The Northwest Territories and Nunavut Chamber of Mines says a sharp drop over the last year in the mineral sector was a bad hit to the NWT, and all levels of government need to help revive the industry.
The chamber was among the organizations that reacted to a report this week from the NWT Bureau of Statistics showing a 10.5 percent drop in gross domestic product (GDP) in 2020 — the worst in Canada.
The report concluded that the mining and oil and gas sectors declined by 30.4 per cent year over year. The slump coincided with an overall $800 million drop in value of in the mineral sector between 2019 and 2020.
Covid-19, the closure of the Ekati diamond mine for most of 2020 and a fire at the Imperial Oil plant in Norman Wells were noted as contributors to the decline.
“That’s an ugly, ugly fall,” Tom Hoefer, the mining chamber’s executive director, said of the mineral sector’s reported figures. “And it’s not just a number. That translated into cancelled projects at mine sites, reduced employment, and that means less money in the communities.
“That’s not the place that the NWT should want to be — the worst in Canada. Not when we have such strong mineral potential, and so many residents and businesses relying on a strong minerals industry,” said Hoefer.
The NWT’s last place result contrasted with its neighbouring Northern territories, who were the only jurisdictions in Canada to see growth last year. The Yukon came in at 5.2 per cent while Nunavut’s GDP grew by 2.6 per cent.
Hoefer said the other two territories have done well to take advantage of emerging mineral markets; they support strong exploration, especially for gold and iron; and they create the conditions to establish new mines.
“When you have new mines opening, and strong market prices, which gold and iron had, it’s to be expected,” he said of their growth. “They were lucky perhaps, with the strong market prices. Unfortunately, we can’t affect market prices, and when they go down, companies must weather the storm, and/or take steps to reduce costs.”
But the outlook is not all bad for the NWT, according to Hoefer. He said the territory has potential to rebound in the future, both in traditional minerals that have been mined and in new and emerging critical mineral extraction that’s growing in demand.
“We don’t want to turn our back on our stalwart minerals — gold and diamonds — and we need to encourage more exploration for them, as we still have untapped potential for both,” he said. “The rising star right now are critical minerals — critical to addressing climate change, to help with wind turbines, electric vehicles, solar panels and a host of other critical technologies.”
Hoefer pointed out that the territory has four advanced projects in Prairie Creek, Pine Point, Nechalacho and NICO that are all promising in their own way.
“Nechalacho had a strong summer, becoming Canada’s first rare earth element mine, and now we hope to see it grow to be a significant commercial producer of these,” he said.
It’s important with such critical minerals to develop a leadership position in the market and strive to take advantage of conditions when they are positive, Hoefer advised.
“We have a great opportunity emerging now in critical minerals, and it will be important that we move fast and seize a position, before other jurisdictions do,” he said. “There might even be potential for CanTung to reopen as it produces another critical mineral, tungsten ore.”
Although market conditions can’t be controlled, all levels of government should support the mineral sector by providing increased resources, training and jobs, and using wisely the tax flows and payments that governments receive, Hoefer contended.
The GNWT Department of Industry Tourism and Investment, the NWT Chamber of Commerce and MP Michael McLeod’s office did not respond to requests for comment on the GDP report on Nov. 10.