Weak commodities prices continue to put pressure on Canada’s mining and exploration industry, and so the economies of Canada’s three territories will see a slowdown in economic growth in 2014.
Last year, all three territories saw a decline in mineral exploration; as well, construction was halted for several new mines, says Justin Cooke, economist with the Ottawa-based Conference Board of Canada.
In contrast, the construction sector in the territories is expected to see a boost in project development, with several projects advancing in 2014.
The Conference Board of Canada anticipates combined real gross domestic product (GDP) growth of 4.1% for the three territories this year, with the Yukon at 6.5%, Nunavut at 4.5% and the Northwest Territories (NWT) at 2.5%.
Here’s a closer look at the individual territories:
– The Yukon. In light of the difficulties in the mining industry and many indicators that the territory’s economy should be shrinking rather than growing, the current expectation is for the Yukon’s GDP to have posted growth for the 10th consecutive year in 2013, says Currie Dixon, the Yukon’s minister of economic development in Whitehorse.
“We expect that things will be challenging in the mining industry throughout 2014,” he adds. “But on the long-term horizon, the general trend is that we are seeing many projects getting advanced permit[s]. That shows some promise for the years ahead.”
One of the Yukon’s largest mines, Alexo Resource Corp.’s Bellekeno mine, suspended operation last year. The company recently announced that it will not be reopening this mine until 2015 – but will do so at a higher capacity with the addition of the Flame & Moth silver mine.
Besides mining, the Yukon will see several construction projects advance. The value of building permits is expected to grow to $125 million in 2014 with the rebuilding of F.H. Collins Secondary School in Whitehorse and a new “affordable housing project” to which the private sector and the territorial government will contribute $27 million combined.
“The construction sector has a lot of territory workers who come to the Yukon for work but have the opportunity to stay on if they want to,” says Cooke. “These types of projects will help attract permanent residents.”
The tourism industry had a banner year in 2013 with an increase in Americans passing through on their way to Alaska, as well as a 30% increase in overseas tourists visiting the region.
– Nunavut also is relying on the construction industry throughout 2014 and could see a bounceback year with many projects in the pipeline in both the public and the private sectors.
“We’re seeing large amounts of spending,” Cooke says, “in both the private sector and at all levels of the government, that could provide some strong growth.”
Iqaluit’s airport will receive a $300-million upgrade that will be funded 25% by the federal government, 25% by the territorial government and the remaining 50% by a private company that will help to build and manage the airport. Nunavut also will see construction start on a new $140-million Canadian Arctic research station and a $32-million aquatic centre.
Baffinland Iron Mines Corp.’s Mary River mine will continue its $750-million construction plans this year after completing preliminary work in 2013.
The mining industry in Nunavut is driven by Agnico-Eagle Mines Ltd.’s Meadowbank gold mine, which saw a record year of production in 2013. With such a good year last year, Cooke is not expecting Meadowbank to boost growth for 2014: “We should see growth under 2%, which is lower than the average for [Nunavut].”
– The Northwest Territories. Two major projects in the mining industry include construction starts for Fortune Minerals Ltd.’s NICO gold/cobalt/bismuth/copper mine (20-year lifespan) and the Gahcho Kue Diamond mine, (11-year lifespan).
The N.W.T. also recently obtained approval to begin receiving its own mineral royalties; this could mean approximately $65 million of annual royalties being added to the territorial government’s revenue.
“This is a really good thing,” Cooke says, “for public finances as well as for funding future infrastructure projects.”
The federal government also just announced that it is funding the expansion of the Tuktoyaktuk Highway, which will lower the costs of goods for people in the region, create jobs and open the door for future development.
The Territories
Population: 115,828
GDP 2012 ($bil.): 9.5
GDP % change: +4.1
2013-14 surplus ($mil.): 171.3
Estimated net debt ($mil.): 447.9
Personal Disposable income/ capita: $37,802
Figures are from latest available reports/estimates
Sources: conference board of canada;
government reports
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