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Now that that pit has reached its bottom, miners are digging a network of tunnels to extract what remains of the carrot-shaped deposit of kimberlite that they have been pulling from the ground for nearly a decade. (JOHN LEHMANN/JOHN LEHMANN/GLOBE AND MAIL)
Now that that pit has reached its bottom, miners are digging a network of tunnels to extract what remains of the carrot-shaped deposit of kimberlite that they have been pulling from the ground for nearly a decade. (JOHN LEHMANN/JOHN LEHMANN/GLOBE AND MAIL)

Mining

The North scrapes bottom Add to ...

It could be many years before the pipeline is built, Mr. Handley says. He believes the impact of looming hard times is already visible.

"You don't find people spending the way they used to. If they do have that disposable income, they're being very careful with it," he says. "And I see that happening for a long time, until people become much more optimistic about where things are going."

Pipeline supporters like Fred Carmichael, the chair of the Aboriginal Pipeline Group, have grown angry with the argument about shale gas. He believes that the exploitation of shale gas will be limited by environmental problems, and that the Mackenzie line will be needed to satiate society's growing energy appetite.

"We're going to need all the gas we can get," says Mr. Carmichael, who has spent years advocating for the project. "We see this as a first step toward economic self-sufficiency for our people and to bring us out from depending on the social welfare system."

"We have nothing else," he says.

'Not open for business'

Gary Vivian looks down at a series of aluminum cases the size of large suitcases and shakes his head. "This is about a $275,000 instrument that hasn't really done anything in two years," he says. "We were looking at buying another one two years ago. I'm glad we didn't."

Mr. Vivian is president of Aurora Geosciences, a firm that was once at the heart of the scramble for the NWT's mining resources, but which now finds itself desperate for work. Mr. Vivian, who first started working in Yellowknife in 1976, has lately contemplated moving his company out of town. Last year, Aurora's gross revenue fell 75 per cent.

"Everybody in the NWT wants to keep blaming it on the global recession, but we all know it's not the global recession," he says, pointing to the Yukon and Nunavut, which saw nearly six times more exploration spending last year than the NWT. The reason, he says, is that the NWT has thrown up so many obstacles to investment that people simply aren't interested any more.

"It's permitting, it's land claims, the fact that we're just not open for business," he says. Aurora has begun looking for work elsewhere, and now runs an office in Alaska. Other businesses are doing the same. Discovery Air Inc., the only public company headquartered in Yellowknife, has watched its stock fall to penny territory as it trimmed its helicopter fleet to 55 from 78, laid off staff, and started to drum up business in Ontario, where exploration has taken off, and Peru.

"We're not staying put waiting for the NWT economy to become more robust," says Chuck Parker, Discovery's executive vice-president of northern business services.

In Yellowknife, hope - and, among environmental groups, dread - prevails that the federal government will streamline the territory's thicket of regulations and woo business back.

Others are pinning their hopes on big federal expenditures: The territory is pressing Ottawa to invest in a Mackenzie Valley road; others think Canada could rekindle the northern economy by building a large hydro project, or an Arctic port that would drive mine development. Each carries an enormous price tag.

"So there are some huge 'asks' potentially on the table," says Premier Floyd Roland, who draws an analogy to federal outlays in the Hibernia offshore oil project and the Trans-Canada Highway. "It is the time in Canada's history now to make those similar types of investments in the North."

Take hydro, for example. One of the biggest costs of running the diamond mines is the diesel fuel they must import by ice road. If the mines were able to access cheaper electricity, the impact could be significant.

"There are lots of resources up there, but a lot of those are not currently on mine plans because of the operating costs. And that's mainly linked to energy cost," says Ricus Grimbeek, the former president of the Ekati diamond mine, now the global vice-president of health, safety, environment and community at BHP Billiton. "Once you've solved that, you've got diamond mines for the next 50 years, easily."

Absent a fix to power costs, those who worry about the territory's future say the social gains of the past few years - especially in income and education among first nations communities - could easily be squandered.

"The single-biggest indicator of whether or not a young person gets a job is whether or not his or her father has had a job. If your parents are in the situation where employment is just not possible, then you're in a generational issue after that, I believe," says Doug Matthews, a former high-level bureaucrat who now consults on energy issues for the territory.

"You can lose a generation very easily if you're not careful here."

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