Gold miner Agnico Eagle warns against carbon tax in Nunavut

Agnico Eagle is warning the Government of Nunavutthat a carbon tax would not only hurt the company's viability, but could also deter future mining investment in Nunavut.

The warning came in an email sent to Nunavut Premier Peter Taptuna last month. It was tabled in the legislature on Wednesday the same day Finance Minister Keith Peterson gave his budget address, where he stressed that the success of the mining sector was crucial to the territory's future.

Agnico Eagle owns the Meadowbank Gold mine in the Kivalliqand its board has approvedthe construction of two more gold mines in Nunavut. In its letter it said it costs twice as much to develop a gold mine in the North than in the South.

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The federal government is aimingto have carbon pricing in place by 2018starting at $10 per tonne, then raising it annually to $50 per tonne by 2022. Agnico Eagle said the tax would be a blow to its efforts to sustain a mining platform in the North.

"The wall-to-wall application of the carbon tax to Nunavut would reduce even further the attractiveness of Nunavut for mining investors," the letter read, signed by the company's vice-presidents Louise Grondin and Dominique Girard.

"Based on the proposed carbon-tax pricing scheme, the impact to Agnico Eagle will be approximately $20 million per annum in 2023 for its carbon emissions in Nunavut."

Given Nunavut's lack of infrastructure, the territory is powered almost entirely by diesel fuel, and Agnico Eagle's site is no different. The company anticipates that 80 per cent of the carbon emitted from its future Meliadinesite slated to open by 2019 will come from power generation.

"We are sympathetic to the global concerns about CO2 levels," the letter reads,"but burdening the sole emitter in the Kivalliq region, who happens to be the largest and only scale industrial employer in the region, may do more harm than good to the future economic viability of the region's communities."

Investing in alternative energy

The company also took aim at the federal government in its letter, saying that rather than taxing businesses, it should help develop alternative power generation in the North.

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"Northerners should have the same right to a prosperous economic future as the rest of Canada," the letter reads.

"If the lack of alternative energy options is preventing this, the government should take it upon themselves to partner with communities and industry to find a solution."

Mitigating impact on mining sector difficult, Taptuna says

Taptuna has long said the government is working on finding solutions to mitigate the impact of a carbon tax on Nunavummiut, who already pay some of the highest commodity prices in Canada with most goods flown in.

When pressed in Question Period in the legislature Thursday, Taptuna said they're in talks with the federal government about potentially exempting certain types of fuel from the carbon tax, specifically heating fuel, jet fuel and fuel for "generatingpower."

While he said getting a similar deal for the mining sector is up for discussion, he said it's difficult to find ways to mitigate "some of these things."

"That's why I want to sit down and talk with the companies to ensure that we find the best way possible to benefit Nunavummiut," Taptuna said.

"The company provides a lot of jobs for Kivalliqmiut, and Nunavummiut, and we want to ensure they don't leave."