1

Background and insights into Nunavut

Doing Business in Nunavut

Prepared and delivered by Aarluk Consulting for the Government of

Newfoundland and Labrador

2

Welcome

Government of Newfoundland & Labrador

&

OceanAdvance Inc. AGM

3

Activity

• What do you know about Nunavut?

4

Our Objectives

• To provide information on how to navigate the business culture in the growing market of Nunavut

• To give an overview of the major economic sectors that offer the most potential opportunities

5

Our Agenda…

• Introduction to Nunavut • Unique factors that impact business development

in the North• The Nunavut Economy• Major Players• Opportunities • Possible market entry strategies• Questions and Answers – throughout and will

allow for follow up afterwards

6

Never Forget…• That business in Nunavut is very

different from doing business in Newfoundland and Labrador, or Ontario, or other places ‘down south’.

• There is a land claim and this sets the stage for how business is done in Nunavut.

7

What you’ll learn• We will provide everyone with an

overview of doing business in Nunavut

• Overview is the key word here. We only have a brief amount of time and Nunavut is a BIG place

8

Nunavut- Our Land

9

Nunavut- Our Land

• 1.9 million km² (750,000 sq. miles)• 5th largest sub-national political unit in

the world • 20% of Canada’s land mass• 13th biggest “country” in the world • The size of

– Three Germanies– One Mexico– Four Newfoundland & Labradors

10

Nunavut- Our Land• Population of Nunavut: 31,906 (2011)• Median age = 22 (youngest in Canada)• Inuit: 24,635 (83% of the total population) • Populations per square kilometre density:

0.01 people per square km. • Languages spoken: Inuktitut,

Inuinnaqtun, English and French• There are no roads connecting Nunavut

communities. Access by air and ship only.

11

Nunavut- Our Land• There are 25 communities in the Territory• Community populations range from 130 to

6,700. • Iqaluit is the capital of Nunavut with the

population of 6,700• Grise Fiord is the northernmost

community with 24 hours of daylight in June and 24 hours of darkness in December

12

Nunavut- Our Land

BAFFIN Region

KITIKMEOT Region

KIVALLIQ Region

13

Nunavut- Our Land• A limited wage economy• Strong traditional economy• Arts and crafts industry• Federal transfer payments • Mining: Lead, zinc, silver, diamonds,

iron ore, and gold • Construction/infrastructure• Fisheries and meat processing plants • Tourism

14

Nunavut- Our Land• Cost of living – 1.6 to 3X the cost of

living in other parts of Canada

• Take a moment, how much do you think 1L of Tropicana Orange Juice may cost in Nunavut?

15

Nunavut - Our (expensive) Land

16

Nunavut- Our Land

• Nutrition North is currently examining how to improve the access to healthy food with lower prices

17

Political Evolution

• In the 1950’s RCMP, Missionaries, Teacher, Gov’t Officials replaced the traditional structures (Inuit move to communities)

• Impact still felt today – alcohol/substance abuse, suicide, incarceration

• Education led to a new generation of fluent, politicized Inuit leaders

18

Political Evolution

• New generation of leaders learned and made use of political and constitutional structures

• Saw devolution from Ottawa to YK• Understood significance of non-

renewable resources• Launched the Land Claims

movement and process ofdividing the NWT

19

About Land Claims• Negotiations started in the early 1970’s and

were finalized in 1993• Land Claims = modern day

treaties• Defines title, ownership, use

and access of land• Based on historical and continued

use

20

About Land Claims• The Nunavut Land Claim Agreement

• Inuit gave Canada rights of entry, access, land use.

• Government compensated Inuit for these rights and the means of participating in economic opportunities;

• Provide Inuit with wildlife harvesting rights and rights to participate in decision-making concerning wildlife harvesting;

• Encourage self-reliance and the cultural and social well-being of Inuit.

21

Article 19

• Gives Inuit ownership of 356,000 square kilometres of land in the Nunavut Settlement Area

22

Article 24• Requires GN and

federal government procurement policies that favour qualified Inuit firms over other businesses

• Commits governments to train Inuit firms, and to set up programs to increase Inuit job and business skills

23

Article 26

• Sets out the rules to be followed when a major development project is planned for Nunavut

24

Article 26IIBAs can deal with• Inuit training and hiring. • Labour relations. • Business opportunities for

Inuit• Housing, accommodation

and recreation. • Safety, health and

hygiene. • Research and

development.

• Inuit access to facilities constructed for the project

• Environmental concerns and disruption of wildlife, including wildlife disruption compensation schemes.

25

Why Does It Matter? 1. Inuit hold land with both surface and mineral

rights;2. Inuit participate in project screening/review; 3. Inuit collect royalties on any mining project; 4. Inuit enter into IIBAs for all major developments

on Inuit Owned Lands or consult on benefit plans for developments on Crown land;

5. Inuit development corporations provide goods and services for exploration and mining projects;

26

Pause. Breathe.

See the differences?

Any quick questions, comments, concerns?

27

The DIOs

28

The DIOs

• All have responsibilities under the Land Claim to carry out specific duties

• There are business development wings including development corporations that GNL and NL businesses need to be aware of for exploring opportunities

29

The DIOs

• Local Hunters and Trappers Organizations

• Take on responsibilities for wildlife management and working with communities on quotas

• Fishing examples: AFA, BFC (4 Vessels)• NL Connection – Captains and mates

30

The IPGs

Nunavut Wildlife Management BoardNunavut Water Board

Nunavut Planning Commission (LookNorth)Nunavut Impact Review Board

Nunavut Surface Rights TribunalInuit Heritage Trust

BONUS!Inuit Tapiriit Kanatami

Inuit Circumpolar ConferencePauktuutit Inuit Women’s Association

31

Birthright Corporations

KITIKMEOT Region

BAFFIN Region

KIVALLIQ Region

32

Birthright Corporations

** Please Note: You will NOT be tested on the logos of the Birthright Corporations!

33

Government of Nunavut

• Powers of the Nunavut Government set out in the Nunavut Act

• NOT a province:– No non-renewable resource revenues– Territorial laws can be over-ridden

• NOT an Aboriginal Self-Government, unlike the Gwichin, Inuvialuit and Nunatsiavut

• Laws are made by a 21 member elected legislative Assembly, operated on consensus.

34

Government of Nunavut

DEPARTMENTS RELATED TO BUSINESS• Community and Government Services• Economic Development and Transportation• Health • Family Services (new) • Environment

AGENCIES • Nunavut Development Corporation • Nunavut Business Capital Corporation • Nunavut Housing Corporation• Qulliq Energy Corporation

35

• Key labour force factsHigh Inuit unemployment rates High number of young peopleLow graduation and education levels

Overview ofLabour Market

36

The Economy

• Fastest growing economy in Canada

• Nunavut’s real GDP was $1.96 billion in 2013, up from $1.37 billion in 2009

• Government expenditures made up 71% however with growing resource and fisheries sectors, exports are quickly becoming a more significant portion of the economy

37

• Optimism about the future of Nunavut especially for 2015 – Anticipated 6.8% GDP growth for 2015 versus

Canada 2.6 % – Modest growth in 2.3 % in 2016– Mining: Big boosts – Baffinland Iron Ore Mine – Canadian High Arctic Research Station in

Cambridge Bay - $143 million– Iqaluit airport - $300 million , to be completed in

2017

Conference Board of Canada- Nunavut Highlights

The Economy

38

– Meliadine ( permit stage) & Amaruq deposits (invested $10m in exploration – 30,000 metres of drilling)

– Private sector continues to grow– Public Sector is expected to grow by 2.8% in 2015

due to Nunavut rapid population growth

Conference Board of Canada- Nunavut Highlights cont.

The Economy

39

– Construction spending expected to increase approximately $100 million in 2015• 60 % construction jobs are from the outside• 40% filled by workers from Nunavut • There is a need for 300 – 350 workers from outside• Great opportunity for training and employment

– Unemployment to drop – 2011 – 16.5% ; 2015 forecasted to be 11.3%

Conference Board of Canada- Nunavut Highlights cont.

The Economy

40

BaffinlandBiggest iron ore resource in the world, construction was initiated in 2014 and be completed in 2016

Some delays, but initial production has started

21 year expected life span and initial investment of $4 billion expected.

Mining

41

Agnico Eagle – Meadowbank

• Only operating gold mine in Nunavut – located near Baker Lake in the Kivalliq region

• In 2010, Meadowbank contribution to the overall Nunavut economy was 20%

• Meadowbank spent in total $969 Million in supplies between 2007 and 2010

• Meadowbank $700 Million site

Mining

42

Agnico Eagle – Meliadine

• Meliadine, another gold mine site, is scheduled to open in 2017 (cost estimate: $382 Million)

Mining

43

• 196 permits, 5,658 claims and 701 leases were active in 2013 – a wave of potential development in the future??

Mining

44

• Estimated to be one of the biggest oil and gas reserves in the world, no producing fields currently

• Research and development to find cost effective ways to access these reserves is an area for growth

Oil and Gas

45

• Nunavut dependent on diesel generation for electricity production

• Most existing plants are at or nearing the end of their effective life span

• Replacement and upgrading is a major priority for Qulliq Energy Corp over next 5-10 years

• Projected budget $145 Million in 5 year plan. $250 Million in 10 year plan

Power

46

• Developing sector in NU• Some interest in solar, wind, and

hydro power generation• 24 hours of darkness in January

offset by 24 hour sunlight in July – potential here?

• Payback may be immense

Renewable Energy

47

• In 2013-2014, $100 million was spent on housing construction (federal funding)

• The Government of Nunavut provided $8 million in capital funding which was matched with $1.455 million of CMHC funding under the Investment in Affordable Housing (IAH)

• The NHC completed the development of a strategic framework along with the GN’s Comprehensive Long Term Housing and Homelessness Strategy

Housing Construction

48

• With no roads, airport and marine facilities are the life blood of Nunavut.

• Marine infrastructure under development

• No deep water ports currently, but a lot of discussion in recent years

Infrastructure

49

• ACL and Northern

• Continued upward climb

• Tim Horton’s !

• NU retail sales continue to climb – 2013 $353 Million, $29 Million increase to 2009’s retail sales

• Online shopping with high shipping costs

Retail

50

• Worth over $30 Million per year

• Generates about 1068 full time equivalent jobs

• Arts and Crafts production generates $1.6 Million in tax revenue for the NU government

Arts and Crafts

51

• $30 Million – 2009• $40 Million – 2011• Forecasts of total revenues from the

tourism sector from 2013 to 2018 estimate possible $49 million

• Growing number of visitors from cruise ships

• Still a major area for growth

Tourism

52

Commercial Fishery• Growth and maturing of Nunavut fishing

industry:– 4 primary offshore participants (with

facilities in St. John’s- AFA, BFC)– From no vessels owned to four Inuit-owned

offshore factory freezer trawlers – Investing in infrastructure, fishing licenses,

science and research, and training.– Increasing returns and benefits to local

owners.

53

Commercial Fishery• Turbot – increase in landed value from

$35.4 Million to $78.8 Million• Shrimp – increase in landed value from

$12.1 Million to $32.6 Million• Currently working with the Marine

Institute on a renewed Nunavut Fisheries Strategy

• $7 million funding for research on new and developing fisheries in the arctic announced in January 2015

54

• The Government of Nunavut has a continually updated list of supplies and services

• Visit the website for the list of tenders, or check Nunatsiaq News

• Nunavuttenders.ca or nunatsiaqonline.ca

• 2013-2014 – the Government of Nunavut contributed $72 million to Nunavut’s municipalities in grants and contributions

Tendering Process

55

Examples

Ref# DescriptionFOB Point

Or LocationIssued Date

Contact Person

Phone Number and/or Email

Closing Date And

Time

CH 006532 Aircraft charter from Hall Beach to Churchill, MB and return.

Nunavut 2015-02-05 John Paton867-975-5437 jpaton@gov.nu.ca

2015-02-10 15:00 EST

CH 006530 Aircraft charter from Igloolik to Churchill, MB and return.

Nunavut 2015-02-05 John Paton867-975-5437 jpaton@gov.nu.ca

2015-02-10 15:00 EST

RFT 222257 Fire Proof Gun Safes Valleyfield, QC

2015-01-27Jocelyn St. Amand

867-975-6443 jstamand@gov.nu.ca

2015-02-11 16:00 EST

RFT 111886 Electric Drum CrusherYellowknife, NT

2015-02-04 Joey Ford867-975-5431 jford@gov.nu.ca

2015-02-12 15:00 EST

234405 Promotional Clothing & Items Ottawa, ON 2015-02-03Matthew Amarualik

867-975-5363 mamarualik@gov.nu.ca

2015-02-13 15:00 EST

RFT 185577 Medical Supplies Ottawa, ON 2015-02-04Susan Noseworthy

867-975-5434 snoseworthy@gov.nu.ca

2015-02-16 15:00 EST

56

Examples

PH 2015-2016 AV 503

Supply, Ship and Erect Three Five-Plexes

Arviat, NU 2015-01-23 Don Hutton867-975-7200 dhutton@gov.nu.ca

2015-02-23

PH 2015-2016 KR 503

Ship, Supply and Erect Three Five-Plexes

Kugaaruk, NU 2015-01-23 Don Hutton867-975-7200 dhutton@gov.nu.ca

2015-02-23

PH 2015-2016 PI 503

Ship, Supply and Erect Three Five-Plexes

Pond Inlet, NU 2015-01-23 Don Hutton867-975-7200 dhutton@gov.nu.ca

2015-02-23

57

• GN supports Inuit ownership, partnerships and involvement through incentive programs such as Nunavummi Nangminiqaqtunik Ikajuuti Policy. (NNI Policy)

• What does this mean?• It means that when the GN is scoring tenders

or bids, there are bid adjustments based on being Inuit owned, having Inuit partnership or being Nunavut based.

NNI Policies

58

Setting foot in Nunavut – how to land without twisting your

ankle!

59

• Form relationships with the regional Chamber of Commerce groups

• The most active is the Baffin Regional Chamber of Commerce (BRCC)

• Form partnerships or relationships with the Development Corporations

• Be in contact with the EDO

Key Considerations

60

• Understand the tendering process

• Have a plan – ask people who know answers, get involved in northern business events

• Research, know the market

• Nunavut Economic Forum is currently working on the Nunavut Economic Development Strategy – a 10 year plan.

Key Considerations

61

62

• Nunavut Trade Show – Iqaluit, September/October 2015

• Kivalliq Trade Show – Rankin Inlet, September 28th–30th, 2015

• Northern Lights Trade Show and Conference – Ottawa. January 27-30, 2016.

• Kitikmeot Trade Show – Cambridge Bay, February 2016

• Nunavut Mining Symposium, other sectoral symposiums – find out!

Participation in Events

63

64

Next Steps

• Continue to research the opportunities

• Determine and establish possible linkages

• Participate in various tradeshows and events and develop relationships

65

Thanks for your time!

Prepared and delivered by Aarluk Consulting