Editorial: Making the case for subsidizing Arctic work -Editorial (Northern Miner – May 28, 2015)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

Five industry groups focused on mining and mineral exploration in northern Canada have produced a timely report that quantifies the extra costs of carrying out work in Canada’s remote Arctic and sub-Arctic areas, and makes recommendations on how various levels of government can encourage mining activity in these places.

Called Levelling the playing field: Supporting mineral exploration and mining in remote and northern Canada, the report was produced by the Association of Consulting Engineering Companies Canada, the Mining Association of Canada, the Northwest Territories and Nunavut Chamber of Mines, the Prospectors & Developers Association of Canada and the Yukon Chamber of Mines.

They describe a “hefty cost premium” associated with working in remote and northern parts of Canada, and the challenges that industries in southern Canada don’t have to face: remoteness, severe weather, undeveloped infrastructure, and in many cases, sparse or no populations for hundreds of kilometres.

The main — and not particularly surprising — finding, backed up by empirical evidence, is that the “cost premium for both exploration and mining is directly linked to the transportation deficit” in remote and northern Canada, and that the “primary driver of cost variation was the distance of a project from the transportation infrastructure required to service the needs of the project.” (A “remote project” is defined in the report as one that’s more than 50 km from a transportation route or supply centre. “Very remote” ones are more than 500 km.)

Here’s where it gets interesting: using all-in costs for diamond drilling to represent overall costs, the average costs of the remote and very remote projects were 2.27 times more expensive than those of the non-remote projects; the average costs of the very remote projects were, on average, 2.8 times higher than the non-remote ones; and the highest-cost project, obtained from a venture in the Arctic, was almost six times that of the lowest-cost project in an established mining camp.

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