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Fortune Tellers - NWT...

Fortune Tellers - NWT...

...with Bob McLeod, Jeff Philipp and Bob Gannicott
By Herb Mathisen
Feb 03
2016
From the February 2016 Issue

Bob McLeod, NWT Premier

Spread the wealth

More so than its neighbours, the NWT in 10 years could find itself at a crossroads with the sector that will have carried its economy for the previous 90 years.

2015 ended ominously. Days before the new territorial government was sworn in last December, De Beers shut down its Snap Lake diamond mine for a year—and likely for good—due to depressed diamond prices, and because the mine wasn’t really making any money. This left the territory with just two producing mines—though De Beers and  parent company Anglo American are full steam ahead on the Gahcho Kué diamond mine, on track for production later this year.

Still, by 2026, the territory’s mines will be reaching the end of their lives, and since those in development are struggling to raise the hundreds of millions and billions needed to get built, there isn’t a sure bet to replace them. (Though, future technological breakthroughs might see demand for cobalt or a rare earth metal skyrocket, and that could be just what a mining project needs to raise said money.)

Premier Bob McLeod, re-elected for his second term, says the government could support six of the most advanced mining projects with some sort of infrastructure investment. That could include extending the all-weather road to the diamond mines to try to make the next discovery that much easier; extending the Mackenzie Valley highway from Wrigley to Norman Wells to open up oil and gas exploration; and building a highway to connect to Tłįchǫ communities and to a nearby mining project. But those investments aren’t  sure bets either. “All these projects have to go through rigorous processes to show that they are worthwhile investments for our government and also to make our case to the federal government,” he says.

“People used to live and survive in communities by being very independent and harvesting off the land and the resources."

That last part is important right now, because none of this can happen without the feds. McLeod is expecting a flat revenue outlook for the GNWT over the next four, or even five years. That means the territorial government will have to match spending with revenues, which would hamstring its ability to fund big infrastructure projects on its own. Enter the feds. McLeod is heartened the new Liberal government is open to spending on new infrastructure. He’s already sent Ottawa a wish list. (The Inuvik-to-Tuk road should be done next year, opening the Beaufort Sea to road access, but oil and gas development might be 10 years away—McLeod concedes, “it’s always been 10 years away.”)

As for diversification, McLeod says tourism has the most potential, though it’s still mainly a Yellowknife industry. Many aurora tourists from Asia—NWT Tourism’s biggest draw—don’t leave the capital. “Our challenge is to find a way to spread it across the Northwest Territories,” he says, adding the NWT needs to develop its aboriginal and eco-tourism markets better.

A revival in the Great Slave Lake fishery holds promise, as does a wood pellet plant being conceived near Enterprise, NWT. Really, the territory needs to work with what it’s got. “People used to live and survive in communities by being very independent and harvesting off the land and the resources,” says McLeod. Wood for biomass, fish and food produce are resources available in the North, though Northerners are “purchasing and transporting them from the south at a very high cost.”

And that’s just it. Slowing this southward flow of money is at the heart of building a sustainable Northern economy.

Jeff Philipp, SSI Micro founder

Get healthy at the cellular level

Jeff Philipp might be the most idealistic businessperson North of 60.

His telecoms business—SSi Micro, based in Yellowknife—connects people in remote and underserved markets in Nunavut, the NWT, Indonesia, Africa and the Pacific island nation of Kiribati to the rest of the world. Really, his concerns should be global.

But for all the expansion, his thoughts always come back to his struggling hometown of Fort Providence (population: 800), where he ran the family business—the Snowshoe Inn—and started SSi. “As an organism, as a territory, we will die if at the cellular level we’re not healthy,” he says. “How do you start at the community level and make sure that, at that cellular level, we’re healthy?“

Focusing on resource development isn’t the answer, he says. Though the payoffs (jobs) are obvious, much of mining and oil and gas revenue—the processing and refining of materials—leaves the territory when the product’s out of the ground. “We’re looking to have an external force come in and develop a resource to build jobs, which are by their very nature temporary,” says Philipp. And people have to leave home for work, aggravating a problem already facing most small communities—a brain drain to cities.

Fixing that problem in Fort Providence isn’t easy. Kids who go away for school don’t have much to look forward to when they return. “They realized if they want to come home, they’re living with their [parents and] five brothers and sisters forever because there’s no housing in that town,” he says. There’s no housing because there’s no land claim, meaning you can’t buy property and get a mortgage. 

“We’re losing all the capable entrepreneurs, businesspeople, employees, kids out of these communities, and it’s a brain drain into the cities and the south, as much as anywhere."

And it’s a vicious circle. Without these ambitious students, the level of employability in town decreases. And when businesses, frustrated with the lack of commitment from the remaining labour pool, start bringing in hungry job-seekers from competitive markets, “the community suffers because then you are really enslaving a bunch of people into poverty.” Many communities survive on the backs of a small group of committed and civic-minded residents—a hamlet or band employee, a businessperson. When those people get tired or decide they’ve had enough, communities can spiral out of control.

What can be done? Well, Philipp is proposing a grand solution—he’s calling it a “community partnership proposal.” He’s submitted a suite of “no-brainer” and “profitable” business ideas to the hamlet, the Deh Gáh Got’ie Dene band, and the Fort Providence Métis Council, with a promise to finance and support the ventures. (Though he discussed these business ideas at length, he doesn’t want to announce them publicly just yet.) He envisions these businesses being 100 percent aboriginal-owned—by the band, Métis or local entrepreneurs—and he’s willing to help those would-be owners to learn the ropes of running a business. (And since the Snowshoe generates its own power and heat, Philipp can help them be more competitive there too.) The only caveat is a portion of revenues would go into a community foundation for scholarships, jobs and housing.

The idea gets more radical. Philipp wants to be able to promise housing to kids at school who return to Providence. “And if you stay in school with the goal of coming back to have that house, there’s a job that goes with that house,” he says. “Like, ‘Look at the menu of jobs that we have and pick one.’”

It’s all about trying to keep money and jobs in the community, to give people a reason to get ambitious, and to spark local entrepreneurship. And to close what he calls “the everything gap” that exists between communities and larger centres.

Because, in the last 15 years, Philipp says things have only gotten worse in Fort Providence—just off the highway, home of the NWT’s Premier and MP. “If that’s happening in Providence, which is a model community on the road system, on the way to Yellowknife—the Great Mecca—then what’s happening in Grise Fiord, in Nahanni Butte, in Trout Lake?” he asks. “Those communities have it way worse and we never see it, because we don’t drive by, we don’t fly in, we don’t know.”

Bob Gannicott, Chairman, Dominion Diamonds

Strike while the iron (or gold or diamonds) is hot

The mining game has changed since Bob Gannicott first came North in the 1960s. Gone are the halcyon days of the frontier-mining town. Like Yellowknife. The Con gold mine opened in 1938 and “it employed a lot of guys, [mining] very manually for a very long period of time and that allowed the city of Yellowknife to grow up around it,” says Gannicott. Across town, Giant Mine started up in the late 40s. Both mines chugged along until they closed within two years of each other at the start of the millennium.

But mines just don’t run like that anymore. The work is largely mechanized with mammoth equipment, and because companies are beholden to the quarterly expectations of shareholders, production rates are much higher to mine the ore-bodies as efficiently as possible. As a result, mine lives are shorter these days.

Don’t believe it? Gannicott says Con, over the course of its 65-year life, produced as much in value terms as the NWT’s first two diamond mines—Diavik and Ekati—did together over their first two years. “You can’t be looking at mining as something that’s going to be there as a permanent thing. It’s just going to be a stimulator,” he says. “We’ve got to find a way to hang economic development on that.”

But it’s not so easy. Though the NWT’s mines have local hiring and contracting requirements, the cost of living—and particularly the power rates, according to Gannicott—has people choosing to move south. “They’d rather just climb on a plane and go to Calgary,” he says. And with all the competition above Yellowknife’s skies, and the resulting fall in fares, “it gets cheaper and cheaper to do that.” Recently, Dominion discontinued flying employee charters south out of Yellowknife for its Ekati operation to discourage this commute.

"Somebody’s gone out and spent $1 billion building these places. Can’t they be used for something that we need in the territories, instead of just ripping them up again?”

Today’s mines are also usually located in the sticks, and towns just aren’t built alongside them anymore. Yet mines still need airstrips, water and sewage treatment plants, power plants and extensive worker accommodations—and Internet, gyms, pool tables and all the other conveniences of home. Diavik even has power-generating wind turbines—the only ones churning out power in the territory. But when the mine shuts down, what will happen? Gannicott thinks they could be put to use as potential research stations, or on-the-land rehabilitation centres. Or pretty much anything you can dream up. 

“Don’t be quite so eager to have everything that was built pulled up and thrown away,” he says. “Start doing some thinking early on about the fact that somebody’s gone out and spent $1 billion building these places. Can’t they be used for something that we need in the territories, instead of just ripping them up again?”

The economy of the Northwest Territories is problematic, he says. After the fur trade died off, the territory has made its money on mining and government, and the industries like aviation that support them, “Somehow, we’ve got to break out of that.”

Remote communities in Ontario have seen small-scale manufacturing of products like Kevlar canoe or kayaks—items inspired by their surroundings. “Those kinds of businesses could take place in Yellowknife … but not when you’re charging the kind of money that we are for hydro.” If those rates came down, maybe in 10 years you’d see custom-built powerboats, fishing gear, or, hell, even cold-water diving equipment designed and tested on Great Slave Lake, and exported to the rest of the world.

Absent some creative thinking, Gannicott thinks the territory—and Yellowknife—will lose its heart. “It will be nothing but a government town and a hospital centre and that kind of thing,” he says. “And that’s it.”

Going local

Money leaves small towns to bring in things like fuel and food, says Craig Scott, executive director of Ecology North. “If you can replace diesel fuel with wood pellets or wood that you harvest yourself, then you’ve kept a whole bunch of money in the community and you created some jobs.” We asked Scott to look into his crystal ball to predict other ways we might keep money in the North.

  • “In 10 years, there’s potential that we could produce 50 percent of our own food here. There’s a guy up in Norman Wells who grows 30,000 pounds of potatoes a year and he does it basically on the edge of an airstrip. And that’s Norman Wells. You could grow a lot more potatoes in Fort Simpson or Hay River.
  • One thing you could prognosticate on is we’re going to have a farming belt, especially around Fort Simpson, and along the Mackenzie River where the soils are amazing. All along the Hay River and even along the highway—Jean Marie River and hopefully Fort Prov.
  • In 50 years, we’re going to be growing wheat and all kinds of things up here [with climate change.]
  • In Hay River, Taltson [Hydro] has excess power—it’s pretty much free power that the Power Corp is just letting go. [With new battery technology] there’s no reason why we can’t make Hay River into an electric vehicle-testing hub—like cold weather testing if you’ve got free electricity.
  • We probably have more cloudberries here than any place on the planet. In Scandinavia, it’s super-expensive to buy cloudberries.
  • I’m pretty convinced the Mackenzie River is gonna be one of the biggest salmon rivers in the world in 50 years.”