Canada’s northern territories can expect strong economic growth in 2012 as they continue to reap the benefits of the resources sector’s further expansion.

Forecasts for real gross domestic product growth for the three territories are quite optimistic. In fact, the Ottawa-based Conference Board of Canada expects real GDP growth of 7.1% for all three territories combined this year, with Nunavut leading the way at 16%, the Northwest Territories at 5.9% and the Yukon at 2.9%, says Marie-Christine Bernard, associate director, provincial economic trends.

Most of the expected growth in the territories will be generated by continuous exploration for precious and base metals, says Bernard, as well as an increase in production levels at some mines. The development of the resources sector also means a boost for other areas of the economy, from retail to housing.

The strength of the mining sector means positive news for employment, which is expected to remain steady. The Yukon has a record level of employment, at least in recent history, says Harvey Brooks, the Yukon’s deputy minister of economic development in Whitehorse. As of December 2011, the Yukon had an unemployment rate of 5.3%.

In contrast, Nunavut and the N.W.T. are expected to have unemployment rates of 15% and 6.4%, respectively, in 2012. One of the reasons, and ongoing challenges for employment in the North, is finding local skilled labour that matches market requirements.

Although skills training is always a challenge, says Dan Westman, manager of economic planning for the N.W.T in Yellowknife, the N.W.T is meeting it through the Mine Training Society. The society is a joint partnership between mining companies, First Nations groups and the government to train residents in mining skills.

One area of the economy that will be lower for all three territories in 2012 is government spending, because of diminishing federal stimulus spending.

Here is a closer look at the individual territories:

> The Yukon. Large exploration projects in the Yukon are one of the main driving forces behind the territory’s expected growth. “There’s tremendous interest in the Yukon’s geology, both precious metals [gold] and base metals,” says Brooks. “And we’re very interested now to see the outcome of that level of exploration.”

For instance, 2011 represented a record level of activity in the territory, with more than $300 million spent on mineral exploration. There are also several new mines coming into, or increasing, production for 2012. The Wolverine zinc/silver mine owned by Vancouver-based Yukon Zinc Corp. is expected to begin production, he says, and the Minto mine owned by Vancouver-based Capstone Mining Corp., which produces copper and gold, made significant finds in its region.

In large part because of this exploration, the Yukon has experienced eight years of growth. This consistent level means good news for other areas of the territory’s economy. For example, construction, particularly in regard to housing, is expected to be strong in 2012. More housing is required in the territory, says Brooks, as many retiring workers are now choosing to remain in the Yukon rather than going elsewhere.

> The Northwest Territories. The N.W.T.’s resources economy, while not as robust as that of its neighbours, is more mature and is still expected to see growth in 2012. Diamonds remain an important part of the N.W.T.’s economy. And according to the Conference Board, Snap Lake Mine, the territory’s newest mine (owned by De Beers Canada Inc.), is expected to reach full production levels by the end of 2012.

As well, one of the N.W.T.’s largest mines, the Diavik Diamond Mine, is building a wind farm on its property. The wind farm is meant to create a significant amount of energy, says Westman, which will increase the lifespan of the mine.

Oil and gas exploration is also “coming back to the N.W.T.,” he adds, noting that Royal Dutch Shell PLC paid about $500 million in oil exploration expenditure commitments to the federal government last year.

Furthermore, although the film industry is a small part of the economy, it is helping the N.W.T. grow. A 2011 study found that film and digital media added $9 million to the territory’s economy annually. As well, television shows such as Ice Road Truckers, Ice Pilots and Arctic Air are bringing more awareness about the N.W.T.

“One of the big benefits of filming up here is that it promotes the N.W.T. as a place to visit,” says Westman. “Ice Road Truckers really put us on the map.”

> Nunavut. Resources are the driving force behind the youngest territory’s expected growth this year. There is much exploration happening in Nunavut, says Bernard, who adds that the Conference Board expects that level of exploration to continue through 2012.

So far, Agnico-Eagle Mines Ltd. has spent roughly $200 million in exploration and new processing facilities at its Meadowbank and Meladine West gold mines, and will spend an additional $130 million by 2013. The Baffinland Iron Mine’s Corp.’s Mary River iron ore project is expected to come into operation sometime in 2013 and, according to the Conference Board, could become one of the world’s largest iron ore mines. IE