Resource agreement will let Territories keep up to 10 times more of their mining and oil royalties BY WI STAFF When Prime Minister Stephen Harper touched down in Whitehorse to end his annual tour of Northern Canada this August, his government had already delivered what the Yukon government had long demanded: a better deal on royalties from some of the richest resource fields in the world. The Yukon will keep a much greater share of its resource royalties thanks to the proposed new deal, according to Yukon Premier Darrell Pasloski, who has called a fall election for this year where the agreement is expected to be a cornerstone of his campaign. Currently, the territory can only keep the first $3 million earned annually from mining royalties. Anything more is clawed back by Ottawa. The new agreement would be far more generous, allowing the territory to keep annual resource revenue of up to $41 million. The deal is similar to one reached earlier with the Northwest Territories (N.W.T.) and is a signal that the vast northern resources, which include gold, diamonds, oil and gas, are meant to fuel northern development. Currently, most Yukon residents - 80 per cent of whom live in the capital of Whitehorse- rely on paycheques from various levels of government, or First Nation transfers, which make up the bulk of Yukon income. But with the Arctic ice melting, a global push for access to resources and the potential of at least three new mines opening, the Yukon may be experiencing another private industry "gold rush" like the one that first made it famous.
"When the Yukon Party government took office in 2002, we promised no tax increases and delivered," Pasloski said in a pre-campaign statement. "Thanks to sound economic planning and negotiations with the Government of Canada, we've been able to raise the territory's budget from $550 million in 2002 to over $1 billion for three successive fiscal years. We plan on moving forward with continued economic growth to ensure that Yukoners' money stays with Yukoners." Harper's visit was long on symbols and short on specifics. The prime minister toured a new museum in Whitehorse and visited Kluane National Park, after visits to the N.W.T. and Nunavut, where he visited a large gold mine. Harper's message remained the same at every whistle stop: Canada is focused on "four pillars" of northern development, which he defined as exercising Canada's Arctic sovereignty, protecting the North's environmental heritage, promoting social and economic development and improving and devolving northern governance. In the past three years, Ottawa has spent $140 million for the creation of a northern economic development agency and strategic investments, and pledged millions of dollars for new Arctic patrol ships and a new polar icebreaker. Whitehorse Meanwhile, the Yukon government has used incentives to attract more industry. An example is Minto Explorations Ltd., which opened a high-grade copper and gold mine, the Minto Project, in the Whitehorse mining district four years ago. The Minto Project is an open-pit mine followed by conventional crushing and grinding. The copper and gold concentrates are exported to smelters for treatment and sale through the year-round port of Skagway, about 100 kilometres south of Whitehorse. The Yukon government helped the company work quickly through the permitting process and assisted Selkirk First Nation with funding for implementing a co-operation agreement with Minto. Minto is a subsidiary of Vancouver-based Sherwood Copper Corp. Incentives are also being used, on a smaller scale, to attract new business to Whitehorse, the capital and largest city - 24,000 population - in the Yukon. Government is the major single source of economic activity in Whitehorse, and government services accounts for 20 per cent of total employment. In smaller communities in the Yukon, the proportion of employment in government services may be a little larger but in Whitehorse the wide array of government activities encompasses most public services for the Territory. The capital is the supply centre for most Yukon communities, and people tend to buy many products, especially big-ticket items, directly from Whitehorse. In a bid to draw new small and medium businesses, Whitehorse and the Yukon government offer loan guarantees of up to $100,000 for promising start-ups and a $4 million investment tax credit, only $1 million of which had been claimed so far this year according to Ian Young of Yukon Economic Development. Young said the incentives are not aimed at retail businesses, but at wholesale operators, trucking outfits and other employers. He noted that the strong Whitehorse economy is enough to attract retailers: "We have everything," he said, naming Starbucks, Walmart and other name-brand retailers. Land lottery Whitehorse has a near-zero rental vacancy rate and a strong demand for new homes, characteristics that may make landlords and home builders take notice. The City of Whitehorse controls most the potential residential development land, however, and conducts an annual land lottery to sell its building lots. For this year, the city offered about 20 lots, each capable of hosting a detached house or a duplex. The lot draw was held last month, with land offered at from $110,000 for 8,000-square-foot lots to $170,000 for larger prime lots of around 16,200 square feet. Demand for housing is forecast to increase as mining activity ramps up in the region. As the Minto Mine expands, Alexco Resource Corrp. is working on ts Bellenko deposit and has obtained rights to the old United Keno site, a silver mine that closed in 1989. Western Copper Corp., 192 kilometres north of Whitehorse, is now operational and expanding and is expected to produce about 32 million pounds of copper annually. Redfern Resources also plans to activate the old Tulsequah Chief Mine in north western B.C.. Meanwhile, analysts say there are other promising mine explorations in the White Gold District, within the Tintina Gold Belt, a 200-kilometre-wide, 1,200-kilometre-long arc extending from northern B.C. through the Yukon and into southwest Alaska. Potential plays include Underworld Resources, which holds 16,900 hectares of property in the area and approximately $16 million in its treasury; and Kaminak Gold, with three properties totalling 7,680 hectares. Kaminak was the first into the area and has announced an aggressive program totalling at least $500,000 for this year. Others include Northern Tiger, with seven properties totalling 5,244 hectares, and Capstone, owner of the Minto Mine, which retains rights to acquire a 65 per cent interest in any of Northern Tiger's projects located within a 50-kilometre radius of the Minto Mine. A $1 million exploration program was budgeted for this summer by Northern Tiger. Arctic melt One of the key aspects of Yukon and northern development isn't mines, however, but the riches beneath the quickly melting Arctic ice. Arctic sea ice is disappearing at a near-record pace, opening shipping lanes for cargo traffic and oil exploration, according to Environment Canada. Ice cover is close to a record low, opening "almost the entire northern sea route to icebreaker-free shipping" as of early August, stated the Moscow-based Federal Hydrometeorological and Environmental Monitoring Service.
from Western Investor October 2011 |
