Rising Arctic temps heating up mining-related economic development – by Dorothy Kosich (Mineweb.com April 13, 2012)

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The reduction in Arctic sea ice could open up access to mineral wealth, bringing with it unique risks and challenges, says Lloyds/Chatham House latest Risk Insight report.

RENO (MINEWEB) – The Arctic climate is changing more rapidly than anywhere else on earth, and the reduction in sea ice could increase access to mineral wealth and open up potential new ice-free shipping routes.
 
“Oil and gas, mining and the shipping industries will be the biggest drivers and beneficiaries of Arctic economic development,” says the report. “Based on current trends, expected investment in the Arctic could reach $100bn or more over the next decade. However, given the high risk/potentially high reward nature of Arctic investment, this figure could be significantly higher or lower.”
 
Three key factors are sharpening interest in the Arctic’s mineral resources; –Feasibility: Technological improvements mean that many more resource projects are technically feasible and commercially viable while geological risks can be better managed.
 
–Commercial attractiveness: High commodity prices, coupled with uncertainty about access to resources elsewhere in the world, make a far wider range of potential Arctic projects attractive to investors.–Access: Improving access to large parts of the Arctic reduces costs of operation and eases logistics.
 
“Thought the prospects are significant, the trajectory and speed of Arctic economic development are uncertain,” the study observed.
 
Nevertheless, Lloyds and Chatham House noted that mining companies have recently increased their investment in the region. Mining projects often offer better long-term potential for economic development than oil and gas, “with a larger permanent and local workforce and a project lifeline of several decades, from prospecting and production to closure and rehabilitation.”
 
The report discloses that there are currently 25 mines in operation in the Russian Arctic, while 36.8% of Alaska’s 2010 foreign export earnings came from exports of zinc, lead, gold and copper. Greenland is home to a number of mines.
 
Mining accounts for half the income of Canada’s North West Territories, while the Mary River Iron Ore Project on Baffin Island in Nunavut is due to begin development in 2013.
 
“In northern Scandinavia, there are mining prospects across northern Sweden and Finland, and iron mines in Kirkenes (in northern Norway) and Kiruna,” the report noted. “The latter is the world’s largest underground iron ore mine and the world’s largest Arctic mine – yet most of the ore is currently unmined.”
 
The study observed that mining company interest in the Arctic has been sparked by the fact “the Arctic has been much less geologically explored than other parts of the world and consequently there is the potential for the discovery of world class deposits.”
 
“However, the challenges and drawbacks are similar [to those of oil and gas companies]: remoteness, lack of infrastructure and the potential of disruption to production schedules causing logistical bottlenecks and increasing costs. While maritime transport to mines may become easier, mining activity away from the coastline may become less accessible,” the report advised.
 
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