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Ottawa, December 17 —The natural resources sector – and the industries that support it – provide the strongest potential for Northern Canada’s future economic development, The Conference Board of Canada concludes in a study for its Centre for the North, released today.
This report, Mapping the Economic Potential of Canada’s North, is one of a series of foundational studies for the Centre for the North. It is intended to provide a launch pad for further inquiry into the future economic development potential of the North.
“The economic potential of Northern Canada is highly dependent on its mining and oil and gas resources,” said Len Coad, Director, Environment, Energy and Technology Policy, The Conference Board of Canada. “These primary industries also drive growth in other sectors of Northern economies, including communication, electricity and transportation infrastructure, and commercial services. They can contribute to the prosperity of northern communities by providing jobs and supporting local businesses.”
The Conference Board uses the Northern Development Ministers Forum’s definition of the North as the basis for this research. Based on this definition, the North comprises the three territories and the northern parts of seven provinces – 80 per cent of Canada’s land mass in all, but it makes up less than seven per cent of the population. This study identified a collection of seven key industries—oil and gas, mining, forestry, fishing, utilities, construction, and tourism.
Hot Spots for Mining Potential
The indicators used to assess mining— economic output and exploration expenditures—all point to a strong mining future for the North. Potential opportunities exist in every Northern region, although there are some emerging hot spots, particularly in the Yukon, Nunavut, and Northern Ontario.
“Northern Canada has a long history of mining and the future looks bright. Even in 2009—the worst year for mining in recent history—the industry contributed $6.5 billion to the Canadian economy in real terms and continued to export a diverse variety of resources,” said Coad.
“Private companies have spent billions of dollars exploring and appraising the North, and several projects have garnered considerable excitement from exploration companies and local communities alike. That said, mining also has a significant environmental impact, which must be especially well-understood and managed properly in the North.”
This report argues that both project proponents and the respective governing agencies must ensure that mine development is both environmentally responsible and delivers economic rewards to residents, benefits to local governments, and returns to investors and operators.
The three territories’ metal mining industries have begun to expand; a number of mines are expected to begin production in the next 10 years. In Yukon, the Bellekeno mine (gold, silver, lead and zinc) came into production this year; the Wolverine mine (zinc, copper, lead, silver, and gold) is due to begin production shortly. The Northwest Territories has Canada’s most recently developed mining industry—diamonds. Nunavut just opened its first gold mine and exploration activity has taken off.
In Northern Saskatchewan, there is strong potential for expanded uranium mining and new mining of gold deposits. Northern British Columbia has a variety of metal mines and a new transmission line will enable several mines to begin production in the Northwest. Northern Manitoba will open at least two new metal mines in the near future.
Ontario and Quebec have long histories of diverse mining operations. The “Ring of Fire” could make Northern Ontario a big player in chromite mining, while large amounts of exploration expenditures will flow into Quebec. Labrador will see a boost in iron ore production from several mines.
In addition to the environmental effects, other challenges and constraints to mining growth in the North include:
•supply constraints (particularly an absence of skilled labour);
•remoteness of some potential mining sites;
•substantial infrastructure costs to build roads, railways, airstrips, and/or ports;
•The long lead times required to bring new properties to full production; and
•changes in the demand for each commodity.
Oil and Gas Opportunities
In addition to mining, oil and gas also offers potential for future economic development in Northern Canada. As conventional resources continue to mature and decline in importance, the resources of the North (unconventional and undeveloped conventional) will increase in importance. Where infrastructure is already in place in Alberta (oil sands) and British Columbia (shale gas), investment is underway and is expected to continue.
The oil and gas resources of the territories remain largely undeveloped – constrained by challenging climate, lack of infrastructure, a fragile natural environment, workforce issues, and distance to market. The development of conventional gas reserves near the Arctic islands and natural gas reserves offshore Northern Labrador offer more long-term possibilities.
Other Industries – Potential Based on Resource Development
• Utilities – which contribute between two and four per cent of gross domestic product in each of Canada’s provinces and territories – may be considered enabling industries. Although they are not basic industries upon which economic growth is founded, their absence or inadequacy adds substantial costs for other industries and for the general population. Northern communities have the best opportunity for access to utility services when a nearby industrial project or development provides an anchor load to justify the required investment. This has been the pattern in Yukon and the Northwest Territories, in particular.
• Commercial or industrial construction will continue to be cyclical, and will opportunistically follow resource-based industrial development.
• Tourism has strong growth potential, starting from a modest initial base. The market opportunity appears to be strong, due to a growing number of Canadian travellers who want to see and experience the North. Two significant challenges are limited infrastructure (such as airports, roads, hotel beds, and year-round services), and the ongoing development of products with consistent quality.
• Forestry and fishing are both mature renewable industries that have approached or reached their sustainable harvest levels. This review has not identified any significant long-term development potential for either industry.
The report has compiled the best and most complete data available to profile each industry identified for its potential in the North. However, there were specific challenges with the data collection, notably difficulties in separating data for the northern and southern regions of each province. Part of this work in this study identifies gaps in the data that could serve as the basis for future research.
The Centre for the North is a Conference Board of Canada program of research and dialogue. Its main purpose is to work with Aboriginal leaders, businesses, governments, communities, educational institutions, and other organizations to provide insights into how sustainable prosperity can be achieved in the North. Over its five-year mandate, the Centre for the North will help to establish and implement strategies, policies and practices to transform that vision into reality.
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