Treasure island

While the future of Saskatchewan’s potash industry is grabbing attention around the world, the real hub of Canada’s resource sector may be emerging in an unlikely place: Baffin Island. The remote and sparsely populated Arctic island could soon be home to companies extracting everything from diamonds to oil to gold.

Among the largest projects being studied is Baffinland Iron Mines Corp.’s plan to build a huge open-pit iron ore mine at Mary River, about 1,000 km northwest of Iqaluit. The $4-billion project would allow the Toronto-based company to tap a site that’s believed to hold some 500 million tonnes of high-grade reserves.

Just who gets to develop the site, however, remains up in the air after rival Nunavut Iron Ore put in an unsolicited offer last week to buy out Baffinland for $274 million in cash.

In the meantime, Vancouver-based Commander Resources Ltd. announced last week its testing had confirmed “continuing potential for a significant gold discovery” on Baffin Island. That same day, Peregrine Diamonds Ltd. revealed it had uncovered diamonds at its flagship Chidliak project on the island, while Alpine Gems began test-marketing sapphires mined on Baffin Island last spring.

The melting of Arctic ice is making it increasingly possible to access resources in the area. The region may also hold as much as a seventh of the world’s untapped oil and gas, according to a U.S. Geological Survey study. But while the world’s energy companies lick their chops at the prospect of drilling, environmentalists are keeping close watch. Last August, the Danish navy dispatched a warship to guard Cairn Energy’s rigs in Baffin Bay, off the coast of Greenland, after a Greenpeace ship showed up to protest the drilling.

For John Nyholt, a mining industry expert at PriceWaterhouseCoopers, the Baffin resource rush is part of a push by resource firms toward ever more remote areas of the globe. “I think scarcity is what’s primarily driving it,” he says. “With commodity prices going in the direction they have and demand for commodities being as high as it currently is, searching for new deposits is high on miners’ minds.”