Sinking global commodity prices have negatively impacted Canada’s North near-future mining outlook, said Wednesday the Conference Board of Canada, but longer-term prospects for the industry in the three territories remain strong.
"Most mineral-exploration plans are proceeding this year, albeit at a somewhat weaker pace than expected six months ago," said the board in its Summer 2012 outlook.
"The economic forecast remains positive for the territories as a whole over the medium to long term," added Marie-Christine Bernard, associate director, forecasting and analysis for the Canadian think-tank.
The board expects growth in the North to outperform Canada as a whole. It predicts Arctic GDP will expand by 3.6% this year, 5.4% the next and 4.3% in 2014.
On the fiscal side, the Conference Board of Canada expects all three territories to post balanced budgets this fiscal year. However, the economic outlook among the individual territories varies greatly.
Recent setbacks, particularly in the mining sector, will limit Nunavut’s expected growth for this year. From an initially projected real GDP growth of 16%, now it is expected to grow only 0.2%.
“The closure of the Hope Bay mine site, lower gold production at the Meadowbank mine, and cutbacks to exploration and development budgets limited the growth outlook for Nunavut,” says the report.
The economic think-tank added that construction on the Mary River and Meliadine mines will cause real GDP to surge by 17% in 2013 and 14.2% in 2014. Between 2012 and 2016, the construction industry will grow by an average annual compound rate of 22.7%, says the board.
Diamond mining, the Northwest Territories largest industry, has peaked and long-term production declines are expected to begin next year, despite the scheduled construction of the De Beers Gacho Ku'e mine, expected to begin production in 2015. Its output, however, will not be enough to offset declines when the Diavik and Ekati mines shut down within the next decade.