Thank you very much.
If my voice is not loud enough, please just interrupt me and tell me so. I'll try to speak louder.
My name is Claire Derome. I am the outgoing president of the Yukon Chamber of Mines, as well as a board member. I am here today on behalf of the chamber and our 500 members. I am also the president of Derome and Associates, a consulting firm offering expert advice and services in relation to the socio-economic aspects of project development and management up north.
It's a pleasure to be here today to address the House of Commons Standing Committee on Natural Resources. The focus of your study, resource development in northern Canada, is very timely, and I would like to thank you for undertaking this very important initiative.
The Yukon Chamber of Mines submitted a brief titled “Mining in the North”. My speaking notes will be an extract from that brief. My presentation will cover key points. I can offer more detailed information during the question period after my presentation, if we have the opportunity to do so—depending on the bells this time again.
Going ahead, the mining industry is global in its reach and activities. The surge in demand for minerals and metals increasingly spurs the industry to remote regions of the globe for opportunities. In the Canadian north, some regions are less remote than others; however, north of 60 here, we often find there's a view from south of 60 that the north is all the same. I hope to bring a little bit of a perspective on that from Whitehorse, Yukon.
In the Yukon, the mining industry only recently discovered—or I might say “rediscovered”—the value and opportunity awaiting it only a short flight away to the Yukon, including access to highly skilled labour, a stable political environment, and a year-round deep water port with the capacity to handle mined product for shipment to Asian markets.
But the recent successes of the Yukon are not only the result of changes in the global economy; they also have very much to do with the territory’s groundbreaking governance advances and changes that have evolved over the last 20 years.
Let me name the key ones: the Umbrella Final Agreement, UFA, signed by Canada, Yukon, and the Council of Yukon First Nations in 1993, provides a framework for the negotiation and implementation of all individual Yukon first nations final and self-government agreements; the settlement of comprehensive land claims agreements and the establishment of self-governments for 11 of the Yukon’s 14 first nations; the devolution of land and resource responsibility to the Yukon by Canada in 2003, which gave the Yukon the same power and authority over its lands and resources that a province has; and finally, the establishment in 2003 of a single assessment body under the Yukon Environmental and Socio-economic Assessment Act, YESAA, providing a one-window approach to the territory’s development assessment process and subsequently more certainty and transparency in the permitting processes.
I will focus my presentation on the changes experienced over the 10-year period from 2001 to today.
Mining exploration, development, and production activity in the Yukon have all soared in recent years, and the growth of the mining sector has really transformed the Yukon’s economic and social fabric.
The Yukon’s economy grew 34% over the last 10 years, and most of that growth, or 24%, was achieved over the past five years.
Personal disposable income increased sharply, from approximately $28,000 in 2001 to $40,000 in 2011. That's a 52% increase.
In the first part of the last 10 years we saw economic activity picking up momentum, starting in 2004 with increased investment in exploration following the firming up of commodity prices on a global scale.
Exploration spending grew from a low of $7 million in 2001 to more than $104 million in 2006, an increase of 1,358% over the period.
With the devolution of land and resources responsibility to the Yukon in 2003...[Technical difficulty—Editor]...YESAA.
In 2005 the acquisition of the Minto copper deposit by Sherwood Copper, now Capstone Mining, helped instill even more confidence in the Yukon’s economy.
The unemployment rate started to decline from 11.3% in 2001 to a 4.4% rate in 2006.
The second period, from 2006 to 2011, saw a continuing strengthening in investment in the mining sector, both in exploration and in mine development and construction. For example, the Yukon's mineral production is estimated at $485 million this year, compared to $46 million in 2006, while exploration expanded significantly to a record high of over $300 million this year. I would say that in the Yukon now, 10% of all exploration spending in Canada is directed toward Yukon, compared to 2% to 4% before.
The impact on Yukon’s economy and communities of the high investment level in exploration and mine development and construction is substantial. Our GDP grew by an average of 5% for each of the past five years, and the mining industry's share of Yukon's economy grew by 270% since 2006 and now represents almost 10% of Yukon's economy, compared to 2% to 3% in 2006. During the same period, the public sector's share of Yukon's economy declined. Because of growth in the size of the economy and the increased share of the mining sector, the public sector share declined to 33.9% of 2011's GDP.
We now have three mines in production in the Yukon—the Minto, Bellekeno, and Wolverine mines—and we have the Eagle project, a new proposed gold mine with construction slated to start next year. Currently, 745 workers are employed at these three mines, and 317 workers, or 43% of the workforce, are local, coming from the Yukon, and that percentage is growing every year. Even more impressive is that 50% of the local workforce is aboriginal, making the mining sector the sector with the largest proportion of first nations employees.
In the last five years, Yukon's population increased 11% to more than 35,000 people, and the labour force reached 20,500, an all-time high. The unemployment rate stayed low, between 4% and 6% over the period, with the most recent figures in November standing at 5%, well below the national average.
Looking forward, what do we see for the next five to seven years? What are the opportunities and challenges?
We expect that five to eight new mines could start construction, representing more than $5 billion in capital investment, thousands of jobs during construction, and more than 1,900 jobs during operation. During operation, we're expecting that some will have a very long mine life, exceeding 30 years.
To bring these new operations on line, significant investment will have to be made to improve Yukon's infrastructure and the capacity of the government agencies, educational institutions, and local communities, to accommodate the growth. While Yukon is relatively well connected compared with the other two territories, the transportation, communication, and power generation infrastructure will require significant investment in the immediate future and over the next five to ten years, in order to support and allow the development of these projects that are in the feasibility and permitting stages.
Regarding energy, Yukon electrical generation is at capacity as we speak, and significant new energy sources will have to be developed. Failure to address this issue will quickly stifle growth and limit investment in the territory. In all cases, any large energy project will require partnership between the Yukon government, Canada, first nations governments, the mining industry, and other industrial partners, as Yukon does not have the financial capacity to develop such projects on its own.
On transportation and port access, which are key to our industry, we have more than 4,700 kilometres of all-weather roads connecting 13 of Yukon's 14 communities. So our Yukon highways that are in place have capacity for significant growth. However, in the near future the addition of new resource roads will become more pressing to meet the need of new mine development while respecting development timelines.
Critical to the Yukon is continuing access to the port of Skagway in Alaska. The port is located only 175 kilometres south of Whitehorse. Already two of the Yukon mines are shipping their production through Skagway, and according to a recent survey by Deloitte, 90% of the proposed new mines are contemplating using Skagway to ship concentrates.
Training, education, and development of the Yukon workforce are key factors for the continuing well-being of our industry. Over the past five years, the Yukon was able to attract new workers to the territory mostly for work in the retail trades and service sector, and some of those workers have now migrated, taking jobs in our mining industry. The exhaustion of the local workforce pool and the competition with western Canada for skilled workers makes recruitment of new workers very challenging presently.
The Yukon must develop and expand its capacity to absorb, train, and educate a migrating workforce coming to the territory looking for jobs while offering better opportunities to our own youth population. Continuing support funding for training is key, and expanding the capacity of Yukon College to deliver training in trades and in developing technical and higher education programs in earth science, engineering, and environmental science is critical.
A recent funding announcement by CanNor for the proposed Centre for Northern Innovation in Mining and from the Yukon government to develop the first university of the north will help Yukon develop a northern capacity in mining-related education and training programs.
Another area that is very important and needs continuing support is public geoscience. It is fundamental to the recent success of the Yukon mining industry. New gold discoveries, including the raw deposit in 2006, the white gold deposit in 2007, and the Nadaleen Trend in 2010, have resulted in an unprecedented staking rush that is continuing to this day. Without the work of the Yukon Geological Survey, geoscience programs, the knowledge provided by the regional mapping programs, and the geophysical and geochemical regional surveys, these recent discoveries would not have happened.
Hundreds of millions of dollars are spent today in the Yukon on exploration because of these discoveries and the geoscience work conducted by the survey in the past. Renewal of the NRCAN GEM program and continuing support for the CanNor SINED program are critical to the exploration sector in the Yukon.
I'd like to briefly give an excerpt from the website of one resource company, ATAC Resources, where they state that:
In late July 2010, a new discovery of gold mineralization was made 100 km east of the Tiger Zone while following up anomalous arsenic values documented in the Yukon Geological Survey stream sediment geochemical data base. Prospecting and soil geochemical sampling by ATAC has outlined six areas of gold mineralization in bedrock and talus within a 2 km by 3 km area at the east end of a 25 km long belt of anomalous arsenic geochemistry termed the Nadaleen Trend.
This explains a lot of the activity going on in the Yukon today. That is clearly a follow-up on the work that the survey has done in the past.
Finally, it's very important as well that we accommodate growth by also providing for housing and community infrastructure. With the population growth experienced over the last five years, the housing stock and the land stock has been depleted. Vacancy rates are historically low while rent and house prices are trending sharply higher. The lack of housing is a deterrent in attracting workers to the Yukon and is a challenge for the low-income population, who have more and more difficulty finding adequate shelter.
In conclusion, I'd like to say that in this peak time in the exploration and mining industry, the Yukon is emerging as a global destination area for the identification and development of significant new mines. To achieve its full potential, the Yukon will have to ensure that it maintains a balanced approach and seek the collaboration of all its partners, including the continued support of Canada, in order to ensure that additional sustainable infrastructure is developed and the environment is protected for future generations. This collaborative approach will allow Yukon residents and all Canadians to benefit to the maximum extent possible from the activity in the Yukon.
Thank you very much for your attention.