Territorial economies slow down in 2013
Eastern Arctic expected to lead comeback in 2015, according to Conference Board of Canada
Daron Letts
Northern News Services
Published Monday, October 21, 2013
NUNAVUT/NWT
Nunavut is poised to lead the NWT on an economic comeback following a two-year pan-territorial slowdown, according to a report published last week by the Conference Board of Canada.
The Conference Board of Canada expects the Avalon Rare Metals' Nechalacho Rare Earth Element Project camp site on Thor Lake will help boost the NWT economy by 7.9 per cent in 2016 if the company gets enough financing to develop the proposed mine on schedule.
- Daron Letts/NNSL photo |
The board's Centre for the North's biannual Territorial Outlook Economic Forecast projects Nunavut's economy will grow by 9.5 per cent in 2015. In 2016, NWT will follow with 7.9 per cent in growth.
This year, the board anticipates 1.6 percent growth in Nunavut, slower than the previous three years, and zero growth in the NWT after several projects experienced delays or were scaled back due to falling commodity prices and tight capital markets.
"Over the last year-and-a-half to two years we have seen an easing of commodity prices, so that changed the mining environment," said Marie-Christine Bernard, associate director of the board's provincial and territorial forecast service and principal author of the document.
"There is less and less investment into mineral exploration. Until there are new mines that are producing, we will see modest growth in terms of mineral production."
Nunavut's one producing mine, Agnico Eagle's open-pit Meadowbank gold mine 110 kilometres north of Baker Lake, has improved operations to produce an anticipated 300,000 ounces of ore annually before declining in 2016 until the possible end of its mine life in 2018. However, lower grades of mined ore may temper its impact on the territory's GDP in 2013.
Nunavut is expected to run a deficit this year, according to the report, with fiscal surpluses forecast in both of the next two years.
"We are very positive about the future over the next few years," Bernard said, pointing out the hefty construction projects now underway at Baffinland's Mary River mine, approximately 160 kilometres south of Pond Inlet. The mine is slated to begin production in 2015.
"That's over $700 million that will be invested, even though it's smaller than the original $4 billion project - they scaled it back at the beginning of this year - it's still a sizable amount of investment for Nunavut," Bernard said. "That will be fuelling strong economic growth over the next few years."
Construction and production at Mary River and Meadowbank, along with federal, territorial, and municipal projects, and the projected opening of Agnico's second, and the larger Meliadine mine, 25 kilometres North of Rankin Inlet, should continue to boost investment in Nunavut until 2016, Bernard said.
The NWT is following a similar economic arc to Nunavut, but at a slower pace as projects struggle to obtain financing.
"There are a number of mines that are expected to be in development, and that will fuel strong growth for the NWT," she said.
The Gahcho Kue open-pit diamond mine proposed by partners De Beers and Mountain Province Diamonds, Canadian Zinc's proposed Prairie Creek Mine, Fortune Mineral's proposed Nico Mine and Avalon Rare Metals' proposed Nechalacho mine will boost the NWT economy if they achieve their production schedules as planned.
"Some of these projects may require financing, so there is a possibility that they won't go ahead exactly as we planned or they may be delayed," Bernard said "It depends how the global economy progresses. There's a lot of uncertainty"
Benefits accrued from Devolution and strong household income growth will contribute to GNWT budgetary surpluses in coming years, according to the report.
"Growth in the NWT is not as strong as Nunavut because in the NWT, at Diavik and Ekati mines, we're seeing a weaker diamond production, so that is counter-balancing the strong construction activity we'll be seeing," Bernard added.
Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines, said if the board's crystal ball proves accurate with regards to an improved global economy in the short term, financing dollars should be easier to find in both territories.
"If this occurs, we are relatively well positioned to grow our industry, certainly over the next five years. In the NWT and Nunavut, we have several projects either in the environmental review and permitting processes, or just through them. As they become mines, they will add to our current mines and our industry's benefits will grow," he stated in an e-mail to News/North. "We are also hopeful that Ekati will be able to develop additional resources on their property, and sustain themselves beyond their projected 2019 closure date."
Hoefer added that although Northerners cannot directly improve global economic conditions to attract investment, they can "roll out the welcome mat" in other ways by keeping the Northern investment climate attractive.
"Building mines is expensive, and we need to attract other people's money to build our mines. That means we need to provide those investors with certainty that they are putting their money in a secure place."
