THE ECONOMIES OF CANADA’S three Northern territories are driven by natural resources – specifically, mining.
Economists have not had to dig deep to determine that current conditions do not favour a resurgence. “The big story is the plunge in the sector,” says Elise Martin, an economist with the Conference Board of Canada in Ottawa.
The economic plot line can be traced back to China, which in 2000 consumed 15% of the world’s base metals. By 2014, that figure had climbed to 45%. “Right now, analysts are concerned about the financial health of China,” says Martin. “The country is in a transition. There is a shift towards a more consumer-driven economy, but this transition is bumpy.”
Mining-dependent economies like those of Nunavut, the Yukon and the Northwest Territories are struggling to navigate around the potholes on their economic paths. “Now there is an oversupply of metals,” says Martin. “There was a closing of many mines in 2015 in the Territories. I don’t see that reversing itself.”
Here is a brief look at the three territories.
– The Yukon. Last year was a tough one for the Yukon. Following the temporary closure of the Keno Hill Silver District Operation silver/lead/zinc mine in 2013, falling mineral prices forced Yukon Zinc Corp. to suspend operations at its Wolverine site early last year and required the company, which has $646 million in debt, to seek creditor protection.
Yukon Zinc now has only one operational mine, a copper mine in Minto. However, after three years of declining economic growth, the territorial economy is expected to return to modest growth this year as production at the Minto mine ramps up. However, this increased output won’t be enough to mitigate rising unemployment, which is anticipated to hit 6.7% for 2015, up from 4.3% a year earlier, and rise to 7.5% in 2016. Real gross domestic product (GDP) is predicted to drop by 6% in 2015 and grow to 3.5% this year. Still, says Martin, “It’s not looking very good for the Yukon overall.”
– Nunavut. Two productive mines – the Mary River iron ore operation and the Meadowbank gold mine – are contributing to robust growth for Nunavut. Midway through 2015, a Conference Board report predicted the territory would lead the country in GDP growth, at 3.8%. Mary’s River, which shipped ore for the first time this summer, is playing a key role in that growth.
Increasing GDP is not unusual for the territory. According to Employment and Social Development Canada, Nunavut’s GDP grew by almost 40% between 2009 and 2014, rising at an average annual rate of 6.2%. In 2015, real GDP is forecast to increase by 3.3%.
That figure may drop to below 1% this year, however, as construction on the $740-million Mary River project comes to a close.
– Northwest Territories. As a small, resources-based economy, the N.W.T. is vulnerable to shocks and fluctuations in the global economy.
“Depressed prices for rough diamonds, which declined by 15% last year, and tight financing will remain challenges for the mining industry,” says Andrew Livingstone, communications advisor with the Department of the Executive in Yellowknife.
In good years, the mining industry has contributed as much as 50% of the territory’s GDP; now, it provides 40%.
However, the N.W.T. has also witnessed a seven-year decline in mineral exploration investment, including the unexpected closures in 2015 of the Cantung and Snap Lake mines. A Conference Board report predicts the N.W.T. will post a decrease in GDP in 2015.
GDP growth will be driven primarily by government investments in public infrastructure – that is, ongoing construction of the Inuvik-Tuktoyaktuk Highway, which began in 2013.
THE TERRITORIES
Population: 118,052
GDP, 2014 ($bil.): 9.8
GDP, % change: 4.7
2014-15 surplus* ($mil.): 277
Net debt/assets* ($Mil.): +649
per capita wage growth, % change, 2015: 2.2
Household disposable income, per capita: $39,653
*Excludes NWT; Figures from latest available reports/estimates
Source: Conference Board of Canada
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