water port at Grays Bay on the northwestern shore of mainland Nunavut to an existing winter road that services Northwest Territories' diamond mines.
Estimated to cost roughly C$527 million, the project would provide direct and relatively economical access to one of the most mineral-rich areas in both territories.
Saying the infrastructure project fell outside of funding guidelines, Transport Canada rejected a request for 75 percent of funds needed to construct the Grays Bay facilities in 2018.
Roads to Alaska resources
In Alaska, new road development to mineral-rich areas rests largely on the Alaska Industrial Development and Export Authority, or AIDEA, a public corporation established by state legislators in 1967 to create jobs and bolster Alaska's economy.
The Delong Mountain Transportation System, a 52-mile road and port facilities constructed in the 1980s to deliver zinc mined at Red Dog to world markets, is among the most successful AIDEA- funded project to date and a model for future partnerships.
Following the same model that has proven so successful for Red Dog, AIDEA is now advancing a 211-mile road that would connect the Ambler Mining District to world markets.
This extremely metals rich area of Norwest Alaska Arctic hosts the Upper Kobuk Mineral Projects, a large land package being developed by Trilogy Metals Inc., South32 Ltd. and NANA Regional Corporation.
Trilogy and AIDEA entered into a memorandum of understanding in 2015 that paves the way for the development authority to investigate various ways to fund the construction and maintenance of the Ambler Road and create the framework by which the estimated US$300 million investment to build the road would be paid back from mines developed at its terminus.
Former Alaska Gov. Sean Parnell proposed an ambitious infrastructure endeavor known as Roads to Resources, which included plans to build three roads that would extend westward into a resource-rich area of Alaska about twice the size of California.
The Ambler Road was one of these projects. Surface access across the metals-rich region between Alaska's system and Nome was another.
At the time of this proposal, however, oil prices were around US$100 per barrel and state coffers were flush. Over the ensuing years, the price of crude fell and the road to Nome was never completed.
Due to being funded by AIDEA, coupled with being an investment with a tangible payback from future mines, investigations into building the road to the Ambler Mining District continues to move forward and the industrial access project is well into permitting.
Unpredictable B.C. permitting
Closer to the beaten path, British Columbia's infrastructure is ranked 34th, much higher than its northern neighbor.
In recent years, northern B.C. has enjoyed major infrastructure upgrades, including the 287-kilovolt Northwest Transmission Line, which is delivering industrial grade electricity into the heart of the legendary Golden Triangle region.
This power, coupled with decent highway access bisecting the mineral-rich northern half of B.C., has played a major role in the province attracting large amounts of mineral exploration and mine development investments in recent years.
While B.C. scores very well on infrastructure and mineral endowment, the province received disturbingly low grades on topics related to mining regulations.
When asked about certainty of mining regulations, mining executives ranked B.C. 71st out of the 83 global jurisdictions.
By comparison, Nunavut ranked 50th, Alaska 46th, Northwest Territories 41st and Yukon 30th.
Likewise, British Columbia came in at 64th when it comes to administering and enforcing the environmental laws on the books.
"Permitting process is unpredictable because it can be easily impeded by various groups," said the vice president of an exploration company on working in B.C.
Another exploration company president, kept anonymous due to the rules of the survey, shined further light on these difficulties.
"Rules around Indigenous consultation and environmental regulations are unclear and this deters investment," he inked in his comments on the province.
Nunavut came in 55th, Northwest Territories 47th, Alaska 25th and Yukon 17th on the topic of administration and enforcement of existing regulations.
The dim view of Indigenous consultation in B.C. was reflected in the province's No. 67 rank when it comes to certainty concerning disputed land claims.
Settled land claims helps define the rules of engagement with the peoples that have called a region home for generations and provides more certainty when it comes to land management and resource development,
While Yukon (52nd), Northwest Territories (44th) and Nunavut (36th) have room for improvement, all three territories fared substantially better than B.C. on this topic.
At 17th, Alaska ranks above all Canadian jurisdictions when it comes to land claims.
Aussies, majors look North of 60
While the North of 60 Mining News jurisdictions all have policies that can be improved, their rich minerals endowment continues to make them attractive places to invest in.
Despite Western Australia being the second most attractive mining region on the Fraser Survey, many Aussie mining companies are looking North to Alaska.
At least four Aussie juniors – White Rock Minerals Ltd., PolarX Ltd., Nova Minerals Ltd. and Riversgold Ltd. – and three Australia-based metals producers – South32 Ltd., Northern Star Resources Ltd. and Sandfire Resources NL – invested in Alaska's rich mineral potential in 2018.
"Alaska certainly has got the attention of Australia and Australian investors...it is certainly the land of giant deposits," Frazer Tabeart, managing director of PolarX told Kitco News during a July interview.
In August, the Perth-based miner agreed to pay US$260 million to buy out Sumitomo Metal Mining Pogo, a joint venture between Japanese firms Sumitomo Metal Mining Company (85 percent) and Sumitomo Corp. (15 percent) that owned and operated the gold mine.
Northern Star Executive Chairman Bill Beament said the acquisition of Pogo was made even more compelling by the fact that this operation is in Alaska, a jurisdiction that ranks in the top 10 for investment attractiveness and top five for mineral potential in the Fraser Institute Annual Survey of Mining Companies.
"Alaska is simply one of the great mining jurisdictions of the world," he told analysts and investors on Aug. 30.
A sentiment the other Australian minerals companies have shared with North of 60 Mining News.
It has been North American majors that have taken an interest in the Yukon.
Over the past five years at least five major gold producers – Barrick Gold Corp., Newmont Mining Corp., Goldcorp Inc., Kinross Gold Corp. and Agnico Eagle Mines Ltd. – have invested heavily in the westernmost territory.
Agnico Eagle is particularly keen on investing in the North, especially Nunavut.
The mining company first moved into Nunavut when it acquired the Meadowbank Mine roughly a decade ago. While this first operation is now winding down, the expanding gold producer is currently opening two new mines in the territory.
"We see tremendous potential there and this is an inflection point and a turning point in the future of Agnico as we are opening up a brand-new area where we see tremendous exploration potential, combined with the ability to do business and build new mines," Agnico Eagle Mines President and CEO Sean Boyd commented on the company's Nunavut platform.
It is this tremendous mineral potential that extends across the North that firmly places Canada and the United States' last frontiers at the top of the Fraser Institute Annual Survey of Mining Companies 2018.
New mines, building infrastructure and addressing other policy issues could push the North of 60 Mining jurisdictions even higher on future surveys.