Mineral production in the Northwest Territories passed the $2-billion mark in 2017, according to preliminary estimates from Natural Resources Canada, but exploration appears to be declining.

Jessica Davey-Quantick/NNSL photo
Gahcho Kue Mine exceeded its production target for 2015.

The federal department projects the total value of NWT mineral production in 2017 was $2.07 billion, up 30 per cent from $1.507 billion in 2016.

However, federal estimates show the value of exploration in the territory dropped to $64.4 million in 2017 from $66.5 million in 2016, and from $100.9 million in 2015.

Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines, said part of the reason for the rise in production is the De Beers/Mountain Province owned Gahcho Kue Mine recently came online and produced more than five million carats in the first 10 months of 2017, which exceeded target production.

It’s unclear exactly how much the territory will benefit from higher mineral production, he said.

“If the $2 billion actually reflects more profits, than we could expect to see some royalties,” Hoefer said Tuesday. “My fear is that it that might not.”

At issue he said, is the price of diamonds, which has remained relatively flat.

“It’s not as strong as everybody would want it to be,” said Hoefer, adding that it is difficult to project how increased production in 2017 will impact the economy before the territorial government does its taxes.

The vast majority of the NWT’s mineral production value comes from diamond mining, with $10.5 million coming from sand, gravel and stone production.

According to 2018 budget documents, the GNWT expects mining royalties to drop 54 per cent, from $35 million in 2017-18, to $16 million in 2018-19.

In February, Finance Minister Robert C. McLeod attributed declining royalties to mining companies writing off the costs of building mines against their profits.

McLeod said royalties are expected to rise in 2019-20.

Hoefer said a number of factors led to less exploration in the territory.

For one, large portions of the territory have been blocked from exploration due to unsettled land claims, and the withdrawal of about 33,000 square kilometres of land for study as part of the proposed Thaidene Nene National Park Reserve.

“One of the secrets to exploration success is being able to go on the land,” said Hoefer. “If you have no land to explore, you’re not going to find anything.”

Hoefer said potential investors are concerned about unsettled land claims because they, “don’t know who the landlord is.”

Taken together, these factors create a climate of uncertainty that scares away exploration companies, he said.

“Money is a coward and money goes where it’s kind of safe, so they took their money to other jurisdictions,” said Hoefer.

He applauded the government for marketing the territory at events like the Annual Mineral Exploration Roundup.
“That’s very good to go out and tell investors, ‘Hey, come on up, we’re open for business,’” he said. “But what you have to be doing at the same time is back at home, you have to be working with everybody involved to try and actually make it better so there’s no more surprises.”

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