NORTHWEST TERRITORIES

The year 2010 marked an economic upswing in both territories thanks to the comeback of the exploration industry, but Nunavut's exploration numbers dwarfed that of the NWT.

However, the NWT received news in December that the Mackenzie Valley Pipeline was approved, a decision that could spark a rise in economic activity in 2011.

In the NWT, exploration spending was up, totalling $98.8 million, according to the latest estimate from Natural Resources Canada. That's a 124 per cent increase from the previous year, but significantly lower than previous years.

Three years ago spending topped $193.7 million.

Over half of 2010 spending was conducted by junior exploration companies - the companies that are working to find the territory's next producing mine. But taking a look at 2009 spending figures - which encompass a very broad group of activities - a trend comes to light: the most heavily funded category of activity was "engineering, economic and feasibility studies." In other words, desktop studies that result in plenty of jobs for high-priced southern) engineers and consultants, but little in the way of employment for the people of the North such as wildlife monitors, camp cooks, attendants and other people who keep exploration camps humming and ultimately bring their earnings back into NWT communities.

The NWT diamond mines - BHP Billiton's Ekati diamond mines including Rio Tinto's Diavik Diamond Mine and De Beers Canada's Snap Lake Diamond, continue to pump away, creating many job opportunities and teaming up with bodies such as the Mine Training Society to equip Northerners to take advantage. After 2009, when both Diavik and Snap Lake shut down for six weeks in the summer to help minimize the impact of the economic downturn and the ensuing decrease in worldwide demand for diamonds, 2010 was a pretty routine, trouble-free year.

The statistics regarding what junior exploration companies are up to is a double-edged sword. At present, those activities don't create many job opportunities for Northerners, but at the end of the day, the hoped-for end game is the creation of new producing mines, which will in turn create hundreds of jobs.

The challenge is in making sure those jobs stay in the North. There are already signs that at least one mine has missed that boat, to a degree.

Last fall, Diavik Diamond Mines Inc., operator of the Diavik diamond mine, reinstated Edmonton as a paid-for pick-up point for southern workers. The reason? Not enough southerners wanted to move up North, citing the high cost of living as a major barrier to settling in the North. More importantly, the company was finding it increasingly difficult to find enough Northerners to work skilled underground jobs.

How the mining industry, the GNWT and their partners face up to this challenge will become increasingly important as more underground mine, including Avalon Rare Metals' Nechalacho deposit, come online.

Nunavut is another story.

With one producing mine, Agnico-Eagle's Meadowbank gold mine near Baker Lake, compared to four in the NWT, a figure that also includes North American Tungsten's CanTung mine, Nunavut's exploration projects dwarf that of the NWT.

Spending this year topped $280 million, up from a still-strong $187.6 million in 2009.

"Geochemistry and geology work" - the type of on-site work that creates jobs, albeit short-termed ones, for Nunavummiut - rated strongly, accounting for $20 million, compared to $15 million for "engineering, economic and feasibility studies."

Nunavut also attracted a lot of interest from around the world in the form of foreign companies pumping money into mineral exploration projects.

On the iron ore side alone, there were two projects that attracted global attention.

In October, it was announced that Xinxing Ductile Iron Pipes Co., Ltd., the subsidiary of Chinese state-owned XinXing Pipes Group Co. Ltd. (XXP), signed a deal with Advanced Explorations Inc., which is developing the Roche Bay iron ore deposit near Hall Beach. Under the terms of the deal, in exchange for 50 per cent of the project's iron ore, XXP has agreed to provide Advanced with a staggering $1 billion to support further development, in addition to $20 million over the next year to complete the project's feasibility study and yet another $30 million of working capital upon completion of the study.

Meanwhile, the battle for Baffinland Iron Mines' Mary River iron ore project near Pond Inlet raged on as of year-end.

On Dec. 15, Nunavut Iron Ore, a subsidiary of Toronto-based Iron Ore Holdings LP, extended its fourth bid of $274 million to Baffinland even as another company, ArcelorMittal, the world's largest steelmaker, based in Luxembourg and London, had its own superior bid for Mary River receive the approval of regulators.

Meadowbank showed what an economic impact a mine can have on a Nunavut community.

As of mid-September, the mine employed 248 people from the Kivalliq region. Since construction, the project pumped $60 million into Baker Lake. In terms of business done with Nunavut-based suppliers, $228 million was spent.

Junior exploration company Shear Minerals is trying to get the Jericho Diamond Mine, which closed in early 2008, back up and running. The company said it hopes by early 2012 to have a go-forward plan.

On the oil and gas side, things really didn't change very much. Even with the regulatory approval of the National Energy Board, the Mackenzie Gas Project is still years, perhaps a decade, away. The exploration field in the NWT remained very thin.

As in 2009, only one company did any drilling in the territory.

Paramount Resources, based in Calgary, drilled a total of five wells over a five mile stretch of land within its Cameron Hills oil and gas field, located approximately 30 to 40 km northeast of Enterprise, spending $12 million.

The big question on everyone's mind remains the future of the Mackenzie Gas Project. What's clear already is that Northerners still have a considerable wait ahead of them.

As many commentators have already stated, the regulatory greenlight of the NEB is an afterthought compared to a second factor: whether or not leading proponent Imperial Oil and its MGP partners will actually go ahead with the project.

Imperial Oil originally wanted until 2016 to decide whether to move forward with construction. The board has required the company to start construction of the pipeline by 2015. Construction would create 5,700 jobs.

But as Pius Rolheiser told News/North at the tail end of the year, before project restaffing and crucial engineering work can begin, there needs to be some positive movement of fiscal framework agreement talks with the federal government. Natural gas prices also remain lower than the ideal $7 need to make the pipeline economic feasible.

Though a lot of balls remain in the air, the NEB's greenlight of the pipeline has already spurred MGM Energy, which will drill a well near Norman Wells this winter, to further commit to be back on the Delta exploring by the winter of 2013.

The basin-opening surge of exploration that the Mackenzie Gas Project has been touted to bring with it could still be many years away, so the challenge for Northern businesses that have prepared for this much-anticipated project will be to carve out business in other areas in the meantime.

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