Mining News: Northern Neighbors: Weak metals prices limit growth in Canada’s territories

The Conference Board of Canada Feb. 24 said declining metal and mineral prices, rising global inventories of most mining commodities and easing growth in the Chinese economy will weigh on the economies of Canada’s territories in 2016. Nunavut and Yukon are expected to see positive but modest growth this year, but the economy of the Northwest Territories will remain virtually flat, according to the latest “Territorial Outlook” published by the independent research organization. “All three territories faced difficult economic conditions in 2015, and the hard times are not over yet. The mining sector will continue to face headwinds as most of the same conditions that prevailed last year are expected to continue over the next couple of years,” said Marie-Christine Bernard, associate director, provincial and territorial forecast, Conference Board of Canada. “On a more positive note, public investment in much-needed infrastructure will help the economies of Nunavut and Yukon return to growth this year.” Following three years of declines, the Conference Board expects Yukon’s gross domestic product to grow by 2.7 percent in 2016. Despite the commodity price slump and easing demand for base metals on the global market, Yukon’s mining industry is poised to increase output by 5.4 percent in 2016 as Capstone Mining Corp. processes higher grade ore at the Minto Mine. However, Capstone recently said it could cease open-pit mining in August if metal prices don’t improve. If this occurs, the board said there would be no producing mines in the territory, significantly hampering economic growth. Also, no new mines are expected to move into development phase over the near term. This will weigh on the territory’s construction industry, which is expected to see little growth over the next two years. Strong government spending is expected to offset some of the slowdown in mining. Yukon’s 2015–16 capital budget is the largest in the territory’s history and many investments in health facilities, schools, and other infrastructure are expected this year. Moreover, Yukon is becoming a tourist destination with overnight visits projected to increase by 2.5 percent in 2016. Nunavut can expect a more positive outlook as public sector projects and mineral exploration help turn the economy around over the medium term. With gold output at Agnico Eagle Mines Ltd.’s Meadowbank Mine continuing to taper, Nunavut'’s mining output is expected to see 3.6 percent dip this year before picking up again in 2017. On a more positive note, exploration spending is on the rise in Nunavut, going from C$158 million in 2014 to C$203 million in 2015. Among the three territories, Nunavut is expected to see the most exploration spending this year, the bulk of which will be done by senior companies. The public sector will be investing in infrastructure in the next few years, including the construction of a C$143-million Canadian High Arctic Research Station in Cambridge Bay and the $300-million upgrade to the airport at Iqaluit, the territory’s capital. Both projects are slated to continue until 2017. In all, Nunavut’s economy is forecast to expand by 1.2 percent in 2016 and grow at an even stronger pace in 2017. The shutdown of De Beers Canada’s Snap Lake mine in December is expected to be a blow to the Northwest Territories’ economy. The mine produced about 1.2 million carats of diamonds in 2014 and accounted for about 13 percent of the territory’s diamond mining output. The start of production at the Gahcho Kué mine- expected in the third quarter of 2016- should help offset some the impact of the closing of Snap Lake and allow NWT’s economy to grow by 0.7 per cent in 2016. As production ramps up at Gahcho Kué, the Northwest Territories is expected to see much stronger economic growth and job creation.

- Shane Lasley