TORONTO (miningweekly.com) – Lower commodity prices would hold back mineral exploration in Canada's territories, cooling previously robust economic growth this year, The Conference Board of Canada's ‘Territorial Outlook: Autumn 2013’ has found.
The report, released on Wednesday at Canada's North Summit 2013, in Whitehorse, Yukon Territory, forecast that the real gross domestic product (GDP) in the territories would grow by 0.5% in 2013.
"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.
"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,” the board’s senior VP and chief economist Glen Hodgson said.
Real GDP in the territories as a whole was expected to expand by a more robust 3.2% in 2014 and 4.2% in 2015. While a given mining project was 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 would be limited to 0.6% this year. With two new mines expected to begin construction, Yukon's economic prospects would be more positive next year, with real GDP expected to rise by 5.7%.
The Northwest Territories would have the weakest regional economy in Canada this year, with no real GDP growth forecast.
However, the subpar economic conditions were expected to be short-lived. The next five years were expected to offer better prospects for mining and the economy, as new mines began production, and the Ekati and Diavik diamond mines remained in operation. Real GDP growth was expected to rise by 1.3% in 2014 and 2.5% in 2015.
Lower production at Agnico Eagle's Meadowbank mine and a slowdown in mineral exploration would limit Nunavut's economic growth to 1.6% in 2013. Next year, economic growth was forecast to reach 3.7%.
Baffinland's Mary River iron-ore project would kick the construction and transportation industries into high gear next year. A number of federal, territorial and municipal government projects were also slated to begin construction in 2014.