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Prime Minister Stephen Harper makes an announcement on an all-weather road linking Canada's Arctic coast to the south for the first time, in Inuvik, Northwest Territories, Wednesday, Jan.8, 2014.Jonathan Hayward/The Canadian Press

Prime Minister Stephen Harper has broken ground on a new all-weather highway to the coast of the Arctic Ocean.

The two-lane, gravel artery will connect the northern community of Inuvik, N.W.T., to Tuktoyaktuk, about 140 kilometres away.

The link, which will hook up to the Dempster Highway through the Yukon, is expected to deliver many economic benefits and save northern families hundreds of dollars a year in shipping costs when completed in 2018.

Harper has made northern development a key part of his mandate and completing a gravel-surfaced, all-weather road to the Arctic coast has been on the northern wish list since the 1960's.

The prime minister credited his predecessor John Diefenbaker with the idea for the link.

The Harper government promised to pay for half the $300-million project in the 2012 budget, a commitment that has since grown to $200-million.

Once complete, the highway is expected to cut shipping costs to Tuktoyaktuk for essentials such as groceries by about $1.5-million – or about $1,500 in savings for resident in town.

Construction will create the equivalent of 1,000 jobs, with 40 permanent positions.

Most of the work will take place in winter to inflict as little permafrost damage as possible.