Two of Canada’s three northern territories — the Northwest Territories (N.W.T.) and Nunavut — are expected to record economic growth that will exceed the national average considerably in 2017 before plunging into negative growth this year.
Meanwhile, the remaining territory, the Yukon, is moving in the opposite direction, expected to swing from contraction last year to strong growth in 2018.
The strength of all three economies comes down to one industry: mining. And it is in flux.
The Ottawa-based Conference Board of Canada predicts that the N.W.T. experienced real gross domestic product (GDP) growth of 12.2% last year, thanks in large part to De Beers Canada Inc.’s Gahcho Kué diamond mine, which had its first full year of production in 2017.
The Conference Board predicts Nunavut’s GDP growth was a healthy 6.4% in 2017.
“[The N.W.T. and Nunavut] will have outperformed the rest of the country [in 2017],” says Stephen Spence, economist with the Conference Board’s provincial outlook group. In the year ahead, however, the outlook is less rosy.
Here’s a look at the three territories in closer detail:
– The Northwest Territories’ real GDP is expected to drop by 2% this year.
“The Northwest Territories will underperform,” says Spence. “Most production plans indicate that total mineral extraction will decline this year.”
A recent Conference Board report notes that no metal mines have been in operation in the N.W.T. since North American Tungsten Corp. Ltd. closed its Cantung tungsten mine in 2015, and oil and gas production also continues to decline.
The impact on the economy will be significant: real GDP is forecast to decline by an average of 1.7% a year between 2018 and 2020.
– Nunavut will have to dig deep to overcome the impact of its projected real GDP decline of 0.2% for this year. The decline is linked to Toronto-based Agnico Eagle Mines Ltd.’s Meadowbank gold mine, which is expected to wind down operations as its reserves are drawn down.
The mine began commercial production in 2010, and produced its two millionth ounce of gold in 2015. Last year, the mine was expected to produce 320,000 ounces of gold; this year, that figure will drop to 165,000 ounces.
– The Yukon is expected to have moved into negative territory for 2017, with a real GDP decline of 0.7%, according to the Conference Board. That’s partly because the Yukon currently has only one operating mine: Vancouver-based Capstone Mining Corp.’s Minto copper mine, for which production dropped sharply in 2017 from 2016. The mine’s closure was scheduled for last year, but Capstone announced operations would continue through to at least 2020 in the wake of increased commodities prices.
However, the Yukon’s real GDP growth is expected to rise to 7.8% this year as production continues at the Minto copper mine and construction begins on new mines.
Specifically, Toronto-based Victoria Gold Corp.’s Eagle gold mine is expected to begin operations in 2019, and Vancouver-based Goldcorp Inc. expects to begin production on its Coffee gold mine in 2021. That will drive growth of more than 20% in the mining industry, the Conference Board states.
The economic impact of this mining resurgence may be more muted than it would be elsewhere.
“[The] Yukon has one of the higher rates of fly-in and fly-out workers. This is hard on the tax base,” says Spence. “In general, increased production doesn’t translate to as much income or employment growth as it would [in other provinces because of those workers].”