Appearance before the Standing Committee on International Trade (CIIT): Study on Canadian Businesses in Supply Chains and Global Markets, May 2nd, 2024

1. Opening Remarks

Thank you. Merci. Qujannamiik.

My name is Jimi Onalik. I'm the President of the Canadian Northern Economic Development Agency, or CanNor.

I would like to thank you for inviting me. I have recently completed my six-month anniversary in the federal system, and this is my first opportunity to appear before the committee. I'm incredibly honoured to be here.

I'll start by giving a brief introduction on the mandate of CanNor and its role in the North, on this, our really important 15th anniversary as an organization

Like other regional development agencies, CanNor is responsible for promoting economic development within a distinct region of Canada—in this case, Canada's three beautiful territories. Through the delivery of targeted funding, CanNor is working to enhance the resiliency of the territorial supply chain and create conditions for growth and job creation.

The North represents 40% of Canada's land mass and is significantly distanced from the normal supply chains that support businesses and trade in southern Canada. Northern communities and remote resource projects are serviced principally by long-haul air transportation year-round and a short ship-based sealift season during the open water months. While the Yukon and the Northwest Territories do have a road network, it is limited and costly to haul goods long distances, especially in regard to resource sector products such as mineral ore.

Economic development in the North is further challenged by a sparse and widely distributed population, significant infrastructure deficits and high operational and energy costs. Headquartered in Iqaluit, Nunavut, CanNor's core responsibility is to support the conditions for a sustainable, diversified and innovative economy in collaboration with northern and Indigenous partners.

With a portfolio in 2023-24 of over $77 million, CanNor has a strong suite of funding programs, such as Inclusive Diversification and Economic Advancement in the North, or, as we call it, IDEANorth, which will distribute over $29 million this year to projects that bring strategic support to small-scale infrastructure as well as sector development and business scale-up.

Much like the broader economic contributors in our respective regions, the projects supported by IDEANorth can vary dramatically in scope and size, such as CanNor's investment of close to $500,000 for the Town of Hay River in the Northwest Territories to plan and design a new business park to provide needed space for business. This project is leveraging Hay River as a transportation hub for critical minerals and freshwater fish available from the nearby Great Slave Lake fisheries.

Targeted CanNor investments helped northern businesses weather the pandemic impacts on our supply chains while maintaining or increasing our export potential. For example, CanNor provided funding to the ‘Yukon Free Shipping' initiative alongside the Yukon Chamber of Commerce, which offered free shipping for Yukon products to make their way to markets within Canada and overseas.

CanNor can also play a role as a ground-level investor for generational infrastructure projects. We have contributed over $4.5 million since 2019 to support feasibility studies of the Kivalliq Hydro-Fibre Link.

CanNor's Northern Projects Management Office, or NPMO, is similarly unique among our colleagues in the RDAs, the regional development agencies, in its role of supporting efficient environmental review processes for proposed resource development and infrastructure projects in the territories. Much of Canada's mineral resource potential lies in the territories, including critical minerals essential to Canada's economic and Arctic security and the transition to a low-carbon economy. This is primarily driven by the mining sector, which is the largest private sector contributor to the territories' economies, accounting for 23% of GDP in 2020 and increasing to well over 28% this year.

The North has a lot to offer our Canadian economy. The North is open for business and eager to break into new markets, both domestically and abroad.

I'm very happy to address any questions you have.

Thank you. Qujannamiik. Merci.

2. Trade – Issue Sheet – CanNor Overview of Supply Chain Support

As the regional development agency for the North, CanNor's targeted funding supports northern businesses to grow, diversify, and contribute to territorial supply chains.

The Agency's flagship program, IDEANorth, has an annual grants and contributions envelope of approximately $30 million. The fund makes foundational investments in economic infrastructure, sector development and capacity building to help Northerners take advantage of economic opportunities.

Additionally, CanNor's Northern Indigenous Economic Opportunities Program, with an annual grants and contributions envelope of $14 million, supports greater participation by northern Inuit, First Nations and Métis businesses and enables them to pursue opportunities for employment, income, and wealth creation.

CanNor also supports northern supply chains through other functions, including its Northern Projects Management Office. This office supports improving the timeliness, predictability and transparency of northern regulatory processes for large resource development proposals by coordinating federal input and participation in the Board processes. The goal is to foster a more stable and attractive investment climate in the territories. CanNor is the only regional development agency with such responsibilities.

3. Sectors – Issue Sheet – Air Transportation

Northern air access issues are embedded within a broader territorial supply chain framework that impacts community and regional economic development, as well as food security, infrastructure, and workforce supply and mobility.

Northern air carriers and industry stakeholders have indicated that the infrastructure deficit is a critical impediment to northern aviation where solutions to address gaps are beyond the capacity of smaller communities and air carriers.

Infrastructure gaps are having a disrupting impact on the aviation sector.

Key challenges include:

• The prevalence of short, gravel runways across the territories;
• The impact of a warming climate on airport infrastructure, particularly gravel runways;
• The lack of 24-hour weather information, critical equipment shortages (such as approach lighting and de-icing equipment) and inadequate fuel supply at some locations.

4. Sectors – Issue Sheet – Connectivity in the North

Reliable high-speed telecommunications networks support the growth of businesses in our North and their ability to contribute to domestic and global supply chains.

The territories are less connected than southern Canada. According to Innovation Science and Economic Development, 93.5% of households in Canada in 2023 were equipped with broadband internet connections.

However, only 63.1% of households in the Yukon had access to broadband, and only 67.3% of households in the Northwest Territories. No place in Nunavut has access to broadband – Nunavut's internet is currently supplied via satellite.

Projects and proposals are underway to bring high-speed fibre-optic connections to more communities in the territories.

CanNor has provided $4.6 million to the Kivalliq Inuit Association in Nunavut to lay the foundations for the Kivalliq Hydro-Fibre Link, a corridor that will see Nunavut's Kivalliq region connected to Manitoba's broadband and electrical grids. CanNor's funding went toward a feasibility study and other research to help move the project forward.

CanNor provided $3 million to the Tłı̨ chǫ Government in the Northwest Territories to help connect households and businesses in the community of Whatì to high-speed internet. Completed in March 2023, CanNor's contribution helped fund costs for engineering, construction, and commissioning of the fibre optic cables.

Fibre-optic cables can be one component of multi-purpose corridors. Like the Kivalliq Hydro-Fibre Link, such corridors could combine different types of infrastructure to serve multiple end users across multiple purposes, including resource extraction, business development, security, defence, healthcare, and emergency management.

Recently, international partners have expressed interest in the potential for a new network of undersea fibre-optic cables to be laid between northern Canada, Greenland, Iceland, Alaska, Japan, Norway, Finland, and Ireland.

Projects such as this could help bolster the competitiveness of northern industry while strengthening the security and resiliency of our telecommunications links with our allies.

5. Sectors – Issue Sheet – Fisheries Development in the North

Nunavut's fisheries sector is an important driver of economic diversification. It is a source of sustainable economic development that creates jobs and career opportunities for Nunavummiut, and presents significant potential for growth. However, a lack of infrastructure creates key gaps in this sector's ability to develop a robust supply chain.

In 2020, Nunavut's marine sectors added approximately $220 million to Canada's GDP, and generated almost 1,200 jobs.

The fishing economy in Nunavut includes commercial offshore and inshore fisheries as well as country food harvesting.

Sustainable and equitable growth in Nunavut's fisheries sector faces three key issues:

• Persistent skills gaps place limitations on the ability of Nunavummiut to participate in all occupations linked to a healthy commercial fisheries.
• A critical deficit in marine infrastructure, including ports, as well as processing and packaging facilities, reduces Nunavut's ability to capture economic multipliers associated with fisheries.
• The current quota system for offshore fisheries allocates only about 50% of the quotas in Nunavut-adjacent waters to Nunavut fisheries.

CanNor has made significant contributions to economic development in Nunavut's fishing sector. Over the past five years, CanNor has provided approximately $20 million in funding to support Nunavut's fisheries sector, including $1.2 million in 2022 to the Nunavut Fisheries Association to monitor stocks and explore the possibility of adding new species to Nunavut's commercial fisheries.

6. Sectors – Issue Sheet – Mining

The resource sector remains a cornerstone of this northern economy, primarily driven by the mining industry which is the largest private sector contributor to the territories' economies, accounting for approximately 23% of the GDP ($2.4 billion), in 2020 and likely to reach over 28% in 2024.

Canada's territories hold the promise to help supply the critical minerals we need to fuel the transition to green technologies. Identified deposits include tungsten, uranium, rare earths, zinc, and copper.

The mineral potential is challenged by supply chain issues that are, in many cases, unique to the North. These include a sparse and widely distributed population; a significant infrastructure deficit; skills gaps; climate change; high energy, living and operational costs; and cyclical downturns associated with fluctuations in the levels of resource development activity.

The competitiveness of northern mining projects is impacted by the cost premium associated with the need to build infrastructure that would not be required for an otherwise equivalent southern mine. The cost premium can be as much as 2.5 times higher for capital costs associated with base metal mines and 2 times for gold mines, as well as operating costs being 30%-60% higher. Developing infrastructure corridors to resource-rich areas would facilitate resource development.