Editor’s note: This is the first in a two-part series on the implications of a potential sale of TMAC Resources, operators of the Hope Bay gold mine.
TMAC Resources is promoting the long-term advantages of selling its assets, including the Hope Bay gold mine, to China’s Shandong Gold Mining amid the unpredictability of Covid-19 and uncertainty over the federal government and the Kitikmeot Inuit Association’s stance on the pending transaction.
Several mine workers at Hope Bay tested positive for the coronavirus in late September and the company subsequently imposed a temporary travel embargo.
TMAC shareholders approved the $149 million (U.S.) sale to Shandong in June, but the Government of Canada still must decide whether a national security review is required. The Kitikmeot Inuit Association reiterated on Sept. 28 that it will not comment on the status of Hope Bay until the federal government has announced its decision.
A TMAC news release on Aug. 13 stated that Ottawa extended its timeline until Oct. 19 to determine whether a national security review is in order. However, a statement from Innovation, Science and Economic Development Canada on Sept. 28 said the government cannot provide specific details of individual transactions “due to confidentiality provisions.”
The federal department, however, included a reference to an April 18 Government of Canada policy statement that indicated Ottawa “will subject certain foreign investments into Canada to enhanced scrutiny under the Investment Canada Act,” including all foreign investments by state-owned investors.
Shandong is partly owned by the Chinese state.
At the territorial level, the Government of Nunavut has provided conditional support for the sale.
David Akeeagok, minister responsible for mines, said in the legislative assembly on Sept 22: “As long as the proponent (Shandong) respects and honours what the terms and conditions are for the environmental reviews that have taken place and the Inuit Impact Benefits Agreement, that is the support that we are giving to the company.”
Although the GN has made a formal submission to the Government of Canada on the potential purchase, that correspondence hasn’t been prepared for tabling in the legislative assembly for MLAs or the general public to view, Akeeagok noted.
He added that the GN has worked closely with the Kitikmeot Inuit Association, which is doing its own due diligence. Any business that’s going to be working in the region will be expected to “honour a number of key things. Inuit employment is one, the Inuit Impact Benefit Agreements are another, and also that they respect our environment and the regulatory regime that we do have in place,” the minister said.
Those assurances were made last week by representatives of the parties involved in the pending transaction. Alex Buchan, TMAC’s vice-president of corporate social responsibility, and Mark Wall, CEO of Streamers Gold, a Canadian subsidiary of Shandong, said TMAC doesn’t have the money to expand operations at Hope Bay, which is necessary to make the site economically feasible. A sale therefore became necessary. Shandong was the only company interested in keeping Doris North as an operating mine on the 1,100-square-km Hope Bay property. To achieve that, the Chinese entity is willing to invest close to $700,000 million to further develop Hope Bay, and that could rise to closer to $1 billion in the future, according to Wall.
As the production of gold grows at Hope Bay – potentially doubling – so too will the royalty payments to the Kitikmeot Inuit Association and Nunavut Tunngavik Incorporated, as well as the taxes paid, said Wall. The number of jobs will also rise.
Hope Bay, where first gold was achieved in February 2017, was the largest private employer in the Kitikmeot region prior to the onset of the pandemic. However, the number of workers at the Doris North camp fell to approximately 140 at the end of the second quarter of 2020.
At its peak in 2019, Hope Bay provided work for 70 full-time equivalent Inuit employees, according to Buchan.
“We have a very desperate need of wages, of investment in our region as we are socio-economically the most disadvantaged part of the Nunavut territory here in the west,” he said.
Next week: Trying to allay suspicions about China