INSIGHT ARCTIC HAS GREAT RICHES, BUT GREATER CHALLENGES Surging demand for oil, gas, gold and other raw materials is fueling interest in the icy northern wastelands of Canada, Russia, Scandinavia and Alaska. But the Arctic is not for the faint-hearted. An aerial view of Agnico-Eagle’s Meadowbank mine and processing facilities in Nunavut, Canada photographed on June 28, 2011. REUTERS/EUAN ROCHA BY DAVID LJUNGGREN AND EUAN ROCHA remote region with temptingly large, but sea ice and shorter winters will open up the IQALUIT, NUNAVUT/ frustratingly inaccessible, reserves of oil, expanse to exploration. BAKER LAKE, NUNAVUT, AUG 31 gas and minerals. But the rosy words obscure the reality of Commentators rarely mention working in an icy wasteland that stretches T THE RIM OF THE Arctic Circle in nightmarish logistics, polar bears and across Russia, Scandinavia, Alaska and Canada, gold mining firm Agnico-Eagle steel-snapping cold when they confidently Canada. And rather than making life easier, Ais learning how tough it is to operate in a predict that as the Arctic warms up, melting the warming of the Arctic and the thawing AUGUST 2011 CANADA ARCTIC AUGUST 2011 UP NORTH: The massive ore storage dome at gold mining firm Agnico-Eagle’s Meadowbank mine in Nunavut. To date, it is the only mine working in Nunavut and it has cost the company a total of $1.5 billion so far. REUTERS/EUAN ROCHA “WITH ASSETS UP HERE Mining projects in Canada’s Nunavut territory IN THE NORTH, YOU Tough operating conditions and almost total lack of infrastructure mean only major NEED BIG TONNAGE mining firms will be able to exploit Nunavut’s mineral resources. OPERATIONS, YOU CAN’T HAVE A SMALL FOOTPRINT GIVEN xx/ THE COST.” 11 of its permafrost could make operating here Mary River even more complicated. A closer look at the far northern Canadian High Lake territory of Nunavut, one of the most Hope Bay Roche Bay promising areas for exploration, reveals Izok Lake challenges so huge that the Arctic may well Hackett River turn out to be a niche market where big firms NORTHWEST with a serious tolerance for risk and adversity TERRITORIES Meadowbank develop a handful of major deposits. Kiggavik Chidliak For all the talk of a bonanza there is just Gold one mine working in Nunavut today - Agnico- NUNAVUT Meliadine Uranium Eagle’s Meadowbank operation, which has ALBERTA cost a total of $1.5 billion so far. The gold Diamonds mine, literally in the middle of nowhere, is Iron ore SASKAT- QUEBEC CHEWAN surrounded by dikes that keep a series of Zinc, silver MANITOBA shallow lakes at bay. Temperatures plunge Copper, zinc, silver, lead to minus 50 degrees centigrade (minus 58 Copper, zinc, silver, gold Fahrenheit) in winter, bringing with it the risk of almost instant frostbite and mechanical Source: Nunavut government’s 2010 overview of mineral exploration, mining and geoscience failures. Reuters graphic/Stephen Culp Most workers have to be flown in, as long came in at $550,000 per km. small footprint given the cost structure,” he as the often foul weather cooperates. The It’s no surprise that Agnico-Eagle chief said. only land access is a gravel road the company executive Sean Boyd concedes such projects built to Baker Lake, a small town 70 miles are not for the faint of heart. SHORT SHIPPING SEASON (110 km) to the south. The road - which was “With assets up here in the north, you need THERE IS VIRTUALLY no infrastructure in supposed to cost $275,000 a km to build - big tonnage operations, you can’t have a Nunavut, a 810,000 square mile (2 million 2 CANADA ARCTIC AUGUST 2011 THINK BIG: The SAG Mill and Ball Mill at Agnico Eagle’s Meadowbank mine in Nunavut. REUTERS/EUAN ROCHA square km) expanse of rock and ice twice the size of western Europe. Dotted across the territory is a largely unskilled aboriginal Inuit population of just 33,000. Heavy equipment, spare-parts and diesel fuel all arrive during a short summer shipping window, first by barge and then along that costly road. “It’s hard to believe we are in the geographic center of Canada, because simple things like parts for an emergency breakdown have to be flown in,” said Agnico-Eagle’s President Ebe Scherkus. “What the last 16 months has taught us is there’s long-term planning and then there’s very long-term planning on a site like this.” In March, a fire destroyed the kitchen and forced the firm to evacuate over 300 employees and operate the mine with a skeleton crew. A new multimillion dollar kitchen will arrive later this summer. Such travails help explain why Nunavut TRUCKING: A truck at Agnico-Eagle’s Meadowbank gold mine. Heavy equipment, spare-parts and diesel was for so long an insignificant player, fuel all arrive during a short summer shipping window, first by barge and then along a 70-mile gravel road. although there are other problems too. REUTERS/CHRIS WATTIE 3 CANADA ARCTIC AUGUST 2011 “WE KNOW HOW TO BUILD ON PERMAFROST,WE KNOW HOW TO BUILD ON NON-PERMAFROST.WHAT WE DON’T KNOW HOW TO DO IS BUILD ON PERMAFROST THAT WILL THAW.” WASTELAND: A view of the Tundra landscape around Meadowbank’s open-pit mine in Nunavut, June 28, 2011. REUTERS/EUAN ROCHA The harsh climate closes down many exploration sites from October to March. Polar bears prowl and snowstorms slash visibility. There is little or no sunlight for three months a year in the far north and low winter temperatures mean metal starts to snap, oil thickens and helicopters stop flying. Even in the summer months, the weather can be a challenge for pilots. A First Air Boeing B-737 jet crashed near the Nunavut settlement of Resolute Bay on Aug 20, killing 12 people. Eyewitnesses said the area had been foggy at the time. And if that was not enough, companies will need to work out how to access their sites in warming weather, and how to cope with the gradual thawing of the permafrost, the frozen layer of soil that sits about two meters under the surface. “We know how to build on permafrost, we know how to build on non-permafrost. What we don’t know how to do is build on permafrost that will thaw,” said University of Ottawa professor Antoni Lewkowicz, a leading permafrost expert. SOFTENING PERMAFROST IN PARTS OF THE CANADIAN and U.S. Arctic, buildings are already starting to collapse and roads crumble as the frozen ground warms up. Yet for all the challenges, high commodity prices are persuading companies to look HOT AND COLD: Gold is poured during a tour of Agnico-Eagle’s Meadowbank Mine. Outdoors, temperatures again at deposits which were once too plunge to minus 50 degrees centigrade in winter. REUTERS/CHRIS WATTIE 4 CANADA ARCTIC AUGUST 2011 SMALL TOWN: (Left) Boats lie on the beach in the center of Iqaluit, capital of the Canadian Arctic territory of Nunavut. (Right) Local Inuit stand outside of a college in Iqaluit, June 14, 2011. REUTERS/DAVID LJUNGGREN expensive to exploit and there is something partner BHP Billiton, Xstrata, ArcelorMittal, century,” said Lewkowicz. of an exploration boom. Companies spent Areva, Newmont and China’s MMG are “There’s a real economic question, as C$30 million ($30.6 million) on exploration variously pursuing gold, diamonds, iron ore, well as a science and engineering question, in Nunavut in 1999, a figure that is set to hit lead, zinc and uranium in Nunavut. associated with building on permafrost that if C$325 million this year. not going to thaw, is at least going to warm.” Nunavut has significant advantages over STAGGERING SUMS NEEDED TO One solution is to drive piles deep into the its Arctic rivals such as Russia, Alaska and START PRODUCTION frozen layers to support roads, buildings and Norway -- land tenure is secure, the politics STILL, THE AMOUNT SPENT on exploration railways. The other is to install a series of are stable, the territory is vast and has a is tiny compared to the staggering sums costly thermosiphons, giant special coolers nicely varied geology. needed to start production. Newmont has that help keep the ground firm. “It is what we like to call in exploration spent $2 billion so far on its Hope Bay gold “The economics of a mine up here are a elephant country,” said Brooke Clements, deposits in western Nunavut and there is no lot different than the economics of a mine president of junior mining firm Peregrine guarantee a mine will ever be built. somewhere else down south,” said Bernie Diamonds. “There’s still the potential to find Baffinland, owned 70 percent by MacIsaac, head of Nunavut operations for really big world class deposits.” ArcelorMittal, is proposing to invest C$4.1 the federal Aboriginal Affairs and Northern Yet geological mapping is grossly billion on a 149 km railway and two ports - not Development ministry. inadequate and prospecting from scratch to mention a special fleet of giant ships - to so costly that it’s hard know what riches exploit the huge Mary River iron ore deposit SUMMER SWAMPS Nunavut may still be hiding. on Baffin Island. This is slated to produce 21 THE WARMING CLIMATE will also hit drilling Peregrine found a promising series of million tons of ore a year for 21 years. firms, which produce samples that determine diamond-bearing kimberlite rock formations The message is clear: Nunavut is not the if a mine is built. Permafrost is covered in a near Iqaluit after three summers of collecting place for small fry.