China-backed base metals producer MMG Ltd. is staking its claim in an industry race to the Canadian Arctic, filing plans to build two mines in Nunavut in the next six years.
MMG, which recently changed its name from Minmetals Resources Ltd., said on Tuesday it had submitted a project proposal for the Izok Corridor project – comprising the Izok Lake and High Lake deposits – to the Nunavut Impact Review Board and other authorizing agencies, starting a process that could see production as early as the last quarter of 2018.
Like other miners from Canada and abroad, MMG is looking for ways to grow as global resources become more scarce, and it is one of many global players with boots on the ground in Nunavut, where highly prospective geology boasts diverse deposits from uranium to iron ore, copper, zinc, gold, silver and even diamonds.
“There are a lot of minerals there, it is packed,” said Patricia Mohr, Scotiabank’s commodity economist in Toronto and a keynote speaker at the annual Nunavut Mining Symposium in Iqaluit, the territorial capital.
“I call Nunavut Canada’s new mining frontier, and there are many projects there that are under way,” she said.
The Izok Corridor, east of Nunavut’s Bathurst Inlet in the Kitikmeot Region of the territory, is expected to produce 180,000 tonnes of zinc in concentrate and 50,000 tonnes of copper in concentrate per year once in production. More impressive than the size of the deposits is the grade – 12-per-cent zinc and 2.5-per-cent copper – at Izok Lake, with similar grades at High Lake.
By comparison, global mining giants such as Chile’s Codelco are embarking on copper projects with grades below 1 per cent in some cases.
MMG spokesman Troy Hey said that “if everything goes to plan,” Izok Lake could come on line just as it winds up operations at its Century mine, Australia’s largest zinc producer, some five years from now.
The project proposal for Izok Corridor is one of the initial regulatory requirements for the project, and follows a successful pre-feasibility study last year. A definitive feasibility study was started in 2012 and will take from 18 to 24 months to complete.
“The two deposits are fantastic, it’s just the infrastructure challenges of that region that make it a very challenging project,” Mr. Hey said by phone from Australia.
Mining is not new to Nunavut. The underground Polaris zinc mine in the territory was closed in 2002 after more than 20 years of production. Agnico-Eagle Mines Ltd.’s Meadowbank gold mine in the Kivalliq region of Nunavut opened in 2010 and is the company’s largest gold producer at some 300,000 ounces per year.
But the latest rush up north promises bigger development.
On Nunavut’s Baffin Island, not far from where MMG wants to build its mines, the world’s largest steel maker, ArcelorMittal, is planning a $4-billion project to build an iron ore operation capable of supplying all Europe’s needs for more than 20 years. As well as other requirements, the owners of the Mary River project will have to build their own railway system.
Mr. Hey could not say how much it would cost to build the Izok Corridor mines, but it will likely be significant, with big-ticket items such as a 350-kilometre road to link the deposits with a new port at Grays Bay. A harsh winter and a remote location add further costs at a time when the price tag on new developments seems to grow daily and miners are keeping a close eye on slowing demand for many commodities.
MMG is also working to bring its Dugald River zinc project in northwest Queensland, Australia, into production by late 2014 or early 2015, when it expects zinc prices may have rebounded from a slump caused by a slowdown in China’s growth.
“There will be some tightness coming into the market there and it will be a good time to bring a project into production,” said Mr. Hey.
China is the world’s largest consumer of zinc, a key ingredient in making galvanized steel, which helped fuel a massive infrastructure build in the Asian giant over the past decade. But demand has slowed as urbanization efforts matured.