Lower commodity prices will hold back mineral exploration in Canada’s territories, cooling previously-robust economic growth in the territories this year.
Real gross domestic product (GDP) in the territories is forecast to grow by a tepid 0.5 per cent in 2013, according to The Conference Board of Canada’s Territorial Outlook: Autumn 2013, released today at Canada’s North Summit 2013 in Whitehorse.
“A once-thriving mining sector is now re-evaluating development and exploration plans due to lower commodity prices and tight capital markets, which makes it difficult for mining companies to obtain financing,” said Glen Hodgson, Senior Vice-President and Chief Economist, The Conference Board of Canada. “However, the outlook beyond this year is more promising. Economic growth in the territories over the next few years is expected to easily outpace growth in most other Canadian regions.”
Real GDP in the territories as a whole is expected to expand by a more robust 3.2 per cent in 2014 and 4.2 per cent in 2015. While a given mining project is never guaranteed to proceed, favourable global demand for metals suggest that Canada’s mining potential is bright over the next decade—particularly in the North.
This year, Yukon’s mining industry saw production and staffing cutbacks. Victoria Gold delayed construction of its Eagle mine by a year, and Yukon Zinc and Alexco Resource announced they were cutting production and laying off workers in the summer. Economic growth in the territory will be limited to 0.6 per cent this year. With two new mines expected to begin construction, Yukon’s economic prospects will be more positive next year, with real GDP expected to rise by 5.7 per cent.
The Northwest Territories will have the weakest regional economy in Canada this year — no real GDP growth is forecast. However, the subpar economic conditions are expected to be short-lived. The next five years offer better prospects for mining and the economy, as new mines begin production, and Ekati and Diavik remain in operation. Real GDP growth is expected to rise by 1.3 per cent in 2014 and 2.5 per cent in 2015.
Lower production at Agnico Eagle’s Meadowbank mine and a slowdown in mineral exploration will limit Nunavut’s economic growth to 1.6 per cent in 2013. Next year, economic growth is forecast to reach 3.7 per cent. Development of Baffinland’s Mary River iron ore project will kick the construction and transportation industries into high gear next year. A number of federal, territorial and municipal government projects are also slated to begin construction in 2014.
The Territorial Outlook, published twice yearly, examines the economic and fiscal outlook for each of the territories, including output by industry, labour market conditions, and the demographic make-up. This forecast is funded through the Conference Board’s Centre for the North. The Centre’s main purpose is to work with Aboriginal leaders, businesses, governments, communities, educational institutions, and other organizations to provide insights into how sustainable prosperity can be achieved in the North. Over its five-year mandate, the Centre for the North will help to establish and implement strategies, policies and practices to transform that vision into reality.
SOURCE Conference Board of Canada