Yukon should match mining potential with better policy to attract investment

You can’t overstate the importance of the mining sector for the Yukon. The mining of gold, silver, copper, nickel, zinc and lead constitute the largest industries in Canada’s westernmost territory, accounting for nearly all its exports. Jobs in Yukon’s mining sector tend to pay above-average wages, and given the surging global demand for metals and minerals, the industry has great potential for expansion.

However, according to a recent study, which measures the investment attractiveness of mining jurisdictions worldwide based on government policies and geological potential by surveying senior executives in the mining industry, Yukon is dimming in the eyes of mining investors.

Specifically, the Yukon dropped out of the top 10 most attractive jurisdictions to investment, falling from the 9th place out of 84 in 2021 to 20th out of 62 in 2022 (the latest year of available comparable data). But because the Yukon is still perceived as a top tier jurisdiction in terms of geological endowment, poor government policy explains most of this decline.

Given the relevance of this sector, Premier Ranj Pillai should address this negative policy perception toward mining investment. In particular, investors noted several policy factors that hamper the territory’s mining attractiveness.

First, 67 per cent of respondents reported a negative perception about uncertainty around protected lands. Second, 63 per cent of survey respondents for Yukon expressed concerns over uncertainty around disputed land claims. Third, 63 per cent said infrastructure was a deterrent to investment in the territory. Finally, 61 per cent expressed a growing concern over the state of socioeconomic agreements and community development conditions, which include requirements to supply social infrastructure such as schools and hospitals.

Moreover, investors took a dim view of Yukon's taxation regime and also noted its regulatory duplications. Consequently, among Canadian provinces and territories, Yukon fell from the third most attractive jurisdiction to mining investment in 2021 (behind only Saskatchewan and Quebec) to the seventh. Clearly, policy improvement would help increase Yukon’s appeal in the eyes of investors.

Following the pandemic, mineral production increased in 2021 helping in the territory’s economic recovery. However, between 2021 and 2022, the mining sector suffered an economic contraction, coinciding with the period where declining investor perceptions were uncovered in the study released by the Fraser Institute.

In light of the Yukon’s strong mineral endowment, the Pillai government can improve the policy environment and foster investment in one of the territory’s largest economic sectors. This will not only help the local mining industry satisfy the growing global demand for minerals but also create and sustain well-paying jobs.