Indigenous and Northern Affairs Committee on June 10th, 2010

[The Chair, Conservative, Bruce Stanton]

Perhaps we'll do this in reverse and start with Mr. Blake; we'll go backwards from what we did the last time.

There are two questions there.

Go ahead, Mr. Blake.

[Erik Blake]

In terms of transportation issues, I mentioned in my presentation that we do face issues with trying to get goods shipped internationally, simply because of changes in the private sector with companies that are providing those services. We have these strange pricing situations or service provisions for companies bringing things in, whereby you're paying for air freight but getting ground service, which causes delays that have an impact on the operation of our business.

We also have another transportation issue that sometimes comes up, and that's shipping to our neighbour to the west, to Alaska. I think the regulatory issues surrounding border crossings have resulted in Yukon-based airlines not taking air cargo to Alaska because doing so involves just too much paperwork. It's not something they do. It actually ends up being more cost-effective to send goods down to the southern 48 and then back up to Alaska, which seems very strange. This includes trying to ship things by road from Whitehorse to Alaska. It's a frustrating situation when that comes up.

[The Chair, Conservative, Bruce Stanton]

Mr. Missal.

[Greg Missal]

Thank you very much for those questions. In terms of those transboundary issues--I think you called them that--I think the challenge in the area that I'm most familiar with, Nunavut, is the actual remoteness of Nunavut and the winter season that goes along with that and the challenges with ice.

There are these very small windows of opportunity, particularly for some of the northern communities on Baffin Island, where they can receive their sealift goods for the year. It's very challenging for people to have to order these items almost a year in advance to get something. The payment structure of that, I know, is challenging for people as well on a personal level. I think that seasonality window is probably one of the biggest challenges for Nunavut and Baffin Island in particular. I would say probably the same thing applies for western Nunavut as well.

On education, I think one of the real challenges that our industry sees is retention of people. As you pointed out, it is difficult to get to and maintain some of these employment goals that we all like to set at the beginning of our projects and try to reach. It can be challenging.

I think the fact of the matter is that working at a remote mine site isn't for everybody. It sounds like maybe it's a great idea when people hear about it for the first time. They're very well-paying jobs and you get to learn lots of different skills, but sometimes people have challenges being away from families, spouses, kids. That's a real challenge that exists.

[The Chair, Conservative, Bruce Stanton]

Thank you.

[Peter Mackey]

Thank you for the question first, Niki, and I agree with some of the comments that Greg has made.

From our perspective, from a resupplier shipping, some of the issues that are critical in terms of having a single resupply is that the resupply doesn't come until the ice is gone away in northern communities, so we may not get that in until September, before the resupply ship will hit us.

Our construction season is extremely short. By that time we're starting to see snow already. We have a very limited one- to two-month construction season, and then the weather, the climate, is too harsh for outdoor work so construction comes to a dead stop. That project then doesn't commence until the following year.

So that's one aspect of it. The other aspect is that in that short construction season, you're hoping to have that labour--that you don't have locally--brought up and available for you. Typically if you don't jump on that labour availability immediately right away and get them up and have them sit around, other projects are going to take them. You're not going to even be able to do that short construction season.

Some of the things that we've been forced to look at as a utility is designing modular-type power plants that we can construct in the south and ship them up as modules, along with the crane and equipment to put those modules together on site, because we don't see ourselves ever doing a stick-built power plant in a place like Grise Fiord. The equipment is not there, the talent is not there, the labour isn't there, and it will be a project that will go five years before it ever gets completed.

In terms of education, Greg hit right on it. We see it all the time as a big employer of Inuit people. We typically try to arrange our Inuit employment in terms of apprenticeship programs and mentorship programs, whether it be finance or whatever. We have a whole pile of initiatives that we put out to try to increase our Inuit employment.

We find that if we bring a person out of a community.... And we've had some really good talented individuals come out of the community who are high achievement individuals who could do anything within our company. They'll come out, we'll enter them into a program with us, a co-op program through university or through an apprenticeship program, and we'll be prepared to support them right up until their completion.

Because of the Inuit culture and being away from family, unless this is someone who comes to a community to work where their family is already there and they have a connection, typically a lot of them end up going back home and dropping out of the program. They'd rather be unemployed at home with family than be in Iqaluit or Rankin or Cambridge. That's the issue. Those are the central areas where we have our regional offices, where we have staff who can actually work with individuals and help them progress, along within the educational programs we have.

[The Chair, Conservative, Bruce Stanton]

Very good. Thank you, Ms. Ashton.

Now we'll go to Mr. Duncan for seven minutes, and then we'll begin a five-minute round after that.

Mr. Duncan, go ahead.

[John Duncan, Conservative, Vancouver Island North, BC]

Thank you very much.

My questions start with Mr. Missal and relate to the progress on your development. First of all, I understand that you did actually arrange for a shipment of your ore to Germany. Perhaps you could tell us about that, just to demonstrate the category of ore and the prospects in a concrete way.

[Greg Missal]

Sure. Thank you for that question, Mr. Duncan.

Part of the normal development cycle of these projects is that a company typically hits a stage where they need to take what we call a bulk sample, which is almost like a large test sample of material that needs to be extracted and then sent to market. You want to see the quality and you want to see what the value is of that. Those results then feed into what we call our feasibility study for the project.

In 2008, Baffinland raised, through public markets, and spent in excess of $200 million doing a bulk sample project and shipped about 150,000 tonnes of iron ore to the European market, which is where we took the numbers from for our feasibility study. This allows us to tell people that we have one of the richest iron-ore deposits in existence today. It's almost pure iron ore. It runs at about 66%, 67%--and 67.4% or 67.5% is pure iron ore. So the quality is there, and, fortunately, we also have the quantity. It's useful to point out as well that this exercise shows that of course it's doable to do this from the north end of Baffin Island.

[John Duncan, Conservative, Vancouver Island North, BC]

To give us a feel for the size of this project, how many communities would you likely be drawing labour from within Nunavut?

[Greg Missal]

Because Baffin Island is so large, we tend to think of ourselves as a north Baffin Island project, which includes those five north Baffin Island communities. They range probably from 200 kilometres to close to 500 kilometres away from the site. We would certainly be looking at making those communities points of hire for this project. The people who are interested, willing, and qualified to work for us would be flown, at our cost, from their home communities to our mine site for employment.

In terms of scale, it's actually hard to put into very relative terms for everyone, but right now this number one deposit has a 20-year mine life running at 18 million tonnes per year. That's doing 12 months a year shipping. That's 20 to 21 years right there. As to our other deposits--two, three, four, and five--we internally talk about this as being a 100-year project, which obviously has significant benefits in terms of generation over generation employment, training, and skill development.

[John Duncan, Conservative, Vancouver Island North, BC]

I understand in 2008 you had 453 people working on-site.

[Greg Missal]

That's correct.

[John Duncan, Conservative, Vancouver Island North, BC]

Where would those 453 people have come from?

[Greg Missal]

It was a wide variety, which is what you typically see at any of these projects. I believe approximately 30% to 35% of our workforce were local employees. For the rest, we had some people from Iqaluit and some people from the larger southern Canadian centres as well. Of course, you have all the different levels of skill requirements, and you have to fill those needs. We'd love to see those skills coming out of the local communities rather than having to bring them up from southern Canada.

[John Duncan, Conservative, Vancouver Island North, BC]

The 30% or 35% of those who were “local”, when they were largely laid off, what impact did that have? It's not very often you see a dramatic situation like that where you go from zero to 450 and then back to 60. That must have had quite a noticeable impact on those communities.

[Greg Missal]

The feedback that was generated, and that we keep hearing, is of course that once people realized what those jobs were all about, they wanted to know when we were going to get hiring again. They all understood that we were doing a bulk sample and that it was a one-season program. There's no doubt that people enjoyed working those jobs, enjoyed working at that mine site, and working close to home.

[John Duncan, Conservative, Vancouver Island North, BC]

When will you be getting going again?

[Greg Missal]

We're at the stage right now where we have an environmental impact statement that's being developed. It's essentially your environmental assessment document that goes through all the regulators. In our case, it's the Nunavut Impact Review Board and on through the Nunavut Water Board for the permitting process. We believe we're going to have completed that EIS by the end of 2010. We've already gone through about a year of work in the regulatory process and we believe we have about two years remaining. So by the end of 2012 or early 2013, if all goes well, we would have our approvals in place to begin our construction.

[John Duncan, Conservative, Vancouver Island North, BC]

The company will be vertically integrated. You're going to have ships, a railway, a mine, a community, and all the maintenance and power generation—one-stop shopping for everything.

[Greg Missal]

That's right. It's the way these sites develop. They have to be very self-sustaining. Of course, this is a unique project, in that it will also include year-round shipping. Obviously it's going to take very large vessels to do this. They'll have to be specially built vessels. We've been working with Fednav on the design of those ships, and they've been working with shipbuilders on their plans.

The railway is probably the largest construction component of the project, because you're dealing with putting a railway down on tundra, and North Baffin Island is relatively rugged as well.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Duncan and Mr. Missal.

Now we'll go to Mr. Russell for five minutes.

[Todd Russell, Liberal, Labrador, NL]

Thank you.

I note you talk about infrastructure. I think the government is planning to build or do something in Nanisivik. How many people live there?

[Greg Missal]

There are very few.

[Todd Russell, Liberal, Labrador, NL]

There aren't very many. Perhaps you can get a population count.

Twelve months of shipping will be unique for this area. Has that formed part of your environmental assessment process?