Mining executives concerned about infrastructure, disputed land claims in Northwest Territories

Last month, the Financial Post reported that residents of the Northwest Territories began consulting on a new Mineral Resource Act, in an effort to boost new development as existing mining operations wind down. This is the first time that the NWT will write its own mining policies, something previously done by the federal government.

As mining is an important part of the NWT economy, the willingness to develop its own Mineral Resource Act may have significant impacts on the people of the NWT, so it’s important for the government to focus on the right reforms. The Fraser Institute annual Mining Survey can help shed some light on areas where current policies are seen as deterrents to investment in the NWT.

In the 2016 survey, the NWT received a score of 75.77 (out of 100) on our index of “investment attractiveness.” This index combines a region’s mineral potential with its perceived policy environment. The regional ranking of 21 out of 104 jurisdictions included in the 2016 survey is quite respectable, but there’s always room for improvement.

The Fraser survey asks senior mining executives for their opinion on 15 different dimensions of mining policy, answering on a five-point scale whether those policy elements (the taxation regime, for example) would “encourage investment,” would “not be a deterrent” to investment” or would pose a “mild deterrent,” “strong deterrent,” or whether the factor would cause them to definitively state they would not invest in the jurisdiction.

On the “good news” side of things, 63 per cent of respondents felt the level of security in the NWT encourages investment, and 48 per cent responded that political stability would also encourage investment. And 43 per cent thought the legal system would encourage investment as well. Another positive is that the percentage of people who said they simply would not invest due to a given policy factor are low, with the highest being 6 per cent who said they would not invest due to uncertainty concerning environmental regulations.

On the “not so good news” side of things, summing up the deterrent responses (from mild to would not invest), 78 per cent of respondents reported some level of deterrence over infrastructure, 75 per cent expressed some level of deterrence due to uncertainty concerning disputed land claims, and 67 per cent expressed some level of deterrence due to uncertainty concerning protected areas.

Within those clustered expressions of deterrence, 33 per cent of respondents said that infrastructure would pose a strong deterrent to investment, 25 per cent of respondents said that uncertainty about land claims posed a strong deterrent to investment, and 26 per cent responded that uncertainty about protected lands posed a strong deterrent to investment.

The Fraser Institute annual Mining Survey lays out a pretty clear pathway for the NWT to improve its attractiveness to investment. Resolve insufficiencies in infrastructure. Improving clarity and certainty about native land claims and protected areas should come first, but also not be the only focus. Some level of deterrence was also expressed regarding an uncertain regulatory environment (existing regulations and those that are environmental), socioeconomic agreements and the availability of labour and skills.