Arctic Review 2013 - Logistics & Mining

Table of contents Arctic snapshot Arctic countries and non-Arctic stakeholders

Arctic shipping and logistics Overview Northern Sea Route (NSR) Northwest Passage (NWP) Barents Region Railroads Roads

Arctic mining Overview Arctic mining by country

Mining – logistics Processing Arctic metals & minerals Raw material transportation & mining infrastructure Business opportunities for Finnish companies

Arctic snapshot

One of the last unexplored frontiers rich in natural resources, minerals, oil and gas

Melting sea ice opens new shipping routes and business opportunities

Increasing interest in Arctic resources from non-Arctic countries specifically export-led Asian economies of China, Japan, Korea and Singapore

Delicate environment and hostile conditions require advanced skills, technologies and equipment for environmentally safe and sustainable operations Significant potential, significant costs

Arctic countries and non-Arctic stakeholders

Arctic Council

• Founded 1996 as high-level, intergovernmental cooperation forum in Arctic issues

• Members: 8 geographically Arctic countries, non-Arctic observer members with Arctic interests, 6 organizations representing indigenous people of the Arctic and 6 working groups of experts, agencies & researchers

Arctic Council Members

• Canada • Denmark/

Greenland • Finland • Iceland • Norway • Russia • Sweden • USA/ Alaska

Non-Arctic Observer Members

• China • India • Japan • South Korea • Singapore • United Kingdom • EU members:

Germany, France, Poland, Italy, Spain, Holland

• EU’s application is pending

Economy relies on oil, gas & mining industries

Significant mineral potential: gold, silver, copper, coal, zinc & lead Access to resources possible as technologies develop

Road-to-Resources projects connect mining sites to existing road & rail systems Umiat, Ambler & Nome projects

Existing 800-mile trans-Alaska pipeline for crude oil transportation, deterioration due to melting permafrost & lower oil flow volumes in pipeline

Plans for LNG pipeline from Prudhoe Bay down south to Kenai: Cost $45-$65 billion Possibility to export to Asia

Plans include a multi-billion liquefaction plant and export terminal in Nikiski area

Exxon Mobil, BP & Conoco-Phillips

Long-term investment needs for ports, icebreaking capabilities, improved satellites and road & pipeline maintenance $8M allocated for icebreaker research and planning

No current deep-water ports along the Arctic coast, 14 possible sites proposed and investigated Nome & Port Clarence/ Teller front runners on the west coast as

first developments

USA/ Alaska

Canada Territory dispute over shipping in Northwest Passage –

Internal vs. international waters

World’s second largest uranium producer, large supplier of gem-quality diamonds

Major mining destination with significant new potential for mining & natural resources development in Nunavut and Northwest Territories (NWT)

Geomapping problem in the north

Corridors for Canada project – Plan for strategic investment in NWT transportation infrastucture: Mackenzie Valley Corridor valued at $1.7 billion, also $65 for bridge rehabilitation & repair, $600 million for transportation infrastructure

NWT economy is mining, oil & gas dominated, further potential and growth in mining diamonds, rare earths, cobalt, silver, nickel, gold and zinc; 300 developed wells and 70 exploration wells for oil and natural gas

Nanisivik deep-water port in Nunavut under development

Nunavut region attracts mineral exploration

Looking to launch a new polar ice breaker within the next decade

Emerging clean energy giant, support responsible and sustainable development of oil & gas industry in the North

Greenland Autonomous state economically dependent on Denmark

New Government in 2013 – pro-mining, lift uranium ban and allow extraction & export of radioactive uranium. Subject to Denmark’s approval

Mining industry supports government’s efforts towards economic independency, growth and improvement in the country’s social status

Attractive mining destination as ice sheet shrinks and mining season becomes longer – potential for lower-cost mining, one-stop regulatory system (Bureau of Minerals and Petroleum), year-round access to ocean transportation

Rich in natural resources and potentially hydrocarbons, large deposits of rare earth elements, uranium, iron ore, gold, diamonds, lead, nickel, copper and zinc

Currently 20 exclusive and 25 non-exclusive hydrocarbon exploration licenses offshore

Over 30 new prospecting licenses for mining in 2012 Nalunaq gold mine, owned by Angel Mining, only producing mine

Possibility of hydroelectric power in mining activities

Alcoa planning an aluminum smelter Interest from Chinese, Korean & Western mining companies London Mining has $2.35 billion mining project in Isua

Pollution and environmental risks of mining raise concerns

No roads between towns, all transportation via sea or air, currently two ice-free ports: Nanortalik and Sisimiut Possibilities for new ports along the coast with access to deep water

Iceland Large aluminum industry with 3 smelting

plants operated by U.S. companies – powered by inexpensive hydropower Planned expansions include 2 new plants

Abundent geothermal & hydropower resources – potential for an energy hub Feasibility studies on possible underwater

power cable to export unused power to Europe

Potential shipping/transhipping hub - Gateway to Northwest & Polar Passage, Northern Sea Route & Atlantic

New deep-water port under construction in Finna Fjord, northeastern Iceland by German Bremenports in cooperation with Icelandic government Port is free of ice year round, close to

regional oil, gas & mineral deposits north and west of Iceland

Possible refining center for imported minerals from Greenland & Canada where refineries are far from mining sites but ocean access is a possibility

Finland

• Knowhow in Arctic maritime technology, onshore & offshore, icebreaking

• Arctic oil recovery • World leader in

icebreaking technology • New Oblique Icebreaker by

Aker Arctic Technology • Ice management

knowhow and expertise • Large mining industry

with growth potential, seeks international investments

• Infrastructure developments

• Promote exports and attract foreign investments

Sweden

• Significant mineral deposits with growth potential

• Expertise in Arctic shipping

• Mining and petroleum sector support activities: experience, systems, machine suppliers

• Focus on Arctic transportation infrastructure developments

• Ice breaking resources and expertise

Norway

• Economy relies on hydrocarbons – Nearly all energy from hydropower

• Energy: Oil & Gas exporter

• Significant offshore wind power potential

• Shipping: Arctic ports in Narvik and Kirkenes

• Cooperation with Russia as a priority

• $200m budgeted for Arctic initiatives

• Svalbard islands major coal producer

• Mapping of mineral resources in the north

Finland, Sweden & Norway

Russia Energy giant: Oil and gas industry, significant hydrocarbon reserves

Oil & gas production on the shelf offshore and on land – Energy security

Large mining industry Develop infrastructure

along the Northern Sea Route

Economic growth: Link between Northern Sea Route as international cargo route and economic development of northern Russia

Provides permits, port services & icebreaking services for the NSR

Transport LNG from Russia to Asia in 2018

Energy Mining Shipping • Development plans by

2020: Timano-Pechora oil & gas provinces and hydrocarbon fields on the continental shelf in the Barents, Pechora & Kara seas and the Yamal and Gydan Peninsulas.

• Exports to Europe and Asia

• Main Arctic areas: Kola Peninsula, East Siberia & Russian Far East

• Most current production is for domestic use

• Iron ore, coal, bauxite, copper, gold, nickel & diamond - lower grade & quality diminish value

• Support to construction of icebreaking, rescue & support fleets, coastal infrastructure

• 16 current ports needing upgrades + Sabetta &Teriberka under construction

• 1 new nuclear powered ice breaker under construction costing €1.1BN, 2 more planned

China Strategic buyer of Arctic resources Interests in energy, minerals and new

shipping lanes – China has capital & willingness to pay

Targets Greenland, Canada, Russia and Iceland

Increasing demand for energy – Future strategic buyer of Arctic energy from U.S., Canada & Russia

Capital to support Arctic projects, export labor

Buying shares from Arctic resource development companies to gain foothold

5 Chinese mining companies currently in Greenland Natural resources are vital to China’s

modernization efforts

95% international market share in rare earth elements – Leader in refining rare earth elements

China offers to invest in infrastructure projects in Greenland in exchange for mineral extraction licenses

Free trade agreement with Iceland – Interest as a shipping hub, access to Arctic waterways, NSR

NSR offers China faster access to European markets

China will double oil imports from Russia and explore 3 artic offshore areas for oil with Russian Rosneft

Possible oil & gas pipelines from Russia to China

Bought Canadian oil & gas company Nexen in 2013 for $15bn

Chinese firms have invested $400m in small scale mineral & petroleum projects in Canadian Arctic

Japan

Arctic energy importer Japan is the largest importer of

liquefied natural gas (LNG), the second largest importer of coal and the third largest of oil.

Arctic Ocean's hydrocarbon resources as a potential alternative energy supply source to Middle East

Possibility of developing and transporting natural resources in the Arctic

LNG shipments planned from Norway & Russia to Japan in 2018

Seeks to increase presence in resource development in the Arctic and Arctic commercial shipping

NSR: shorter distance from Japan to Europe

Import of raw materials for industrial purposes

Focus on the effects of Arctic shipping Possibly design & develop ice class vessels

Follow China & Korea and maintain marine transport capacity in the Arctic

Japan-Russia relationship development Science and technology consultation

agreement to provide further economic and industry development of Japan and Russia

Roles and interests of other non-Arctic countries Korea • Interest in energy, minerals & shipping

• Maritime industry: Shipbuilding, transportation and logistics

• Experience in building ice-strengthened cargo ships

• Acquired Aker Finnyards & their technology for ice navigation: the double-acting ship - provide cargo ships for Barents and Kara seas

• Daewoo to build up to 16 ice-class LNG tankers to NovaTek (RUS)

• Interested in shipping along the NSR and Arctic mineral & energy resources

• Depends on imported natural resources

• Greenland exploration deal for rare earth elements, tungsten & cobalt

• Emerging rare earth refineries in Korea

• Port development along the NSR in cooperation with Russia

Singapore • Shipping stakeholder

• Member of International Maritime Organization (IMO), Strong interest in global shipping development

• Global maritime knowledge hub by 2025

• Interest in Arctic shipping and offshore activities

• Expertise in major port facilities

• Potential for the Offshore & Marine Industry – Singapore's Keppel Offshore and Maritime & Sembcorp Marine have technologies for offshore drilling in hostile environments

• Keppel and Marine delivered 2 Arctic icebreaking vessels to Russia's Lukoil in the Barents Sea

• 2013: Keppel & ConocoPhillips designing a pioneering jack-up rig for offshore Arctic drilling

• Growth in related industries (supply vessels, logistics IT repair & support)

India • Views itself as an Arctic

stakeholder • Interest in Arctic energy • Fast growing domestic energy

consumption

• Oil & gas for energy security

• Imports 80% of energy

• Plans pipelines to tap into Arctic oil and gas reserves in Russia

• Natural resources for food & resource security

• New shipping routes as India grows and becomes a bigger player in international trade

• Significant interest in climate change research in the Arctic – direct impact on Indian monsoon

• Arctic research station on the Svalbard Islands

Roles and interests of other non-Arctic countries United Kingdom • New shipping routes create

opportunities for ports • Stornoway port in Scotland a

possible European Arctic gateway hub for shipping, refueling station

• Insurance and re-insurance agencies for Arctic shipping companies

• New sources of oil, gas, minerals and fisheries

• Commercial interests: BP & Shell oil and gas exploration and drilling in Arctic regions

• Leased an icebreaker in the Arctic

EU • EU Commission’s observer status to

Arctic Council is currently pending • Presence through Germany, France,

Italy, Spain and Poland as non-arctic observer members; Finland, Sweden and Denmark as Arctic members

• Main interest stems from climate change and its impacts on society

• Environmental sustainability as a driving force behind Arctic development

• EU is a large consumer of Arctic energy and minerals

• Political and security concerns over increased interest in Arctic resources and transportation channels

Energy & mining developments in the Arctic

Arctic Shipping & Logistics

Arctic logistics overview

Arctic logistics include shipping routes, roads and railroads, also pipelines for oil and gas transportation

Shipping routes, NSR & NWP need significant investments in port facilities

Rehabilitation of existing ports, more capacity & services

New deep-water port construction Search & Rescue preparedness Mapping, navigation & communication technologies Roads: Alaska & Canada have long-term investment

plans for infrastructure developments in the North American Arctic

Connect mining sites to existing road networks Railroads: Focus in Barents region where different rail

standards in Finland, Sweden, Norway and Russia pose a challenge to cross-border transfer of raw materials

Selected logistics developments

Barents Region (NOR, SWE, FIN &

northwestern Russia

Arctic deep-water ports: Narvik, Kirkenes & Murmansk, new railroads and increased capacity to support mining activities

Alaska Road-to-Resources: Umiat, Nome & Ambler; Deep-water ports: 14 suggested sites, Nome & Port Clarence most advanded developments

Canada Corridors for Canada: NWT infrastructure developments

Greenland Shipping hub: Possible port development, quick access to deep water

Iceland Shipping hub: Finna Fjord deep-water port construction

Russia Rehabilitation and upgrading of existing ports, 2 new deep-water port sites (Sabetta &Teriberka), development of new pipelines

Arctic logistics focus on the transfer of resources to and from Arctic locations via shipping lanes, roads and railroads. Remoteness and harsh conditions of Arctic locations bring costs of new infrastructure developments in the area very high. However, infrastructure developments are a prerequisite for successful and safe Arctic resource exploitation.

Arctic shipping Melting sea ice has increased

traffic in the Arctic waters Arctic could be ice-free by 2050 Export opportunties for natural

resource, energy, oil & gas transportation

Shorter maritime distance compared to Suez- and Panama Canals results in faster shipping times and potential cost savings

Challenges: Port infrastructure Ice management Icebreaking services & high costs Ice Class vessel requirements Short operating season Inadequate mapping of Northwest

Passage Navigational challenges Lack of emergency preparedness Search & rescue services Environmental issues

Northern Sea Route (NSR) From Barents Sea to Bering Strait Year-round navigation since 1978 in western NSR Vessel traffic rapidly increasing from 4 vessels completing the

route in 2010 to 71 in 2013 71 vessels sailed the whole route and transported 1,355,900 tons of cargo in

2013

620 ships had permits to sail parts of NSR in 2013 Avoids unrest of Suez Canal, seasonal supplement, current season

is from July to November Energy-hungry Asian markets - shipments of liquified natural gas

(LNG) and oil from Barents Sea & Siberia Russia investing in infrastructure along the route: 16 current ports &

2 ports under development (Sabetta & Teriberka) Increased commercial traffic in NSR link to economic development of

Russian Arctic Shipping costs potentially competitive with time savings if large

ships can sail with full cargo loads Ice breaker escort through NSR $200,000 (Lloyds)

Major opportunities Ice Class vessel development Port and pier infrastructure, safety and service development Mapping, navigation and communications technology Energy, oil and natural gas transportation to Asia 5-15% of China’s European trade could use NSR by 2020 LNG trasport from Norway to Japan possibly in 2018

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Northern Sea Route Traffic

Number of transits potential number of transits

www.arctic-lio.com, Northern Sea Route Information office

NSR vs. Suez Canal NSR is up to 50% shorter in distance It can cut down 12-15 days of shipping

time compared to Suez Canal Capacity restrictions due to narrow

straits & ice conditions – vessels cannot be wider than icebreakers

Additional costs of NSR Icebreaker assistance cost depends on Ice class of the vessel Ice conditions in the area Distance of escort Time of navigation

Insurance Variability in transit time due to weather

conditions Construction standards and crew training Current shipping costs are significant and uncertain conditions along the route discourage shipping time sensitive cargo. However, future potential remains.

Yokohama - Rotterdam

Route NSR Suez Canal

Distance 7,600 nautical miles 11,300 nautical miles

Time 26 days 36 days

Capacity 2,000 containers 6,500 containers

Total cost $2.5 million $3.5 million

Cost per container $1,250 $538

Kirkenes/Murmansk – China • NSR is 16 days faster • Requires 750-1,000 tons less fuel,

savings up to $650,000 Dailan (CHN) – Rotterdam • NSR is 9 days and 2,800 nautical

miles shorter • Average cost of mandatory

icebreaker escort $200,000 (Lloyds) Yokohama – Rotterdam • Suez has lower costs per container

due to capacity restrictions in NSR

NSR shipping development Cargo increase from 1.4 million tons in 2013 to up

to 4 million tons by 2015

Sort out all navigational blank spots, and upgrade all navigation maps with route depth data by 2016

€23.4 million invested in 10 emergency and rescue centers along NSR by 2015. Main centers Murmansk (2013), Naryan-Mar (operational in 2013), Dudinka (2012), and Anadyr. Subdivisions planned for Arkhangelsk, Vorkuta, Nadym & Tiksi

Extra aircraft (10 helicopters & 8 aircraft) to stations in Murmansk, Novaya Zemlya, Dikson and Mys Shmidta

Development plans: new Arctic rescue ship, military ice-capable transport, new icebreakers to replace aging fleet - €1.1BN ice breaker under construction in St. Petersburg, 2 more planned

Vision of NSR as a key transport route in global scale

Public-private collaboration for financing

Sabetta port (construction underway) Part of Yamal-peninsula LNG project

€1.82 billion, funded as a public-private partnership, majority govt funding

Capacity of 30 million tons annually by 2020

LNG shipments to Europe, Asia & Americas

Teriberka Port Construction depends on Shtokman LNG

development Port for exporting LNG from Shtokman field in the

Barents Sea

Costs $2 billion

Planned capacity of 30 million tons annually

Northwest Passage (NWP)

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Northwest Passage traffic

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Bering Strait traffic

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• NWP extends along northern Canada from Baffin Bay to Beaufort Sea

• Suffers from poor mapping and uncertain ice conditions

• Mostly used for community supply, minimal commercial traffic • First commercial bulk carrier sailed the route from

Vancouver to Finland in 2013 carrying 25% more coal than possible through Panama Canal

• Need for more icebreaking capabilities

• No current deep-water ports along the route • Port development plans are in place for Alaska’s

Arctic coast (Nome & Port Clarence) and Nanisivik in Nunavut, Canada

• Need for mapping, navigation & communication technologies

• Increased traffic from NSR has increased traffic in Bering Strait between Russia & Alaska – need for more visible U.S. presence off the coast of Alaska

NWP shipping developments - Alaska Alaska’s advanced Arctic deep-water port developments in

Nome and Port Clarence are motivated by increased vessel traffic in Bering Strait, 60% foreign vessels Increased activity requires increased presence

In 2012 480 ships transported 3 million tons of cargo, in 2020 up to 50 million tons as NSR traffic from Russia increases

Within the next 10 years U.S. will have a need for 2 new ice breakers ($1BN / piece), new air station in Point Barrow with 3 helicopters and a deep water port with response presence and infrastructure

Proposed deep water port sites in AlaskaSt. Paul Island

St. Lawrence IslandNome

Port Clarence/ TellerKotzebue/ Cape Blossom

MekoryukCape Thompson

WainwrightPort Franklin

BarrowPrudhoe Bay

Mary Sachs EntranceBethel

Cape Darby

NWP shipping developments - Canada • Infrastructure developments

are needed, high costs postpone plans, reduce scope of projects

• NWP mainly used for community supply and tourism, majority of vessels private yachts

• Canadian Space Program supports Arctic developments • Security and safe navigation • Atmospheric and weather

forecasting • Deep-water port

development in Nanisivik • Route development

significantly lacking compared to NSR

• Commercial potential remains low

Arctic shipping – Role of Arctic countries and non-Arctic stakeholders Russia sees Northern Sea Route (NSR) traffic

as a key to economic development in northern Russia

Norway has Arctic ports for cargo transportation in Narvik and Kirkenes

Iceland as a potential shipping/ transshipping hub for access to NSR, NWP and Atlantic

Greenland has potential for deep-water ports Finland is world leader in cutting-edge

icebreaking design and technologies, deep expertise in ice management

Sweden has technologies for icebreaking and Arctic shipping

U.S. sees increased international vessel traffic in Bering Strait – Need for increased presence

Canada lacks infrastructure along NWP

China, Japan and Korea need resources, energy and raw materials, NSR is a viable option for shipping through politically unstable Suez Canal

China: Potential to ship 5-15% of exports to Europe through NSR by 2020

Arctic shipping - Options and possibilities Port & pier infrastructure development along

Arctic shipping lanes in Russia, Canada and USA, also Iceland and Greenland New and updated facilities and services

Mapping technologies for NSR & NWP Navigational and communication

technologies development, also better vessel monitoring and surveillance to increase safety

Search and rescue centers, emergency preparedness in case of oil spills and pollution is needed

Ice management for improved safety and mitigation of environmental risks Forecasting, monitoring & detecting Detect first-year ice vs. multi-year ice Physical ice management (ice breaking, iceberg

towing)

Icebreaking technologies: Icebreakers, icebreaking services, ice-class cargo vessels

Transshipment hubs where cargo will be loaded for rail, road or smaller vessel shipments

Barents region shipping – Norway & Russia Murmansk

Base for Arctic icebreaker fleet

Transshipment hub

Expansion possibilities to western shore, warehouse and cargo terminal facilities

Expansion of railroad capacity to port

Arkhangelsk Bulk cargo gateway

Need for extensive icebreaker assistance –high operating costs

Possible new deep-water area Kirkenes Potential transhipment hub

Primarily iron ore to EU Possible connection to Russian railway system Tromsø On-going development and capacity expansion Narvik Strategically important bulk cargo port

Expansion to continue

Barents region ports are used to export products from mining, oil & forest industries to Europe, America and Southeast Asia

Barents region shipping – Finland & Sweden Challenges Shallow waters Fairways and port must be dredged

regularly

Icebreaking Winter ice increases shipping costs

Sulphur directive Increase shipping costs 25-40%,

effective 2015

Umeå Forest products & general goods Connection to Vaasa for passenger and

freight traffic

Luleå Large volumes of bulk cargo Funding granted for capacity expansion

studies

Oulu Moderate bulk cargo volumes

• Gulf of Bothnia offers access to the Baltic Sea and towards southern Europe

• Mainly for raw material transportation • Shipping is more economically feasible for the

industries in the area than using the rail network • Potential for growth

www.regjeringen.no/pages/38466475/JointBarentsTransportPlan200913r.pdf

Finland’s expertise in Arctic shipping Ice management expertise Forecasting, prediction & tracking technologies

Detection & monitoring technologies

Satellites, areal surveillance, ship-based systems, radar technologies

Ice management vessel operations

Online ice load monitoring, data archiving and continuous training

World leader in Ice breaking 60% of the world’s ice breakers built in Finland

80% of icebreakers designed in Finland

Nearly 100% of icebreaker propulsion units done in Finland

Ice Class vessel design & technologies Ice strengthened cargo ships

Ice Class vessels for mineral transportation

Innovation in environmental technology for oil spill recovery Oil spill clean-up products

Oil recovery vessels

Aker Arctic Technology (AARC) Designed over 50% of world’s

icebreakers Arctic & Antarctic research vessels Cargo vessels & offshore structures for

harsh climates Unique technologies (double-acting

vessels, reduced energy usage through electric azimuthing thrusters (Azipods), oblique icebreakers

Technologies to meet new emission standards

New design on Arctic floaters and multipurpose and ice management icebreakers

Conceptual and basic design work for new polar icebreakers for Canada and China

Arctic logistics - Railroads Barents region Railroads for mineral and

mining industry transportation

Challenge: Two different rail gauge standards in Finland, Sweden, Norway and Russia

Electrification of railroads

Possible 60km rail link between Salla and Alakurtti to connect Finnish and Russian rail networks

Possible railway from Rovaniemi to Sodankylä to support mining industry in central Lapland

Norway: Nordland line along the coast – remote control, increase in capacity planned

Arctic logistics - Roads Barents Region - Map Cross-border freight traffic expected to increase

significantly Narrow roads limit traffic volume growth Inadequate accessibility and road safety – lacking

by-pass lanes, central barriers Bottlenecks – Poor horizontal and vertical curvature,

difficult gradients Norway Tunnels and bridges need rehabilitation E6 construction EUR 50M E8 high priority, EUR 53M for the next 4 years,

significant increase in funding up to 2023 Mo i Rana from Umeå EUR 48M Bodø National road 80 EUR 250M 2014-2017 Finland Add capacity Kilpisjärvi – Palojoensuu (EUR 50 million) Sweden National road 99 reconstructed 2013-2015 due to

mining expansion in Kaunisvaara

Russia: Murmansk – Kirkenes

Export of goods, passenger traffic between Russia & Norway

E105 construction: EUR 46 million in Norway & EUR 40-65 million in Russia

Different vehicle regulations regarding weight & lenght

Cross-border cooperation is a prerequisite for economic growth

Canada: Corridors for Canada

Northwest Territories transportation

Total investment of $600M $415M Provincial-Territorial fund

$185M National Infrastructure Fund

Mackenzie Valley Corridor

Alaska: Road to resources

Umiat oil and gas fiel access road

Ambler mining distract access road

Road to Nome – Tanana access road

Barents region logistics

Corridors for Canada – Mackenzie Valley Corridor consists of existing marine

resupply route and winter road, and proposed all-weather highway and fiber optic link

Largest single investment in Northwest Territories

$600 million over 10 years to improve air, marine & road transportation infrastructure Mackenzie Valley Corridor total

estimated value $1.7 billion $127M allocated to improve

Mackenzie Valley Highway (National Infrastructure Fund) Includes bridge rehabilitation and/or

construction Completion of HW from Wrigley to

Tuktoyaktuk on the Arctic coast Back to logistics

Road to Resources - Alaska

Ambler Ambler Mining district access Brooks Range East Corridor 225-mile long from Dalton HW to

Coldford $430 million

Umiat Oil and gas field access $10M allocated Nome Road to Nome – western Alaska

access would cost $3BN Road to Tanana project (part of

Road to Nome) $10M allocated

Back to logistics

Arctic Mining

Arctic mining overview – opportunity vs. uncertainty + Mining industry growth is driven by

increasing global demand for resources, minerals and energy

+ Arctic coastal regions are more attractive due to ocean transportation possibilities – lower development costs

+ Technological improvements + arctic mining technically feasible and

commercially viable

+ Uncertainty about access to resources in other regions in the world attract investors to the Arctic

+ Mining offers long-term economic development opportunities for the Arctic

− Development is guided by commodity prices Falling prices can cancel, delay or scale back

arctic mining projects

− Infrastructure lacking in most of the Arctic region

Photo courtesy of Diavik Diamond Mine in Canada

Arctic mining – Barents region

Norway, Sweden, Finland & northeast Russia

Strong mineral potential Area contains nearly 600

mineral deposits, 110 are currently active mines

More than 40 active metal mines, 10 opened or reopened in the last decade

Current year-round Arctic ports for mineral transportation in Narvik & Kirkenes in Norway and in Murmansk, Russia

New infrastructure developments for roads, rails and sea transportation to support economic growth

Arctic mining – Finland, Sweden & Norway Sweden and Finland have

significant mining industries while Norway relies mostly on its hydrocarbon reserves

2011: Sweden & Finland provided 28% of EU’s gold production, 27% of zinc, 17.5% of silver and 11% of copper

Governments pro-mining, encourage exploration and seek new investments – international financing is needed to exploit new mining potential

Geological information on deposits is readily available in Finland & Sweden

Transportation Infrastructure investments are needed for long-term resource development Significant increase in transport

volumes as new mining developments take place

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Finland Sweden Norway

Mining snapshot

Large active mines

Potentially largedeposits

Large unexploitedmetal deposits

Mining in Norway Deposits of industrial minerals, building materials, stone,

metallic ores and energy minerals Industrial minerals provide growth

Iron ore production declining due to exhausted reserves Producer of aluminum, cadmium, cobalt, copper,

ferroalloys, nickel, steel and zinc – Production is decreasing

Coal production in Svalbard 60% of mineral production is exported International companies dominate the market

Domestic share of mineral production supports local mineral processing industry (plants & smelters)

Goal to increase exploration activity Annual budget of EUR 3.3 million to increase knowledge about mineral

resources in the region

Geological survey is mapping minerals of northern Norway

Nordic cooperation in mineral research

Large active mines

Potentially large deposits

Large unexploited metal deposits

Bjomevatn Brattbakken Engebofjellet

Fisketind Ost Gallujav'ri Lauvneset

Kjellmannsåsen Grinder Nordli

Ortfjell Rai'tevarri Selvåg

Tellnes

Mining in Finland

Large active mines Potentially large deposits Large unexploited metal deposits

Hitura Akanvaara LC Ahmavaara Jokisivu Akanvaara UC Koitelainen UC Kemi Akanvaara ULC Konttijärvi Kevitsa Koitelainen LC Lumikangas Kutemajärvi Perämaa Siika-Kämä Kylylahti Sakatti Sokli Laivakangas Soidinvaara Pahtavaara Au Sokli Nb Pampalo Pyhäsalmi Siilinjärvi Suurikuusikko Talvivaara

• Gold, chromium, zinc, copper and nickel • All chromium to Outokumpu in Tornio for steel production

• Long mining tradition and readily available geological data support mining industry

• EUR 300 billion worth minerals in Finnish bedrock • Total of 50 mines and quarries operating in 2012 • 62% of EU’s cobalt production comes from Finland • Growth requires increase in transportation capacity • Internationally valued competences and equipment

manufacturing for mineral industry • Continuous growth needs international investments

Mining in Sweden Sweden is the largest producer of iron ore in the EU – also a major producer of

copper, zinc, lead, gold and silver Mines in northern Sweden produce iron ore, zinc, copper and gold Mining employs 82% of workforce in the north

Plans to expand current production and open several new mines Potential to increase mineral production three-fold by 2025 – greatest potential in

iron ore Requires better infrastructure for goods transportation and more efficient permitting process

Large active mines Potentially large deposits Large unexploited metal deposits

Aitik Akkavare Fäboliden Björkdal Häggån Lappmalmen Dannemorafjältet Myrviken Laver-nya Garpenbergsfältet Ranstad Norra Kärr Gruvberget Fe Routivare malmfält Palotieva Kankberg nya Rönnbacken Pattok Kiirunavaara Smålands Tabergs gruvfält Kristineberg Sundsberget Lovisagruvan Tåsjö Malmberget Vinberget Maurliden Västra Maurliden Östra Renström Svartliden Tapuli Zinkgruvan

Arctic mining - Russia One of the largest mineral producers Continuous exploration for new

mineral deposits Exceptionally rich in mineral resources More than 700 minerals have been

discovered Apatites, iron ores, nickel, rare earths,

semi-precious stones, diamonds Year-round deep-water port in

Murmansk – access to north Atlantic Vast mineral processing industry Iron Nickel Aluminum Apatite ore

2008 over 8 million tons of ore and 110 000 tons of nickel produced in Murmansk county

Kola peninsula & Karelia 27 active mines World’s largest apatite deposit

35 potentially large deposits 38 large unexploited metal deposits Smelters and refineries Suffer from poor environmental

standards Pollution problem

Growth in coal production in Siberia & Far East

Nornickel (Kola peninsula & Taymyr peninsula) World’s largest nickel producer is

looking to invest $35bn by 2025 in non-nickel mineral resource production (chromium, coal, iron ore)

Mining in Alaska Producing mines Red Dog: Zinc, lead & silver Fort Knox: Gold Greens Creek: Silver, zinc, gold, lead Kensington: Gold Pogo: Gold Usibelli: Coal Nixon Fork: Gold, copper

$330M invested in exploration projects (90% from Canada) $34M northern Alaska $90M eastern interior $16M western Alaska

$340M in development projects $40M in northern Alaska $162M eastern interior $37M in western Alaska

Advanced exploration projects in Pebble, Livengood and Donlin Creek (59% of exploration expenditures), Bokan mountain, Chuitna, Niblack, Upper Kobul and Wishbone Hill

• Large deposits of gold, silver, copper, coal, lead and zinc • 2012 mineral production valued at $3.4BN ($1.43BN north

Alaska) • 3 refineries for gold and 1 for silver • Minerals are exported mainly to Asian markets • Road-to-resources: Ambler mining district (North) & Road

to Nome/Tanana (West) current projects

Mining in Canada World’s largest mining countries Mineral exploration & mining: key drivers of

economic growth in the north Since 2004 Canada has attracted 16-19% of the

world share of mineral exploration

Half of income in NWT from mining

Significant deposits of gold, iron ore, diamonds, uranium, base metals, cobalt, zinc and rare earth elements

Geoscience problem: 73% of Nunavut is unmapped or has inadequate geological maps – geoscience information is critical for exploration Geological mapping is strongly supported by the

government

Geoscience efforts north of 60 degrees

Canadian Space Program activities support Arctic developments Space-ground infrastructure to advance the utilization of

satellite data

Inadequate public infrastructure - obstacle to growth in resource sector

Long & complicated regulatory process - challenge to new investments

$140 billion in mining projects over the next decade

Broad supplier network for mining industry

Aging smelters and refineries in southern Canada

Geomapping (GEM) project areas Geomapping for Energy and Minerals Program (GEM) $100 million investment 2008-2013 $38.6 million in Nunavut $15.6 million in Northwest Territories

Mining in Canada Natural resource development in the northern regions faces social, economic, infrastructural, environmental and regulatory challenges

NWT has 4 procuding mines: 3 diamond & 1 tungsten + 2 advanced developments and 7 other mineral projects – 2000 new mining jobs projected by 2020 Main regions: Dehcho region & Slave Geologic

Province

Nunavut: Growth in investments, Hope Bay and Mary River projects combined value $ 6 billion Mary River investment estimate $40 billion by 2040

Corridors for Canada projects for transportation infrastructure developments

Transportation access challenge Exploration costs in areas that are distant from

transportation are significantly higher than costs closer to transportation networks

Energy access challenge Nunavut relies on diesel

NWT benefits from hydropower (36% of total) (Statistics Canada, 2012)

Advanced Exploration Projects in the Northwest Territories and Nunavut

Mining in Greenland Significant deposits of gold, uranium, iron ore, zinc and

rare earth elements Government pro-mining, lifted 25-year uranium ban in

2013 (subject to Danish approval)

Bureau of Minerals and Petroleum only stop for permits and licensing

Year-round access to ocean transportation, mineral deposits close to shore

Development depends on new infrastructure and international investments

One producing gold mine, tens of exploration projects and potential developments

Deposits hold high-grade metals and minerals Possibility of using hydropower Alcoa’s Aluminum smelter development

Limited infrastructure significantly increases exploration and mining costs

Isua development by London Mining valued at $2.35 billion, includes a processing plant, 105km pipeline to deep-water port and water & wastewater treatment plants

Greenland Minerals & Energy is developing $810 uranium & rare earths mine in Kvanefjeld, production to start in 2017

Lack of skilled labor, environmental concerns More information and detailed, interactive maps www.geus.dk

Mining in Iceland

Scarce mineral resources Abundant renewable energy

resources Hydropower & geothermal

energy

Large aluminum and ferroalloy industries

3 current aluminum smelters and 2 new planned by Alcoa & Century Aluminum Plants rely on imported raw

materials and inexpensive geothermal and hydroelectric energy

Finna Fjord deep-water port to support mineral shipping, access to NSR & NWP

Arctic mining summary Minerals in Economy Outlook Major Challenges Biggest Projects

Canada Industrial mineral mining $4.3 billion, metal mining $3.6 billion, coal $900m

Exploration projects in Nunavut & NWTerritories, infrastructure development

Access to energy and transportation networks, short construction season, high costs

Nunavut: Hope Bay gold mine $2 billion & Mary River iron ore mine $4 billion

Finland Processor and refiner of copper, nickel and zinc

Production of nickel & zinc likely to increase, market interest in rare earths

Attracting international investments, transportation capacity bottlenecks

Hannukainen iron ore mine (part of Kaunisvaara in Swe), Sokli phosphate mine

Greenland Dependent on subsidies from Denmark. Mineral industry to promote economic independency

New mineral deposits likely to be discovered, govt pro-mining, new prospecting & exploration licensed issued

Lack of skilled workers, high development costs

Isua iron ore mine by London Mining $2.35 bn, Ilimaussaq rare earths mine $2.3bn, Kvanefjeld rare earths $2.3bn

Iceland Exports 2% of global aluminum & 1% ferrosilicon

Oil & gas exploration offshore, aluminum industry to expand Shortage of skilled workers 2 new aluminium smelting plants

Norway Natural gas and petroleum sectors dominate. Mostly for exports

Exploration drilling in the Barents Sea, hydropower, industrial minerals

Attracting international investments, geological mapping of the north

Potential in Repparfjord in Finnmark for copper

Russia Mining contributed $273.3 million to GDP.14.6% of all investments in economy to mining industry.

Expansion in production & holdings. govt regulation to benefit beryllium, rare earths & tin.

Remote locations,.high costs Norilsk mining centre $3bn 10- year investment plan

Sweden Metal mining & metal products dominate, leading mineral exporter in EU

Base-metal, gold and iron ore deposits are developed and exploited actively,

Attracting international investments, increasing transportation capacity

Kaunisvaara (Sahavaara and Tapuli mine sites) iron ore mine

Alaska Exploration, development investments and value of mineral products $3 billion

Over $300m invested in exploration + $300m in development annually

Mining site access, remote locations, high development costs

Ambler mining district (copper, zinc, gold, silver, lead) includes $2.7 bn Road-to-Resources

Mining – logistics

Processing Arctic metals and minerals

Mine, smelter and refinery production of copper

• Mineral refineries and smelters require large amounts of energy • Locations with access to inexpensive

hydropower attract mineral processing industry: Iceland, Norway, Greenland, possibly Canada

• Transportation challenge • Many Arctic mining sites are in remote locations,

transportation infrastructure requires significant investments in roads, railroads and ports

• China has significant processing industry with smelters and refineries – Need for raw materials

• Options: Refine locally or export raw materials for further processing, infrastructure investments are required regardless

• Alaska: Processing plants, smelters and refineries in lower 48 states

• Canada: Aging refineries and smelters in south • Finland: Processor of copper, nickel & zinc • Sweden: Smelters for copper, gold, lead & zinc • Norway: Processing industry for domestic supply,

mine sites along the coast – ocean transportation access

• Russia: Large smelting & processing industry in Kola peninsula

• Iceland: 3 aluminum smelters + 2 new planned, hydropower

• Greenland: Ocean access, hydropower potential, potential future mineral processing site

Metal industry and main export routes

Main priorities Bothnian corridor: Oulu –

Haaparanta/Tornio – Umeå Road 766km & rail 800km

Luleå – Narvik Road 520km & rail 473km

Vorkuta – Kotlas – Syktyvkar – Arkhangelsk – Vartius – Oulu Road 1729km & rail 1517km

Map

Barents raw materials transportation developments Russia, Finland, Sweden and Norway’s joint planning Efficient Barents Region

transport system Internal connectivity External links to world markets Facilitate development and

opportunities for key industries Biggest challenges Low standard on sections of

roads and railways Arctic winters and winter

maintenance Lack of deep-water ports in the

Gulf of Bothnia Different national regulations on

lenght and weight of vehicles Different railway gauges Lack of flight services east-west

– Major bottleneck

Barents – raw materials transportation In northern Sweden iron ore is transported via the Iron Ore line (Ofoten) for further shipment Two-thirds is shipped from the

port of Narvik to Rotterdam One-third is shipped from the port

of Luleå to the steelmill across the Gulf of Bothnia in Raahe

Iron Ore line, port of Narvik and port of Luleå are critical to the industry, along with the connecting road network

Port of Luleå handles 9 million tons of goods annually, including 5.5 million tons is iron ore

Port of Narvik is central for Swedish and Finnish mining - deep, ice-free port - handles 18 million tons of iron ore a year

Main smelters and refineries Steel Luleå (SSAB) Raahe (Ruukki) Tornio (Outokumpu) Copper – Skellefteå, Harjavalta Nickel - Harjavalta Zinc - Kokkola Ferrochrome - Tornio Iron - Mo i Rana (Norway) Aluminum - Mosjøen (Norway)

Barents transportation network (road, rail, maritime)

Mining infrastructure in Alaska DeLong Mountain Transportation

System (DMTS) supports Red Dog mine where ore is transported via 52-mile all-weather industrial road to Red Dog/Kivalina port for storage and further shipping Region is completely isolated, port has

no services

Road-to-Resources projects in Umiat, Ambler and Nome/Tanana provide better access to mining sites and more affordable raw material transportation options

Alaska Industrial Development and Export Authority (AIDEA) actively supports and offers financing to mining industry logistics developments Responsible for Delong Mountain

development

• Anchorage is the main export port in Alaska followed by Fairbanks

• Main destination is China followed by Japan, Korea and Canada

Mining infrastructure in Canada Current issues are wide-ranging Aging and inefficient community power

plants Limited broadband availability Short and unpaved airstrips Underdeveloped services at industrial

sites

Most roads end north of 60 degrees Communities are not served by all-

season roads

Nunavut: Mine start-up costs up to $1.6 billion (vs. Yukon $200 million) because companies need to build supporting infrastructure (roads, rail & ports)

Alaska-Canada rail link, $11 billion, as a possible option for resource transportation

Cooperation between different leves of government and the private sector is needed to develop infrastructure in the northern regions

International cooperation to harmonize geo-reference standards

Government support to capacity-building and infrastructure in the north

Suggested Northern Infrastructure Fund (NIF) Initial investment of $1 billion over a

5-year period Finance transportation, energy and

community infrastructure needed for resource development

Mining infrastructure in Greenland & Iceland Greenland

Ocean and air transportation only No roads or railroads between

towns Deep-water port potential Current year-round ports in

Nanortalik and Sisimiut Mining sites along the coast 1 operating gold mine, several

developments underway, active prospecting

Alcoa is planning an aluminum smelter on the west coast south of Nuuk Availability of low-cost hydroelectric

energy Significant infrastructure

investments required

Iceland 3 current aluminum smelters 2 on the west coast & 1 in the

east coast

Finna Fjord deep-water port development driven by forecasted increase in shipping in NSR Potential to support oil and gas

industry north and west of Iceland Developments in Greenland’s

mineral industry are a potential source of business for the port

Business opportunities for Finnish companies

Arctic Shipping

Arctic Ports

Arctic Mining

Working in the Arctic

• Mapping and navigation technologies, satellites • Icebreaking services, leasing icebreakers, designing and building

icebreakers (US, Canada, China & Japan) • Arctic marine tehcnology expertise, onshore & offshore • Ice management technologies

• Cargo handling equipment and cranes • Port engineering and infrastructure equipment • Navigation technologies • ICT applications

• Solution for sustainable mining: Energy efficiency, recylcling, water treatment, technologies for minimizing environmental impacts

• Technologies, expertise & equipment for exploration, exploitation, mine construction and mining activities

• Wear-resistant special steels, ex. for mining equipment in harsh arctic conditions (Ruukki)

Contact: Finpro Lasse Baldauf lasse.baldauf@finpro.fi