Canada's mild winter disrupts key ice road to remote Arctic diamond mines

Burgundy Diamond Mines

30/03/2024 10:00

By Divya Rajagopal
       TORONTO, March 30 (Reuters) - An unusually warm winter
in Canada this year has delayed the opening of a 400-kilometer
(250-mile) ice road that is rebuilt every year as the main
conduit for Rio Tinto  RIO.L , Burgundy Mines  BDM.AX , and De
Beers to access their diamond mines in the remote Arctic region.
    The Winter Road, which serves the region accessible only by
air for 10 months of the year, opened with a two-week delay in
the middle of February, disrupting movement of goods along the
ice road built over 64 frozen lakes. 
    Earlier this week, the Tlicho government in Northwest
Territories (NWT) restricted movement of commercial trucks for
few days in one of the winter roads due to anticipated warmer
weather across the North Slave Region.     
    While diamond production remains unaffected, the delay
underscores the challenges that companies face as the mines that
make Canada the world's third largest diamond producer come to
the end of their productive life. 
    It also highlights the infrastructure hurdle for the NWT and
Nunavut that are positioning themselves as the next frontiers in
the exploration of critical metals, such as rare earth, cobalt
and lithium, in the transition to a greener future. 
    The delays in building the Winter Road, which first became
operational in 1982, have happened in the past, but this year's
is the longest delay in recent years, according to Tom Hoefer,
senior advisor to the NWT and Nunavut Chamber of Mines.  
    "We did start the road a bit later as a result," he said.
    Climate change, driven by the burning of fossil fuels,
coupled with the emergence of the natural El Nino climate
pattern, pushed the world into record heat territory in 2023.
    The impact of El Nino this year resulted in Yellowknife, the
capital of the NWT, recording a maximum temperature of zero
degrees Celsius (32 degrees Fahrenheit) in December and minus
8.7 degrees Celsius (17.6 F) in February, making it the warmest
winter days in a decade, according to data from Environment
Canada. 
    The Winter Road opens between late January and early April
and requires minimum of 29 inches (74 cm) of ice for vehicles
that can carry 26,000 kilograms (57,320 lbs) of gross vehicle
weight, to transport diesel and dynamite required to operate the
mines.
    On warmer days, the engineers have found ways to trick
nature by creating artificial ice using giant sprinklers to
spray water high up in the air so that they cool and form thick
layer of ice when they fall.
    Paul Gruner, CEO of the Indigenous corporation Tlicho
Investment Corp & Group of Companies said this year the warm
winter at the start and if there is a warmer end of the season
or an early spring, it could risk an early closure. 
    "So when you're nibbling away on both sides of that, you
start to create a very short season," Gruner said. 
    The Winter Road is jointly operated by Burgundy Diamond
Mines, Rio Tinto  RIO.AX  and De Beers of Anglo American group
 AAL.L  which run the Ekati, Diavik and Gahcho Kue diamond mines
respectively.
    De Beers and Burgundy Diamonds said operations at their
mines have not been affected by the mild winter. Rio Tinto
declined comment. 
    The Winter Road costs C$25 million ($18.54 million) to
operate for two months, which is shared by the three companies
based on goods transported on the road and distance traveled.
    However, the mines have a operational life of around 20
years and as they reach the end of life, they need to be shut
down.
     Rio Tinto has said it will close the Diavik mine in 2026
and De Beers plans to shut Snap Lake end of this year, while
seeking to extend the life of Gahcho Kue. 
    
    CHICKEN AND EGG
    Canada's remote Arctic region, home to around 86,000 people,
is facing the complete closure of all the diamond mines by 2030
and is looking for ways to keep mining alive.
    The lack of infrastructure is a challenge and the shortened
seasonal use of the ice road could hurt investments needed to
mine critical minerals. 
    "If you're in the exploration phase ... and looking at using
the winter road as part of your core business model, the risks
start to come into ... your decision making whether or not to
advance a project," Tlicho Investment's Gruner said.    
    Hoefer of NWT and Nunavut Chamber of Mines said the two
Northern territories, which are as big as Europe, have the
highest infrastructure deficits in Canada -  one of the reasons
for the very high costs of living and doing business in the
North.  
    "It is a chicken-and-egg situation, the mining companies
probably won't come unless there is some infrastructure, it's
just too expensive," said Heather Exner-Pirot, director of
Energy, Natural Resources and Environment program at
Macdonald-Laurier Institute. 
    It costs C$3 million a kilometer to build gravel roads,
Pirot said.
    Mining groups are pushing for a mega infrastructure project
that connects NWT to Nunavut that runs through the diamond mines
could help unlock the mineral riches in the region. At least 23
of the 31 critical minerals listed by the Canadian government is
found in the NWT.
    "When the project comes up, it would replace the roads that
have served mining for 40 years, but until that happens, the ice
roads are required," Hoefer said.
($1 = 1.3483 Canadian dollars)

 (Reporting by Divya Rajagopal
Editing by Denny Thomas and Marguerita Choy)
 ((divya.rajagopal@thomsonreuters.com;))