TORONTO (miningweekly.com) – 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 Conference Board of Canada's Centre for the North said in its twice-yearly 'Territorial Outlook: Winter 2013'.
The Conference Board said real gross domestic product (GDP) in the territories as a whole was forecast to increase by 2.8% this year, and by 5.4% in 2014. In comparison, Canada's overall real GDP growth this year was expected to be 2.2%.
The report found that despite short-term uncertainty, long-term global demand for metals suggested that the mining outlook for Canada's North was bright.
"The territories are not immune to the vulnerability of the global economy. 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,” forecasting and analysis associate director Marie-Christine Bernard said.
The Conference Board said Nunavut's mining sector was experiencing both accelerating growth and downside risks. Production at Agnico-Eagle Mines’ Meadowbank gold mine in 2012 far exceeded initial predictions, and output was expected to rise over the next three years.
On the other hand, ArcelorMittal's and Baffinland’s Mary River iron-ore project, on Baffin Island, was scaled back from a planned $4-billion expenditure to a $740-million project. The revised plan was expected to produce less iron-ore and not include a rail line or the Steensby Inlet port, although it would begin operations earlier than it would have under the larger project.
Even with the downgrade, overall economic growth in Nunavut was forecast to be 3.4% this year and 8.8% in 2014.
The Northwest Territories were expected to grow by 0.2% this year, which was an improvement over the declining real GDP growth in 2011 and 2012. The diamond mining industry was both maturing and entering a long-term decline.
The Conference Board noted that, luckily for the territory, its fortunes were not all tied to the diamond industry, owing to several metal-ore mines which would be developed and explored over the next few years. Stronger economic growth of 2.6% was forecast for 2014.
Yukon's real GDP is forecast to increase by a strong 6.3% this year, as mineral production continued to climb and construction got a lift from mineral development. Yukon's next mine would be Victoria Gold's Eagle gold mine, which was expected to begin construction this year.