Feds considering massive Chinese-backed Arctic mining development

Andy Radia
Politics Reporter
Canada Politics
Copper is extracted in southeastern Democratic Republic of Congo (DRC). Minmetals Resources Ltd, a unit of state-owned China Minmetals Group, has made a $1.28 billion offer for Congolese copper firm Anvil Mining Ltd.

In 2004, Minmetals Resources — a subsidiary of the Chinese state-owned company China Minmetals Corp. — backed away from a takeover of Canadian mining giant Noranda, partly due to a public backlash.

Well, they're back in the news again.

According to the Canadian Press, MMG Minerals, a subsidiary of Minmetals, is involved in the Izok Corridor project — a proposed multi-billion-dollar mining development in Nunavut.

"Some time in the new year, four federal ministers are to decide how to conduct an environmental review for the Izok Corridor proposal. It could bring many billions of dollars into the Arctic but would also see development of open-pit mines, roads, ports and other facilities in the centre of calving grounds for the fragile Bathurst caribou herd.

It would be hard to exaggerate the proposal's scope. Centred at Izok Lake, about 260 kilometres southeast of Kugluktuk, the project would stretch throughout a vast swath of western Nunavut."

Nunatsiaq Online claims that the project would be a significant boost to the region's economy, creating 1,140 jobs during the two-year construction phase and 710 full-time jobs during the mines’ 12-year lifespan.

The Canadian Press notes, there are significant environmental concerns regarding water and wildlife protection. To date, more than 400 groups and individuals have registered concerns about the project with the Nunavut Impact Review Board.

There's also, undoubtedly, going to be some public concern about MMG's ties to the Chinese government, especially on the heels of the widely unpopular CNOOC takeover of Calgary oil giant Nexen.

[ Related: Kenney confident CNOOC will abide by Nexen deal ]

Earlier this month, in response to the Nexen deal, prime minister Harper laid out three new guidelines for future foreign acquisitions. In the future, the government will i.) consider the degree or influence a state-owned enterprise will exert on a business; ii.) consider the degree or influence a state-owned enterprise will exert on the industry; and iii.) consider the extent to which the foreign government in question is likely to exercise control or influence over the Canadian business.

But according to a spokesperson from Industry Canada, "the MMG Izok Corridor project in Nunavut in question is a project and not an acquisition and thus does not fall under the ICA [Investment Canada Act]."

For their part, MMG is downplaying the role of their parent companies and arguing that this project is different than the CNOOC takeover of Nexen.

"We're not acquiring and operating assets that are producing," a spokesperson for the company told CP.

"We're in there as a long-term investor in a project that has been seen as quite marginal by others.

"The Harper government has noted the importance of mineral investment in this region and the importance of that to unlock benefits for the local communities. We certainly see that we're very aligned in our strategy with that."

[ Related: Japex to expand Hangingstone oilsands project ]

In a 2011 interview with the Globe and Mail, Minmetals CEO Andrew Michelmore maintained that government officials don't interfere in the day-to-day management of the company.

"They don't tell us how to do it. They say, 'Tell us what you need to be able to achieve this. It has to be commercially viable,'" he said.

"This isn't just a bucket of money for you to go about and buy whatever you want."