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Boom in store for NunavutConference Board of Canada predicts high growth in its Territorial Outlook
Northern News Services
Published Saturday, Sept. 15, 2012
Both the economies of the Northwest Territories and Nunavut are poised to grow faster than the rest of the country this year, according to the Conference Board of Canada's summer 2012 Territorial Outlook, mostly due to the strength of the North's mining industry.
"There's a lot of uncertainty right now with the situation in Europe and possibly the slowdown in China, but if we look longer term, the outlook is actually quite positive for global demand for metals," said Marie-Christine Bernard, a conference board associate director. "So it should benefit the mining sector and since it's a dominant industry in the North, that's why we have favourable forecast for the North."
Real Gross Domestic Product (GDP) in the Northwest Territories will increase five per cent in 2012, outpacing Nunavut's GDP growth of just 0.2 per cent this year, due to the shuttering of the Kitikmeot region's Hope Bay mine site and GN fiscal restraint.
However, Nunavut is forecast to see 17 per cent growth in 2013 and 14.2 per cent growth in 2014, as construction begins on Baffinland Iron Mines Corp.'s Mary River iron project and Agnico-Eagle's Meliadine gold project, according to the conference board, which is the foremost independent, not-for-profit research organization in Canada.
"For Nunavut, if we look at the economy in the next few years, the forecast is actually quite positive because there will be some new mines that will be under development, so the investment related to the mining projects and also to develop the infrastructure that will be necessary to make those mines operational, will create jobs and will help greatly the economy," Bernard said.
Mary River, Meliadine, in addition to a number of other mining projects being developed in the territory including the Izok Corridor, Sabina Gold and Silver Corp.'s Back River gold project, and the already operating Meadowbank gold mine, make up a wave in the near term for Nunavut like the impact by the diamond mines on the NWT, said Tom Hoefer, the executive director of the NWT and Nunavut Chamber of Mines.
"It's the same kind of order of magnitude," Hoefer said, comparing the $4-billion capital costs of the Ekati, Diavik and Snap Lake diamond mines to the capital costs of Baffinland and Meliadine, and the 3,200-strong labour force of the diamond mines to at least what the major projects being proposed in Nunavut would require.
"You need to make sure you put the training into place, make sure there's business capacity too, and try to help the projects moving forward, because if something happens and they get stopped, then we were just dreaming," Hoefer added.
As diamond production decreases from the NWT's diamond mines over the years, the opening of the
new Gahcho Kue mine will not be enough to offset the production that will be lost when the Diavik and Ekati mines shut down, according to the conference board, which forecast the economy of the NWT will shrink in 2013 and 2014, due to declining diamond production.
In addition to Gahcho Kue, five more projects will also offset the decline of diamond production even before the diamond mines are expected to close, Hoefer noted, including Pine Point, Tyhee's Yellowknife gold project, Avalon's rare earths project, Canadian Zinc, and Fortune Minerals Ltd.'s NICO project being proposed.
"This is a good thing, and we are hopeful they will all advance as all of their manpower (1,400) would be just enough to offset the Ekati manpower (1,400)," Hoefer said.
The chamber has been calling for improvement to the investment climate in the NWT to attract more grassroots exploration to replace the diamond mines if their lives are not extended.
Oil and gas exploration activity in the NWT was not factored into the conference board's report because it is still in the early stages, Bernard said.
Even as Nunavut's GDP is forecast to nearly double in the next 15 years, from $1.28 billion in 2011, it is not expected to catch up to the Northwest Territories' GDP, the largest economy of the three territories, which was was $3.279 million in 2009 and is forecast to grow about 1.2 per cent by 2016.