Sure nice to have that $1 billion
June 29, 2013
The mining sector in the three northern territories roils with slowdowns and closures. No worries for territorial governments though, a billion per year (each) federal transfer is secure and underpins the overall economy. Mining exploration expenditures for the three territories will be less than 1/2 the 2012 total of almost $1B.
- In Yukon, Yukon Zinc has laid off about one half of its underground workforce (100 jobs) at its Wolverine Mine near Ross River. Victoria Gold has put its $400 M Eagle gold mine on ice. Meanwhile, Alexco has reduced 30 positions at its Keno mining operations. The Minto copper mine has not laid off any staff.
- NWT has a number of advanced projects on tap. The souring of the commodity price situation has not helped move these projects to development. The Tamerlane and Prairie Creek zinc projects and the Izok base metal project are in doubt with uncertainty in the market. Gold projects (Tyhee, Courageous and Ulu) are uncertain. The three diamond mines are operating normally.
- In Nunavut the giant Mary River iron ore project has been significantly scaled back. The Meliadine gold mine near Rankin Inlet should go forward to construction, unless the gold price plummets further. Feasibility and pre-feasibility studies continue on a number of projects.
Meanwhile in the government sector:
- The Yukon announced a surplus budget of $72.8 million, without any tax increases. This year’s territorial budget allocates more than $1 billion in government spending — nearly twice the amount in the 2003-2004 budget, which was before the territory’s devolution.
- The NWT’s outlook for revenue growth over the medium-term is modest. Overall, NWT expects less than two per cent growth in revenues over the next three years; a fraction of the six per cent annual growth we’ve experienced over the past decade. The primary reason is that Territorial Formula Financing, which is 70 per cent of our revenues, is not expected to grow over the next two years as NWT’s population growth remains stagnant.
- Nunavut will receive $1.56 billion next year, excluding third party revenues. This number is also up nearly five percent from the current year. Most of the increase comes from arise in the Territorial Formula Financing arrangement.
The central bankers in the world’s two largest economies, the US and China, have signaled that the ultra-loose monetary policies of the last 4 years may be coming to an end sooner rather than later. Interest rates have spiked and gold/commodity prices have tumbled. Through no fault of their own the territorial economies are facing a bleaker outlook than just 6 short months ago. Good thing that Ottawa is so generous.
- a)Jacqueline Ronson, "100 jobs cut at Wolverine mine", Yukon News, 28-Jun-2013.
- d)Territorial budget info: see http://www.fin.gov.nt.ca/address/ and http://www.gov.nu.ca/files/2013-14%20GN%20Budget_Address.pdf and http://www.cbc.ca/news/canada/north/story/2013/03/21/north-yukon-budget.html