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Zinc hungry China asks Canada to back giant mine
by Staff Writers
Ottawa (AFP) Jan 5, 2013

With zinc sources drying up and demand forecast to surge, resource hungry China is looking to Canada to approve two giant mines and close the gap -- but environmentalists and roving caribou stand in the way.

There are rich deposits to be had at the Izok and High lakes in Nunavut, in Canada's Arctic territory, with companies anxious to build the transport links and infrastructure needed to extract the bluish, gray element and move it out.

An Australian subsidiary of Chinese state-owned Minmetals Resources Ltd has proposed that two multi-billion dollar mines be built and Canada's government is considering granting regulatory approval for the project.

The plan would involve the partial draining of several lakes to access vast zinc deposits, building dams to divert water, as well as the construction of an airstrip, and a port at Grays Bay on the central Arctic coast.

Hundreds of kilometers (miles) of roads and more than 60 bridges would complete the project. Ships would access the port through the Northwest Passage.

The scheme is projected to be capable of annually producing 180,000 tons of zinc and another 50,000 tons of copper, over 12 years.

At the center of the proposal, however, are calving grounds for the roving Bathurst caribou herd, a population that has fallen tenfold in recent decades to about 30,000 animals at the last count in 2009.

The animals begin their annual migration south after calving, but return and tend to use the same areas year after year, but a mine would present them with a different challenge altogether.

Izok Lake would have five separate underground and open-pit operations producing zinc, lead and copper. High Lake, 300 kilometers (186 miles) to the northeast, would have another three.

The scale of the mines have attracted concern from environmental groups -- MMG, Minmentals' subsidiary, also wants to build a processing plant on-site to handle 6,000 tons of ore a day, a tank farm to hold 35 million liters of diesel for the operation, and residential camps for hundreds of workers.

At stake are the deposits, given that the outlook for zinc presents a rich commercial opportunity.

The market for the metal is currently down with inventories at an all-time high. But with several large sites, including MMG's Century Mine in Queensland, Australia, and Xstrata's Brunswick Mine in easternmost Canada, scheduled to close soon, and no new deposits discovered, prices are expected to rise.

Zinc is used to galvanize steel -- protecting it from corrosion -- as well as in the die casting industry, and to produce brass and bronze.

Leading economies around the world and Chinese infrastructure expansion, chiefly in railways and buildings, demands zinc, as does China's developing auto sector.

The Izok Corridor deposits were acquired by Minmetals in 2009, after changing hands several times over past decades.

Stefan Ioannou, an analyst at Haywood Securities, said new sources of the metal, and the lack of obvious supply lines, was becoming increasingly stark.

Ten percent of global supply will be lost and "there's nothing to replace it," he said. "2013 will be a transitional year for zinc."

The decision on the Nunavut mines is currently with four federal ministers -- for northern development, transport, natural resources, and fisheries.

Officials say they are trying to determine how to conduct an environmental review for a project of such unprecedented scale in the far north.

They may send the proposal back to MMG and ask for changes, hold hearings or involve local and territorial governments if the impacts are deemed to be broad enough.

Sally Cox, a spokeswoman for MMG, in a telephone interview from Melbourne, told AFP that the caribou were "one of the biggest impacts" to be considered, but pledged the company would mitigate against any animal harm.

Environment Canada said in a submission to the Nunavut Impact Review Board (NIRB) that the mines "may cause significant adverse effects on the ecosystem and wildlife habitat."

The mines could start producing in 2018 if preliminary work on-site is started in late 2014 before the end of the regulatory process.

After its Century Mine is depleted by 2016, MMG would cease to qualify as a major zinc supplier.

"So we see a need for a new supply to continue in the future," Cox said, conceding that the Izok Corridor project will nonetheless be difficult.

"All the easy projects have already been found and developed and there are none now sitting near built infrastructure. We expect to have to address more community and environmental issues."


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