NWT mining on shaky ground

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It was a mining workforce that built Yellowknife and it’s mining that continues to power the economy.

The Conference Board of Canada’s spring forecast, while pointing to a “grim” future for the territory, notes that mining still represents about a quarter of the territory’s GDP at $1.3 billion.

The issue today is that many of the mining jobs are occupied by people who don’t live in the North but fly in from down south and take their pay cheques with them when their shift ends.

All three diamond mine owners in the territory – the only mines currently operating in the NWT – admitted to the legislative assembly’s Standing Committee on Economic Development and Environment last month that they haven’t met their local employment targets as set out in their socio-economic agreements with the territorial government.

Each mine has a non-binding socio-economic agreement – to create employment and business opportunities – that reflects commitments made during the environmental assessment process.

Ekati owner Dominion Diamond Mines’ workforce is 47 per cent northern, Rio Tinto’s Diavik Diamond mine is likewise at 47 per cent, and De Beers’ newly minted Gahcho Kue mine, the star of the bunch, is at 53 per cent.

The original social-economic agreement for Ekati – signed in 1996 — called for a 72 per cent northern workforce. Fifty per cent were supposed to be Indigenous.

De Beers signed a perhaps more realistic target of 55 per cent when preparing for Gahcho Kue, which opened in March of last year.

Achieving northern hiring targets has been a perennial problem for the diamond mines from the beginning.

It didn’t help when Dominion Diamond moved its corporate office and a hundred jobs with it last year, although the move was somewhat offset by its decision in 2015 to stop paying for flights from outside the territory, which made it a little less lucrative to work in the NWT and live elsewhere.

Part of the problem, as noted by Wally Schumann, minister of Infrastructure, Tourism and Investment, is that not everybody in the North wants to work at the mines, with a rotation schedule that takes them away from home for two weeks at a time.

A bigger problem, however, remains the prohibitively high cost of living in the territory, particularly in Yellowknife where a migrant workforce for the mines would be expected to settle.

Yellowknife has always been an expensive place to live but when the gold rush that birthed the city came in the mid-1930s Canada was in the midst of the Great Depression when jobs were few. Workers then, and for decades after, made the best of it in a harsh environment where flight services and other transportation means were severely limited.

Today, a worker from Saint John, New Brunswick, can end a two-week stint at a mine site 300 km from Yellowknife and be back home within 24 hours.

If any positive can be taken from this situation it’s that when the diamond mines do come to a close a dozen years or so from now, we won’t have to worry about the sudden out-migration of half the workforce.

Still, the writing is on the wall. The territory is not prepared for a future without diamond mines. Too little has been done to diversify the economy and encourage other mines to open. The GNWT’s answer the last 10 years appears to consist mainly of growing itself at the expense of everybody else. Now it is facing an Armageddon strike action by its workforce after over-extending itself, leaving it unable to provide the salary increases to which its staff have grown accustomed.

Self-defeating proposals such as land transfer taxes on home purchases, meanwhile, will do nothing to promote the growth the territory desires.

The federal government’s shamefully short-sighted decision not to help fund the Slave Geological Province road to diamond country should not deter the GNWT from pursuing its construction post-haste while setting aside plans for projects that may be politically popular but have dubious value, such as a Mackenzie Valley Highway.

The GNWT should refuse to institute Prime Minister Justin Trudeau’s increasingly unpopular demand for a carbon tax until Ottawa recognizes the territory’s already excessive high cost of living and its need for infrastructure to grow the economy.

Training efforts, meanwhile, in trades and through the NWT Mine Training Society, must continue so that when new mines come on stream there is a ready workforce on hand that doesn’t have to be imported from down south.

There is an economic storm on the horizon. Time to batten down the hatches and prepare while we still can.