NORTHWEST TERRITORIES
While generally waxing positive on the NWT's near future, a recently issued forecast by the Conference Board of Canada indicates the NWT's none-too-varied economy will still face some significant challenges in the years to come.

Nathan Bourgeault, a worker at Rio Tinto's Diavik Diamond Mine, poses with a vehicle used to transport workers underground. The combination of underground and open pit mining at Diavik until some point in 2012 – and a production ramp-up at De Beers Canada's Snap Lake Diamond Mine – will help bolster the NWT's GDP this year and next year, according to a recently-issue economic forecast from the Conference Board of Canada. - NNSL file photo

Specifically, a decrease in construction activity – traditionally driven by government investment and the mining industry – will result in fewer jobs and send the the territory's unemployment rate rising.

With De Beers Canada's Snap Lake diamond mine up and running for two years now; Rio Tinto's Diavik diamond mine now finished its underground expansion; and the Government of the Northwest Territories expected to reduce its capital spending next year to $75 million from $222 million this year (and that's not counting generous contributions made this year by the federal government), there will be more unemployed people in the medium term, said Kris Shaw, an economist with the Conference Board.

According to the forecast, the NWT's unemployment rate is projected to average seven per cent over the next three years, a significantly higher rate than before the recession.

"One reason is that construction is not going to be as strong in the future. Construction is a big source of jobs for the territory. The private sector, too," said Shaw.

Though the $16.2 billion Mackenzie Gas Project – if it goes ahead – would obviously change that, the Conference Board doesn't expect natural gas will begin flowing until 2018, said Shaw.

"It's a product of gas markets as they are today and how long we think they'll take for prices to shrink and for demand to increase enough to make Arctic natural gas an economic project, especially with all the non-conventional gas that's coming up these days."

During National Energy Boarding (NEB) hearings earlier this year, Imperial Oil, leading proponent of the pipeline, said the project will likely not begin operations until 2018 at the earliest.

Regardless of when the pipeline comes online, oil and gas exploration activity – which is scarcely mentioned in the forecast, despite the stated intentions by giants like BP and Imperial Oil to eventually produce oil or natural gas from the Beaufort Sea – is not expected to generate much activity until the pipeline looks like a sure thing.

"Exploration ... is not that urgent because that project, at least as we see it, is going to be delayed at least until the end of the decade," said Shaw.

In light of BP's massive oil spill in the Gulf of Mexico, the NEB has imposed a moratorium on any new Arctic offshore wells while it reviews Arctic offshore drilling regulations.

"That adds another element of uncertainty to companies that are thinking of doing business in that part of the world," said Shaw.

On the positive front, increased diamond production at Diavik – which will operate as both an open pit and underground mine until open pit mining ceases in 2012 – and a production ramp-up at Snap Lake – which is expected to generate another 175 jobs by the end of this year – will help expand the NWT's GDP by 4.8 per cent this year and 9.3 per cent next year.

The forecast also cites Fortune Mineral's gold-cobalt-bismuth NICO project, located 50 km north of Whati, as a future potential driver of the NWT economy, with the Conference Board predicting commercial production at the 150-person mine to begin in 2013.

Curiously absent from the forecast was any mention of the NWT's regulatory system, which, by even the admission of minister of Industry, Tourism and Investment Bob McLeod, has been assailed by critics, notably the mining industry.

"Everybody knows that all of the mining companies blame (the NWT's trailing Nunavut in terms of exploration spending) on the regulatory process," said McLeod.

Currently, the Tlicho government is calling for a halt to NICO's environmental assessment; a decision was not yet reached by the regulator, the Mackenzie Valley Environmental Impact Review Board, as of press time.

Complaints about the regulatory process aren't the only things missing from the report, which fails to mention a slew of other mineral exploration projects that also hold much promise for the NWT's future economy, said McLeod.

"I could easily count another nine or 10 projects that are the same stages as NICO," said McLeod, citing, to name only two, Canadian Zinc's planned 220-person Prairie Creek mine, located 90 km southeast of Nahanni Butte, and Avalon Rare Metal's Nechalacho mine, located 100 km southeast of Yellowknife.

And while the Conference Board predicts the territory's population will continue to decline, McLeod doesn't see it that way, either.

"To me, I think we've already turned a corner. They're saying it's going to continue to decline. Our numbers show that for the past two years, there was a very small decline, maybe a couple hundred or a hundred. This year ... there's been a slight increase of about 100."

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