Whither Canada’s Arctic bonanza

Perhaps the mother lode of industrial projects lies in Canada’s northern reaches. At 550,000 sq mi Canada’s Arctic is a massive warehouse of undeveloped mineral deposits such as gold, silver, lead, zinc, diamonds, uranium, tungsten, natural gas, oil, fisheries, lumber, and fresh water. How to exploit Canada’s Arctic bonanza is a challenge, which for now few answers are forthcoming. Railroaded, the Chill in Churchill  The Pas is a small town in Manitoba, located where the Pasqua and Saskatchewan Rivers meet, nearly 400 miles from the provincial capital of Winnipeg, importantly the rail link – and really the sole link - to Canada’s only Arctic deep-water port, the Port of Churchill. On August 29^th a fire broke out in the town’s Hudson Bay Rail yard and subsequently Denver-based OmniTrax, owner of the Hudson Bay rail, shut down the entire line, effectively cutting the Port of Churchill off from the world. Reportedly the fire, deemed “suspicious” by the RCMP, started in a locomotive engine that had been idle for three years. The line was soon reopened following the fire but again reminded the Port of Churchill of its dependence on the slender right of way.

It’s Complicated Normally such an event would be hardly newsworthy but the relationship between north Manitoba communities and the railroad has in recent years been strained over the complicated relationship between OmniTrax and the Port of Churchill.  Back in 1997, when OminTrax acquired the Hudson Bay rail service and related port properties, grain shipments along with lumber and other commodities represented a solid base. But the service has been the recipient of substantial subsidies and grants from Canada’s federal and provincial authorities.  In 2016 Omitrax shut down port (grain) operations in Churchill because they were owed $1.74 million for the 2015 shipping season. The shutdown resulted in layoffs and further strained relations between the railroad/port operator and the community. According to OmniTrax the negotiations between the rail operator and the provincial and federal governments had failed to yield a suitable agreement on strategy for the future.  Although the parties are at loggerheads over the management of the port and the rail facilities (for example, is the port closed because it had no ship calls or is it open but without ship calls?), all parties seem to believe the port is on the auction block…providing the residual issues can be negotiated.  This brings to the fore the real question eluding the combative parties, how to profit from the unusual position of the Port of Churchill and indeed the mineral wealth of the region? And without regular trade or even basic patrol craft, the plight of Churchill’s business calls into question Canada’s ability to exercise sovereignty over its Arctic routes. At 550,000 sq mi, Canada’s Arctic is a massive warehouse of undeveloped mineral deposits such as gold, silver, lead, zinc, diamonds, uranium, tungsten, natural gas, oil, fisheries, lumber, and fresh water. It’s one of the world’s truly last bastions of undeveloped resources. But over the years, Canada hasn’t developed the manufacturing and secondary processing to support Arctic investment. Obviously the weather and terrain have contributed to the lack of development, but the lack of railroads, deep-water ports and all weather highways has railroaded progress. The only new northern port is the International Port of Stewart, located a short distance north of Prince Rupert on the West Coast, but it is not the Arctic. Nonetheless Stewart offers a tantalizing glimpse into what can be for places like Port Churchill. The Stewart World Port is near the Alaskan border in close proximity to some of North America’s richest mineral deposits. For example, the port is near the recently opened Red Chris mine (located roughly 130 kilometres from the Alaska border) and moved its first shipment of copper concentrate on to the M/V Edward Oldendorff last year. And the future is bright in the north with oil and gas pipelines being considered for British Columbia – meaning an opportunity for shippers to move project cargo such as steel pipe and machinery to sites via the port and the Stewart-Cassiar Highway, which is linked to the Alaska Highway. Brad Moffat, the Chief Development Officer for the port, has told AJOT that plans are to have the northern port become a multi-purpose port. “We are very interested in the mine concentrate industry. We are also open for all kinds of breakbulk cargo and see ourselves open to a number of industries: oil and gas, mining, all types of forestry products and any type of project cargo destined for B.C. and the Yukon. But, while the port has access to a highway and airport, Moffat said port management would like to see rail access constructed someday.  “We’re just waiting for an anchor tenant on either the mining or forestry side to proceed with the third phase,” Moffat said. Arctic Investment But for Canada and places like the Port of Churchill to reap the benefits of their location, a great deal of investment is necessary. Stephan Schott, professor in the School of Public Policy and Administration at Carleton University, and an investigator on Arctic research projects said, “The mining sector in Canada’s North is forecast to almost double its output and employment by the end of the decade – staggering growth compared to the Canadian economy as a whole. Achieving this outcome, however, depends on greater efforts by industry, governments and communities to address key issues including infrastructure, regulatory uncertainty, skills shortages and Aboriginal rights,” citing the Centre for the North’s report, The Future of Mining in Canada’s North. The Conference Board of Canada forecasts that Canada’s overall northern metal and non-metallic mineral output will grow by 91% from 2011 to 2020, a compound annual growth rate of 7.5%. In contrast, the Canadian economy is forecast to grow by an average of just 2.2% annually over this period. The annual gross domestic product of mining in the north, which was $4.4 billion in 2011, is expected to reach $8.5 billion in 2020 (both figures in constant 2002 dollars). “Mining is the future economic driver of Canada’s North. To fully reap the benefits of this potential, we must find the right balance between risk and opportunity,” said Anja Jeffrey, Director, Centre for the North. Jeffrey elaborated, “For instance, governments need to be conscious of how changes to the regulatory environment can affect communities and industry. Strong efforts to ensure a favourable business climate can leave communities feeling vulnerable. Going too far in the opposite direction can act as a deterrent to investment.” Among the outstanding issues highlighted in the Report were the need for improvements to regulatory processes and to addressing the lack of transportation, energy and community infrastructure. As the Report noted, private companies currently provide much of their own infrastructure and public-private partnerships could relieve them of some of these costs and promote investment.