Mining News: North should prosper despite tough times

Economists cite vulnerable global economy, firming base metal prices and tight financial markets as factors in near-term outlook

Rose Ragsdale

For Mining News

The mining industry in northern Canada is expected to continue to flourish in 2013 despite current challenges, including slow economic growth, lower commodity prices and dismal financial markets, according to economists at The Conference Board of Canada.

“The territories are not immune to the vulnerability of the global economy,” said Marie-Christine Bernard, associate director, forecasting and analysis at The Conference Board. “New mine development and production will provide a solid economic foundation for Canada’s territories. However, base metal prices are only now firming up, after slipping in 2012. And tight financial markets are making it more difficult for mining companies to raise capital, which is delaying or downsizing projects.”

In “Territorial Outlook: Winter 2013,” published March 18 by The Conference Board of Canada’s Centre for the North, the economists said the global economy is making its presence felt in Canada’s territories, dampening – but not dousing – the mining boom under way in Canada’s North.

The outlook, which is published twice yearly, examines the economic and fiscal outlook for each of the territories, including output by industry, labor market conditions, and the demographic make-up. It is funded by the Centre for the North, which under a five-year mandate works with Aboriginal leaders, businesses, governments, communities, educational institutions, and other organizations to provide insights into how sustainable prosperity can be achieved in Canada’s North. The Centre aims to help to establish and implement strategies, policies and practices to transform that vision into reality.

The winter 2013 report cites a number of recent developments in the territories that will affect the near- to medium-term outlook for mining in the territories.

Nunavut’s mining sector is experiencing both accelerating growth and downside risks, the board noted. Production at the Meadowbank gold mine in 2012 far exceeded initial predictions, and output is expected to rise over the next three years.

On the other hand, the Mary River iron ore project was recently scaled back from planned C$4-billion expenditures to a C$740-million project. Difficulty in obtaining financing led to the plans being revised downward. The revised plan is expected to produce less iron ore and not include a rail line or the Steensby Inlet port, although it will begin operations earlier than it would have under the larger project.

New mining developments in Nunavut, however, are expected to propel growth in real gross domestic product in that territory over the next few years, according to the economists. Even with the downgrade at Mary River, overall economic growth in Nunavut is forecast to hit 3.4 percent in 2013 and jump to 8.8 percent in 2014.

In the Northwest Territories, real economic growth will remain depressed this year as diamond production declines, according to the report. Growth of 0.2 percent is anticipated in the territory in 2013, which is an improvement over declining real GDP in 2011 and 2012. The diamond mining industry is both maturing and entering a long-term decline.

“Luckily for the territory, its fortunes are not all tied to the diamond industry – several metal ore mines will be developed and explored over the next few years,” the economists said.

Stronger economic growth of 2.6 percent is forecast for the Northwest Territories in 2014. 

Yukon Territory’s real GDP is forecast to increase by a strong 6.3 percent in 2013 as mineral production continues to climb and construction gets a lift from mineral development. New mines are expected to be developed in the Yukon, leading to at least five producing mine during the mid- and latter part of the decade.

Yukon’s next mine will be Victoria Gold’s Eagle gold mine, which is scheduled to begin construction this year. 

Overall, new mine developments in the North will provide a solid foundation for job creation and income growth during the next year, the Conference Board concluded.