N.W.T. and Nunavut Chamber of Mines slams activist group that proposes gov't raise royalties

·5 min read
An aerial view of the Ekati mine, 300 kilometres northeast of Yellowknife. (Dominion Diamond Corporation - image credit)
An aerial view of the Ekati mine, 300 kilometres northeast of Yellowknife. (Dominion Diamond Corporation - image credit)

As the Northwest Territories government considers changes to its royalties policy, two groups — the N.W.T. and Nunavut Chamber of Mines and social activist group Alternatives North — are butting heads over what they should be.

On Wednesday, the Chamber penned an open letter to Industry, Tourism and Investment Minister Caroline Wawzonek to voice its disagreement with Alternatives North, which circulated public handouts earlier this month saying the public isn't getting a fair share of mining profits.

It comes as the N.W.T. royalty regime is being reviewed, with the public having until Friday by 5 p.m. to give their feedback to the government.

The handout document from Alternatives North, which was posted on its website on July 8, proposes that the Northwest Territories government should increase royalties in greater increments than the current one per cent. And it says the cap, currently 14 per cent of profits, should be higher.

Royalties are a percentage of a company's profits, the biggest portion of which goes to the federal government, some goes to Indigenous governments, and the rest goes to the territorial government, which in turn allots a portion to its heritage fund — money for future generations.

Karen Hamre is a volunteer with Alternatives North, and wrote the group's submission to the territory containing 13 recommendations.

Alternative North is an activist organization in the N.W.T., which on its website says it's sometimes known as the "unofficial opposition," and tackles issues on topics including poverty, health, government finances, climate change policies and resource policies.

Travis Burke/CBC
Travis Burke/CBC

Hamre said royalties are important because they're how future generations are paid "for the fact that we're taking a ... non-renewable resource."

She said Alternatives North created the handout to get people talking about the royalties review.

"It is important," she said. "This is our one chance for quite a while to have a say in how the rules regime is done. So we wanted people to know about that."

But the chamber of mines disagrees with Alternatives North's proposition and said the group's document is not based in fact.

"The social justice group has no history of advancing ideas that could help strengthen mineral investment in the N.W.T.," the chamber said in its open letter.

"We know this, because that is what our Chamber does virtually every day of the year, and Alternatives North has never joined in to help."

The Chamber of Mines members are made up of various employees of companies including Agnico Eagle Mines, Air Tindi, Arctic Canadian Diamond Company, Baffinland Iron Mines Corp., Canada North Environmental Services, Diavik Diamond Mines (2012) Inc. and many more.

It argues in the letter, signed by its president Kenny Ruptash, that  Alternatives North tends to "pop up occasionally to take pot shots at our vital northern resource industry."

Since 2014, $11 billion in diamonds have been produced in the N.W.T., and of that $250 million in royalties have been paid. And since 2015, the territory has collected $90 million on average each year.

Mining industry not in healthy state, says chamber director

Tom Hoefer, the executive director of the N.W.T. and Nunavut Chamber of Mines, told the CBC that the mineral industry in the territories is not in a healthy state right now, and that raising royalty payments is "not the silver bullet for that kind of change."

Travis Burke/CBC
Travis Burke/CBC

"We all know that mines are maturing, and we're going to have sort of a bleak outlook here in about three years from when Diavik closes," Hoefer said.

"It needs help, and government and the industry worked together to try and make things better."

"It's a tough jurisdiction, it's an expensive jurisdiction. And so raising royalties is not the answer."

Hoefer said since the industry takes the bulk of all of the risk in mining, he thinks they're deserving of the bigger share.

He says raising royalties would be a disincentive for companies to build mines in the N.W.T.

"If you want more royalties and more benefits, you need more mines," Hoefer said. "That's the simple answer."

The chamber argues in the letter that profit is critical, and without it, "there would be no industry." It notes that the N.W.T. and Nunavut are the only jurisdictions in Canada where mines pay a property tax.

Ruptash, in the letter, points to a study from 2017 that says the N.W.T. is "in the middle of the pack" when compared against other jurisdictions in Canada in terms of royalties, and "should stay there."

Royalties vital to future generation, says Alternative North

Hamre said there were some "misconceptions" in the chamber's letter to the minister, adding the handout is based on information from the territory's website.

She also disputes the chamber characterizing the royalties as a "sweetener" on top of taxes.

"If you think about those future generations there, that's not a sweetener, that's really an obligation that we hold to the future," she said.

When it comes to the risks taken by the mining companies, Hamre agrees that it exists, but said that risk is on the public too.

"We are at risk that the companies are going to pull out and not clean up, or that the jobs won't be appropriate jobs, all sorts of things," she said. "There's a definite public risk as well."

Next steps

The territory will review the input and feedback received and develop policy options, according to Drew Williams, a spokesperson for the Department of Industry, Tourism and Investment.

He said the implications of the options will be tested with financial models to develop recommendations, which will then be reviewed by an independent third party before any new regulations governing royalties are drafted.

Once there's a draft, Williams said the regulations addressing royalties will be incorporated into the broader process by which all of the regulations for the Mining Resources Act (MRA) are being developed.

Then a public consultation of all proposed regulations is anticipated to happen in the spring of 2023.

"Once its regulations are in place, the MRA will be able to come into force," Williams wrote.

"When it does, it will become the first-ever stand-alone legislation governing mineral resources drafted in the N.W.T. and will administer all aspects of mineral tenure."

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