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Economic Development and the Future of Mining in the Canadian North

The extraction of natural resources – oil, gas, minerals – has a central role in many Northern economies. But with dwindling interest in these industries in the Canadian Arctic, what might a post-extractive economy look like?

Written by Stephan Schott Published on Read time Approx. 4 minutes
The Ekati Diamond Mine is Canada’s first surface and underground diamond mine, located about 200km (120 miles) south of the Arctic Circle.Wikimedia/Jason Pineau, CC BY-SA 3.0

Economic development in the Arctic is an ongoing challenge. People in the Arctic regions of Canada, Greenland and Alaska are mostly dependent on the government, the mining industry or oil and gas extraction for employment and generating income. But many are also involved in subsistence harvesting (hunting and gathering), which can sometimes be at odds with the extraction industries.

Living off the land is crucial for the transfer of traditional knowledge from one generation to another and for the preservation of cultural practices, traditional languages and place-names. Subsistence harvesting also is a source of nutritious, culturally desirable country food, and is linked to sophisticated social sharing networks and rules. But access to country food is becoming increasingly difficult for Northerners as equipment, maintenance and operating costs for snowmobiles, boats and all-terrain vehicles are rising and the jobs available in the North are tied to rigid work schedules that are often not well matched to the timing of subsistence activities.

The future of the Arctic economy must better integrate subsistence harvesting activities with a modern income- and employment-generating sector. The latter needs to be more flexible and accommodating of seasonal variations in the availability of labor and alive to the gradual development of local capacity in business and regional and community governance.

Past Experiences in Mining

Despite a long history of mining in the North, the economic impacts on local business, community and human development are not well understood or researched. Mining has several economic stages (exploration, construction, operation and reclamation) with various economic impacts and varying involvement of the local labor force. Local businesses often do not have the experience and know-how to compete with larger southern companies that operate nationally and internationally. In addition, revenues often flow out of the regions and do not create the expected local multiplier effects.

Mining sites also vary considerably in terms of local employment ratios. At some mines, such as Voisey’s Bay, an open pit nickel mine in Labrador that is now preparing to start underground mining, almost 50 percent of the employees are indigenous, but at other mines the count could be as low as 10 percent. Employment can also be unstable. Mining is subject to increasingly volatile commodity markets, which can mean slowdowns, shutdowns and layoffs for local employees when mining companies try to cut costs.

The mining industry is currently in a slump. Traditional commodities, including iron ore, copper and nickel, are no longer in strong demand – nickel and iron ore prices have dropped back to where they were at the start of the millennium. The volatility of world financial markets has, however, uplifted the older Northern mining industry. We see increased prospecting for gold and silver in Nunavut, for example. But the future for mining in the Arctic seems to lie in rare earth metals, which are needed to secure a transition to a low carbon economy. Almost all new green technologies depend on rare earth metals for their components, such as the magnetic engines used in electric cars and batteries to store energy.

Currently most of the supply of rare earth metals comes from China, but Chinese reserves are dwindling and mining practices in China are controversial. Rare earth metals are also abundant in the eastern Canadian sub-Arctic. We can expect a shift and a renaissance in the mining industry in the near future. Mining will continue to have a role in Northern communities, but it cannot be the only sector on which a rapidly increasing Arctic population relies when facing rising living expenses and subsistence-harvesting costs.

New Directions

There are new economic sectors that could be developed. Ecotourism is one example that is not fully explored. Southerners used to come to the Arctic for trophy hunting or sport fishing. This market has diminished, and a large number of southerners are now interested in exploring Arctic landscapes and lifestyles. The challenge is to organize ecotourism activities in a culturally sensitive way that does not interfere with traditional activities and life in the community.

The impacts of climate change are well advanced in the Arctic. In order to develop policy, adapt management practices and to create new infrastructures, we need far more input from Northerners to document changes more systematically and in more detail. By fostering the right education and local capacity through the creation of locally relevant training programs new jobs could be created. There is a tremendous need for Northerners as active partners, researchers, environmental monitors and stewards in the comanagement of water, fishery, wildlife and environmental resources.

Commercial fisheries in the Arctic are a rapidly growing sector but we do not know enough about ocean stocks and the impact on subsistence harvesting. A better integration of traditional knowledge with Western science is required to assess stocks and to implement comanagement plans and strategies. Of course, this would require investment in local post-secondary education that offers an Arctic context.

Finally, alternative energy development and finding energy efficiency solutions for the North is a highly promising, up-and-coming field. The testing of renewable energy technologies in extreme conditions could not only help to wean Northern communities from their dependency on diesel fuel and generators, but could also act as a testing ground for other regions and countries – and could, therefore, develop a new export sector for technological know-how and expertise. The same applies to energy efficiency in energy consumption, housing retrofits and new housing structures in the North. Again, a lot more local expertise and engagement is required to change the often dismal living conditions in a rapidly changing permafrost environment.

There are ample opportunities for economic development in the Arctic that are largely untapped. The mining industry will play a role in the future but the new Northern economy will and must be far more diversified and better integrated with the traditional way of life that is so important for cultural preservation, community and individual health and the healing process for Northern communities.

The views expressed in this article are those of the author and do not necessarily reflect the editorial policy of Arctic Deeply.

This article was produced in collaboration with OpenCanada.

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