Poor infrastructure a big deterrent to mining in Nunavut: survey
Nunavut ranks 37 out of 96 jurisdictions worldwide
Poor infrastructure in Nunavut is a huge deterrent to mining development in the territory, says the Fraser Institute’s 2012-13 survey of mining and exploration companies.
For these firms, it means infrastructure in Nunavut is at about the same level as the underdeveloped west African country of Guinea.
On the positive side, the companies say the security situation in Nunavut poses no concern.
The Fraser Institute’s Survey of Mining Companies: 2012-2013, which was released Feb. 28, is based on the opinions of mining executives representing 742 mineral exploration and development companies, commenting on the investment climate of 96 jurisdictions around the world.
The companies participating in the survey reported exploration spending of $6.2 billion in 2012 and $5.4 billion in 2011.
The survey ranks 96 jurisdictions using a Policy Potential Index (PPI) which measures the overall policy attractiveness of the 96 jurisdictions surveyed.
Nunavut comes in 37 in 96, behind Yukon and the Northwest Territories
But the survey noted that the PPI score for all of Canada’s territories continued to improve in this year’s survey.
Finland had the highest PPI score of 95.5.
Along with Finland, the top 10 ranked jurisdictions are Sweden, Alberta, New Brunswick, Wyoming, Ireland, Nevada, Yukon, Utah, and Norway.
Yukon was the first Canadian territory to make the top 10 in 2011-2012.
But the survey also reveals that Quebec appears to have lost its mining edge: the province ranked 11th out of 96 jurisdictions this year, down from fifth in 2012.
Quebec ranked first worldwide from 2007 to 2010.
“Falling from No. 1 to 11th in just three years tells us that the mining policies of the Quebec government, particularly uncertainty around changes to the provincial mining act and proposed royalty hikes, are a serious concern to the global mining community,” said Kenneth Green, Fraser Institute senior director of energy and natural resources and director of the survey.
Miners’ investment intentions reflect a cautious outlook, the survey notes: only 46 per cent of respondents said they plan to increase their exploration budgets in 2013, compared with 68 per cent in 2012.
More than 90 per cent of respondents “somewhat or fully agreed that it was currently more difficult to raise funds.”
A majority said the reason for this difficulty was investors being worried about the state of the world economy or being risk averse and seeing mining as risky.
The survey also notes that miners are pessimistic about short term commodity prices.
They expect nearly level or reduced prices for silver, copper, diamonds, coal, zinc, nickel, potash, and platinum with only gold expected to increase in value significantly.
Only over the longer term do miners expect stable or moderate price increases, the survey said.