Newmont pull-out batters western Nunavut businesses
Kitikmeot, Nunavut firms lose more than $70 million annually
CAMBRIDGE BAY — Less than a year has gone by since Newmont Mining Corp. decided to put its Hope Bay mine project into “care and maintenance.”
Now the once-promising gold mining project, located on the mainland about 90 kilometres from Cambridge Bay, will move into full shutdown mode this winter.
And Kitikmeot Corp, the business development arm of the Kitikmeot Inuit Association, is already feeling the pain.
Newmont’s decision to halt development of the 80 km-long greenstone belt was “very significant” and “certainly disheartening,” KC’s president and chief executive officer David Omilgoitok said in his report to the KIA annual general meeting.
From 2009 to 2011, almost $290 million, or 52 per cent of Newmont’s contract spending, went to Kitikmeot- and Nunavut-based businesses.
Much of that money earned over the past years ended up in KC’s pockets through various joint ventures that worked on the Hope Bay mine site.
Now, that flow of money is drying up. Contract spending with KC dropped by over a half from 2011 to 2012, and will drop again as much proportionately in 2013, according to information from Newmont.
Since last January, Newmont has mothballed the sprawling site, which, at this time last year, included an accommodation complex surrounded by outbuildings, lots of busy machinery and a new network of mine shafts, with 340 workers on site.
Now, all new construction and exploration has stopped. Vehicles, drills and supplies have been sold or removed to save money.
Kitikmeot Cementation Mining and Development used to employ 57 workers at Hope Bay in rotation. By April they were gone.
The same goes for Kitikmeot Blasting, which now has “no other activity ongoing in the Kitikmeot region at this time.”
Kitikmeot Caterers still had 115 people at Hope Bay in September, but under a “best case scenario,” the company will be providing services to only a handful of people this winter.
“Beyond October and through to March 2013, a full shutdown may occur before care and maintenance is resumed,” Omilgoitok said.
Now, that’s in the cards.
All on-site personnel at Hope Bay will be off the site within the next week. And Newmont has sent 7,000 pounds of fresh and frozen food to Kitikmeot communities as well as about 50 television sets to Kugluktuk and Cambridge Bay as they clean up the accommodation site for the winter (the food filled 84 hampers, which were delivered to people in Cambridge Bay during the Thanksgiving weekend).
Of seven KC-owned joint-ventures, only the catering company and Nuna Logistics remain involved at the Hope Bay site, with some Kitnuna equipment still on loan to Newmont until the end of 2012.
If there was any benefit to the pull-out, KC’s partner in Kitikmeot Caterers ended up acquiring a 68-person camp, water and wastewater treatment plant, and an incinerator.
KIA, which had the first right of refusal on the sale of Newmont’s equipment, “realized a commission on this transaction,” Omilgoitok said.
You can still see Newmont’s other former equipment used around town — such as a big crane, acquired by Kitnuna, now being used to build KIA’s new $17-plus-million, three-storey office building.
For some people in Cambridge Bay, that building is a bittersweet reminder of a brighter future that would have seen up to 250 Inuit working at Hope Bay this year.
Instead, 150 people in the region — roughly 50 from Kugluktuk, 30 from Cambridge Bay and the balance from Gjoa Haven, Kugaaruk and Taloyoak — are now out of work or looking for new jobs due to the closure of the gold mine project.
Ask one man wearing a Newmont jacket how he feels about mining jobs, and this veteran of other on-and-off mines like Lupin says he’s through with mining: “they promise jobs and then they close down.”
KIA will also feel the pinch of at least 1.5 million dollars in lost revenues, according to financial statements discussed at the recent AGM.
From 2011 to 2012, Newmont’s direct payments to the KIA dropped roughly by half, and in 2013, payments will drop by around 50 per cent again, the company said.
And it may be a long time before these rise again.
“Hope Bay will happen. It’s just a matter of time,” said Alex Buchan, manager of community and external relations for Newmont in Cambridge Bay. “There is gold in there, [but] the conditions have to be right for the project to go forward.”
For now, all that’s planned is the return of “care and maintenance” crews. They will return from the spring through to the fall of 2013 to maintain the remaining facilities and conduct monitoring under various licenses and permits.
Newmont has still sent the Nunavut Impact Review Board a project proposal for the second phase of development for the Hope Bay belt, the “Phase 2 Hope Bay Belt,” for deposits at Boston and Windy, at some distance from Doris North.
Newmont plans to have environment impact statement guidelines issued for that new project, but won’t go any further until it makes a decision to return to Hope Bay.
“Essentially, the Phase II environmental review will be “parked” just prior to the draft environmental impact statement stage,” Buchan said. “This is a convenient step to stop the process as it does provide for some feedback and comment on our proposal without taking up time and resources going further along in the Nunavut environmental assessment process. “
The NIRB is holding public meetings on those plans in Kitikmeot communities this week and next, which started Oct. 9 in Kugaaruk.