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Vol. 19, No. 8 Week of February 23, 2014
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Mining plays key role in economic future

In 2013 report, public-private coalition identifies main drivers and significant challenges to prosperity in Far North territory

Rose Ragsdale

For Mining News

Despite a surge in economic activity in recent years, Nunavut still has considerable work to do for its residents to achieve prosperity.

That’s the conclusion of the 2013 Nunavut Economic Outlook, a report based on research conducted by Impact Economics on behalf of the Nunavut Economic Forum last summer and fall.

The forum released the 98-page report at the North Lights Trade Show in Ottawa in January. Subtitled “Nunavut’s Next Challenge: Turning Growth into Prosperity,” it details recent socioeconomic developments in the territory and offers insights into where Nunavut appears to be headed.

The forum, a coalition of public and private entities, works to identify and share information about economic activity in Nunavut. The 2013 Outlook marks the sixth report by the group since 2001.

“For the first time since its creation and after a decade of persistent investments in its foundation, Nunavut’s economy is expanding in several areas. Turning this growth into prosperity for people and for communities is Nunavut’s next great challenge,” the Forum wrote in introducing the 2013 report.

“While there has been an increase in employment levels and average personal income is now in line with the Canadian average, there are still many Nunavummiut who are not participating in the economy (for a number of reasons) which has given rise to an increase in inequality. This division between rich and poor can be observed in numerous economic and social datasets and it is clear that the gap is widening,” wrote the Forum.

Closing this gap presents overwhelming challenges that will require Nunavut to innovate, experiment, test, and adapt repeatedly at the community, regional, and territorial levels. Progress will be measured by hundreds of small victories achieved in a slow march towards a high and sustainable quality of life, the Forum observed.

“Growth over the next five years will likely be higher (in Nunavut) than in any other jurisdiction in Canada when measured by GDP, but this statement hides important considerations. Not all regions within Nunavut will grow equally, and more work is needed to bring economic opportunities to more communities,” the group predicted.

Some 35,591 people who resided in Nunavut as of July 1, but they will not share equally in the benefits of the anticipated economic growth even though the territory has enough jobs available to employ most, if not all, of its labor force. Nunavut’s employment rate currently averages 13.5 percent, reflecting that about 2,000 Nunavummiut are unemployed even though there are two jobs for each unemployed residents.

Yet 93 percent of university graduates from Nunavut find jobs, giving the territory the best graduation –to-employment ratio in Canada, according to the outlook.

“Understanding why so many remain unemployed and end up in a poverty situation means understanding the complexity within Nunavut’s challenge of bringing prosperity to all Nunavummiut,” the report said.

Though the outlook for growth in most sectors of the economy is good, mining offers the most promise for capital investment, job creation and business opportunities. The Mary River iron ore project is now under construction and prospects for development of the Meliadine gold project remain high.

The Meadowbank Gold Mine, which had just entered production when the last (2010) Nunavut Economic Outlook was written, is the only operating mine in the territory. Owned and operated by Agnico-Eagle Mines Ltd., the mine is scheduled to continue operating until 2018 and produce about 358,000 ounces of gold annually during the next few years. Meadowbank currently employs about 800 workers, of which 31 percent are Inuit, primarily from the Kivalliq Region of Nunavut.

Nunavut has at least eight advanced mine projects, of which Mary River appears to be closest to startup of operations. Co-owned by the steelmaker Arcelor-Mittal from Luxemburg and Iron Ore Holdings Ltd., the operator at Mary River made the decision to proceed with development of a mine in 2013 and began shipping construction materials to the mine site in the latter half of 2013.

Predicting the future of mining in Nunavut with any degree of precision has been challenging during the past decade. The territory is strewn with numerous examples of projects that have risen to prominence bringing hope to communities only to fade away due to a variety of factors. Hope Bay Gold Project and Jericho Diamond Mine are good examples. Many of these mineral-rich deposits have changed hands several times or stalled in the exploration phase for prolonged periods and continued to exhibit uncertainty regarding their future development. Low commodity prices, challenging capital markets and high cost of development are major contributors to this uncertainty.

In the economic outlook, the Forum predicted that Nunavut’s GDP will be shaped by the course of large mineral resource development projects over the next several years.

“On average, GDP could grow between 4 percent and 5 percent during that time frame. There are several important construction projects that will make important contributions to Nunavut’s economy in the next five years, but will barely register when set beside the Mary River or Meliadine projects,” the outlook said.

“Similarly, important advances in fishing, tourism, and the arts sector, while dwarfed by mining activity, cannot be fully appreciated through an analysis of their contributions to GDP,” it concluded.

The Nunavut Economic Forum was started as a coalition of about 30 federal, territorial and municipal government agencies, Inuit organizations, business associations and non-government groups in the territory. The coalition set up the forum as an independent organization in 2004, first to monitor an earlier economic development strategy for the territory, covering 2003 to 2013. The forum also organizes “Sivummut” economic development conferences in Nunavut.

Beginning with the 2005 edition, the Nunavut Economic Outlook has provided feedback on the implementation of Nunavut’s Economic Development Strategy. This year’s Outlook will help to inform the next Economic Development Strategy.

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