Weak economy predicted
New report cites difficult financing environment for delay in many metal mine projects
Karen K. Ho
Northern News Services
Saturday, July 25, 2015
NORTHWEST TERRITORIES
Things don't look good for the economic outlook of the territory for both the short and long term, according to a new report from the Conference Board of Canada.
Canadian Zinc's Prairie Creek Mine, pictured here is one of the few projects in the territory projected by the Conference Board of Canada to start production by the end of the decade. - photo courtesy of Prairie Creek
|
In the organization's economic forecast for all three territories, the NWT was singled out as being the weakest, and expected to contract over the next year.
"The near-to-medium term outlook is definitely not strong as it used to be," said Marie Christine Bernard, the board's associate director of territorial forecast service.
In the report, the conference board said it expects Prairie Creek to be the only new mine producing by the end of the decade.
Bernard said conditions in the mining industry and falling commodity prices were why five proposed metal mines in the territory last year at different stages of development were delayed or held back by lack of financing.
The report also cited weak prospects for the oil and gas sector, due to suspended operations in the Canol shale oil region and low prices.
Bernard also cited the mature stage of the territory's diamond mines as one of the factors weighing down overall economic growth.
"Diavik and Ekati have been producing for a number of years, so we're seeing less production as well," she said.
Bernard said the volatile nature of commodity markets meant that the forecast regarding the territory's mining industry wasn't surprising, since commodity prices had been falling for a few years. She also acknowledged the financing situation was also affecting mining projects in other parts of Canada.
"It doesn't mean no projects are going to go ahead but it definitely looks like it's going to be difficult to bring a new mine into production before the end of the decade," she said.
In the report, co-author Brent Dowdall did note that production at the Gahcho Kue diamond mine could begin as early as 2016-2017, helping to boost the territory's economic growth by 8.4 per cent.
Ultimately, the conference board believes the NWT's gross domestic product is will decline by two per cent this year but grow 1.7 per cent next year.
However, Bernard that the territory's migration pattern and aging population will also affect health-care spending and budgets overall.
"That's definitely a concern, because that does affect government revenues," she said.
Ultimately, when it comes to the question of whether the NWT needs to diversify its economy, Bernard said that natural resources are still its greatest competitive advantage. "It's just the economics of making it work right now, prices are low and it's hard to obtain financing," she said. "But that can change rapidly as well. We'll have to watch closely."
