Mining News

The Northwest Territories assume control of their natural resources

Posted by Alana Wilson on 4/2/2014 3:55:32 PM

By Alana Wilson

On April 1st, 2014 the Northwest Territories gained province-like powers, according to an article on the CBC. Until now, decision making power for land, water and resources was held by the federal government. However since the 1970’s, the territorial government has gradually taken on more responsibility beginning with health, education, and social services in an agreement known as devolution. According to the CBC, negotiating the transfer of land and resources to the territory took over a decade.

The N.W.T. has a long history of gold and diamond mining, as well as oil and gas extraction. Devolution means the N.W.T. will start regulating those resources and the effects their extraction has on land and water. It will be responsible for cleaning up any new contaminated sites if companies go bankrupt.

The territory will collect revenues from mining and resource development, expected to be about $60 million this year. A quarter of those revenues will be shared directly with aboriginal governments. With hopes of nine new mining projects by 2020, that amount could grow, subject to a cap.

The article notes that not everyone in the territory is celebrating devolution, however. Of the seven aboriginal groups in the territory only five have signed the devolution agreement with the Tlicho government threatening to go to court over the merging of four current regional land and water boards.

This uncertainty could put a damper on the territories plans to attract mining investment. The N.W.T. rated lowest amongst Canadian jurisdictions in the 2013 Survey of Mining Companies on a question about how uncertainty concerning disputed land claims encourages investment. Only 6% of respondents rated this N.W.T. as encouraging investment on this factor, while 40% rated this uncertainty as a mild deterrent, 21% as a strong deterrent, and 1% of respondents would not pursue investment in the territory as a result.

A Financial Post article notes that the Northwest Territories is already seeking to improve infrastructure to attract more investment in the region. The N.W.T. has asked Ottawa to raise their borrowing limit from $800 million to $1.8 billion to fund power lines and roadwork necessary to support development.

“It’s very important for us,” said David Ramsay, minister of industry, tourism and investment for the region, who will head a newly created oil and gas regulator. “If you look at trying to attract investment, the government of the Northwest Territories needs to be investing in itself.”

A rush to develop the Arctic territory’s resources has long been hampered by high costs and remote distances from southern markets.

The results of the 2013 Survey of Mining Companies would suggest the N.W.T. is on the right track in prioritizing infrastructure to attract mining investment. Over half of survey respondents (51%) rated the quality of infrastructure in the Northwest Territories a mild deterrent to investment, 27% as a strong deterrent to investment, and 1% would not pursue investment due to this factor.

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