The economic forecast for 2014 is not as sunny as Yukon officials had thought.
This week the territory released its economic outlook, predicting 3.3 per cent real GDP growth in 2014.
That’s revised down from the 8.8 per cent prediction from the report released in October.
The government bases its forecast on a series of assumptions about what economic activities will take place, said Derrick Hynes, Yukon’s director of business and economic research.
But some mining companies in particular have changed their plans since the department last ran the numbers.
“There have been some significant changes, and that’s what has resulted in the downward revision of our forecast,” said Hynes.
In the October report, officials assumed that Alexco Resource Corp.‘s Bellekeno mine would go back into production in 2014.
In July the company announced it would shut down for the winter, but that it would work towards re-opening in 2014 “assuming the silver market has improved from current levels and underlying fixed costs have been reduced,” according to a news release.
But now the company says it will spend 2014 setting up underground infrastructure at the Flame & Moth deposit and bring both that mine and Bellekeno into production in early 2015.
Capstone Mining Corp has also cooled its plans to ramp up production significantly at Minto mine in 2014.
“While we do still anticipate an increase in production at the Minto mine, it’s probably not going to be at the rate that they originally were projecting it would be last summer when we did our last forecast,” said Hynes.
Yukon Zinc Corp. also had been predicting production increases at the Wolverine mine, but now “we’re not quite certain whether that’s going to occur or not,” he said.
And the October report also assumed that Victoria Gold Corp. would make significant developments towards the development of the Eagle gold mine in 2014. Now that is looking less likely.
While that project is fully permitted, the company must find $430 million in initial capital investments before major earthworks will go forward.
Despite these downward revisions, Yukon still predicts economic growth for 2013, fuelled not only by mining activity but also by government expenditures and tourism.
“We always like to talk about the tourism industry because it’s so important to our economy,” said Hynes. “We have an economy that is built on three pillars: government investment, the mining sector and then tourism.”
In terms of government spending, the F.H. Collins school replacement project and continued development of the Whistle Bend subdivision should give construction and related industries a boost.
Tourism numbers are expected to climb as well. The industry took a hit in 2009 with the recession in the United States, but things have been getting better since then, said Hynes.
“Certainly we’re seeing some growth there, and that’s very positive in terms of the overall diversification of the economy.”
The territory’s economic forecasters are predicting continued GDP growth over the medium term, at an average of 5 per cent annually from 2015-2019.
Four new mines are expected to start production during that period, according to the report. Those include the Whitehorse Copper magnetite project, Eagle Gold, Carmacks Copper, and the Casino copper-gold mine.
Contact Jacqueline Ronson at
jronson@yukon-news.com