Northwest Territories is the second largest territory of Canada, located in the far north of the country. It is one of the world's most remote and sparsely populated areas, with a population totally only about 40,000 people. The capital and largest city is Yellowknife, which is the populated place in the Northwest Territories with over 10,000 people. In 1999, the Nunavut Act created the territory of Nunavut, which shrunk the area of Northwest Territories by more than half. It is now the third largest territorial unit in Canada. The economy is based on raw materials export and mining. Northwest Territories' climate is arctic, with the entire territory covered in tundra and taiga.