Randy McLean, Princeton BC Mayor | BCBusiness
Princeton mayor Randy McLean welcomes the return of the mining industry to his town.
As copper demand soars, it’s boom time in small resource towns throughout the province hit hard by the one-two punch of the pine beetle and the U.S. housing crisis. Will the boom and bust cycle be different this time around?
Princeton mayor Randy McLean gets giddy when describing the mood in this small community that sits at the confluence of the Tulameen and Similkameen rivers east of the Cascade Mountains. “Let’s just say it’s gone from euphoria to semi-euphoria,” McLean says, from his desk at Princeton town hall, reflecting on the mood resulting from last summer’s reactivation of the Copper Mountain Mine 18 kilometres south of town after a 15-year hiatus.
“This is a huge boost,” McLean says of the effect on this log, lumber and mining community of 3,000, which had suffered the double sting of the mine closing in 1996 and the pine beetle epidemic that slammed the southern Interior forest industry. “Now if someone is thinking of investing here they’ll have extra confidence knowing that there’s a mine here with a 20-year lifespan.”
Thanks to soaring global copper demand that has seen prices spike over the past decade, from about $1 a pound to over $4, Vancouver-based Copper Mountain Mining Corp. spent $438 million to buy the old mine site from a reclamation company in 2006. It conducted exploratory drilling throughout 2007 and 2008, then retooled the mine in time for a reopening in August this year. During the construction phase, Princeton hotels and motels swelled to capacity, housing as many as 500 construction workers. At full production, Copper Mountain will have close to 270 full-time employees working shifts around the clock, seven days a week, many of whom live in and around Princeton.
A new Cooper's Foods is one sign of revival in
Following the initial construction boom, there is still a buzz in town. A new Cooper’s Foods has helped give the small and faded downtown a perky facelift, and this fall ratepayers will cast their votes in a referendum over the proposed new Princeton and District Aquatic Centre.
For Zoë Younger, acting president and CEO of the Mining Association of B.C., it’s go time like never before in the province’s copper mining sector. “This is about communities and an industry coming back to life,” Younger says. “With commodity prices sitting where they are today, it enables investment to develop resources with a high degree of certainty. And in terms of mine development I don’t think B.C. is anywhere near its potential.”
The rejuvenation of Copper Mountain, whose share price soared from $2.02 last July to a 52-week high of $8.15 last May, traces the arc of copper itself and the seismic wave of exploration, mining development and redevelopment that is rejuvenating towns throughout the province. Imperial Metals Corp. is studying the feasibility of extending the life of its Huckleberry Mine in northwest B.C. after discovering a substantial ore body beneath one of its old pits. New Gold Inc. is nearing completion of a $600-million construction project at New Afton, a copper property on the outskirts of Kamloops previously worked by then Teck Cominco in the 1980s and ’90s, and operations are set to begin in 2013, says New Gold president and CEO Bob Gallagher.
Teck’s Highland Valley mine, with its 950 workers and $80-million annual payroll, recorded a handsome $524-million operating profit before depreciation and amortization last year, and high copper prices have put a low-grade copper-molybdenum deposit into play, potentially extending that mine’s life until 2025. At the same time, Abacus Mining and Exploration Co. has entered into a joint venture with Polish mining giant KGHM Polska Miedz, to develop another dusty old Teck Cominco property near Kamloops into an open-pit mine with an estimated 23-year lifespan.
Princeton has a lot riding on the newly reopened
Copper Mountain mine.
New mineral property exploration
Exploration of new mineral properties has also taken off, with expenditures in B.C. topping $500 million in 2010, more than double the 2009 total. Yet there’s still plenty of room for growth. B.C. copper production is modest on a world scale, with Canada as a whole accounting for just 3.2 per cent of world copper output. B.C. currently has only seven copper mines in production; when New Gold Inc.’s New Afton mine and Terrane Metals Corp.’s Mt. Milligan come on stream they will bring the total to nine. According to the most recent PricewaterhouseCoopers mining report, 2010 was a record year for revenues, net income and cash flow in B.C.’s mining industry as a whole, with pre-tax earnings at $3.7 billion, up 65 per cent from 2009. As for copper specifically, gross revenues increased from $1.2 billion in 2009 to $1.4 billion in 2010.
If the B.C. mining industry is motivated to grow, it has the enthusiastic support of the B.C. government. Its 2007 mining plan is focused on providing certainty to investors around access to land. An agreement signed with Ottawa in 2004 aims to streamline the federal and provincial environmental assessment processes to avoid costly duplication of effort and time. The B.C. Mining Explorations Tax Credit offers a 20-per-cent credit on net exploration expenses, and as of February 2007, a 30-per-cent credit for exploration in mountain-pine-beetle-affected areas. And last spring Victoria pumped $12 million into the budget of Geoscience B.C., an industry-led nonprofit created in 2005 and tasked with spearheading geological survey projects with the hopes of attracting more mining investment to the province.
Even though we’ve been mining in B.C. since before the Cariboo gold rush of 1862, Lyn Anglin, Geoscience B.C. president and CEO, agrees with the mining association’s Zoë Younger that there’s still much to learn about what lies beneath the surface of the province. “Do we have a good handle on the potential in B.C? I’d say not really. B.C. has very complex geology with a complicated structure, steep terrain and a lot of glacial overburden left over from the last ice age,” Anglin says. “My feeling is there’s a lot of undiscovered potential.”
Geoscience B.C.’s first major undertaking was dubbed QUEST, after the Quesnellia Terrane, a massive area centred around Prince George and extending from the Gibraltar copper-molybdenum mine near McCleese Lake north to Mt. Milligan. Anglin says exploration companies and geologists have a longstanding interest in this large but poorly understood belt of geology, and within weeks of QUEST’s launch there was an avalanche of online staking that totalled more than 800,000 hectares, a testament to the speculative interest in this region. Another Geoscience B.C. project, called QUEST West, involves aerial geomagnetic surveys in the Smithers region, and helped Imperial Metals identify a deposit that could prolong the productivity of its Huckleberry mine, 80 kilometres southwest of Houston, by as much as 10 years.
All this mineral mania is translating into high expectations in hinterland B.C. Maureen Czirfusz, economic development officer for the Houston and District Chamber of Commerce, points out that 30 per cent of Huckleberry’s workforce, or approximately 70 employees, is based in her community. “Mining is now our number one industry,” she says, adding that companies with local outlets, such as Finning International Inc. and B.C. Bearing Engineers Ltd., are examples of the kind of spin-off enterprises that would benefit hugely from an extended lifespan at Huckleberry.
In this often boom-and-bust industry, what are the prospects for continued prosperity in Princeton and other small towns currently enjoying the spin-off benefits of the mining boom? The answer lies at least in part in Victoria and Ottawa, and a contentious permitting process for new mines.
The Prosperity mine near Williams Lake being proposed by Taseko Mines Ltd., offers an example of the confusion that often surrounds this gruelling process. Many in the local communities were euphoric when in January 2010 the province green-lighted this new mine, which promised an investment of $800 million and 6,800 person years of employment over its 10-year life. Hopes were quashed, however, when in November of that year the federal government’s Canadian Environmental Assessment Agency rejected the proposal, largely over the company’s plans to use fish-bearing Fish Lake for waste rock impoundment. Although Taseko is preparing a revised proposal addressing the feds’ environmental concerns, local towns are left in limbo, suffering from the uncertainty resulting from the two-tier approval process.
“It’s important that these assessments appear credible and when you have two very different decisions as in the case of Prosperity, it raises some very serious doubts in the minds of the public and participants,” says Mark Haddock, who wrote an 84-page report for UVic’s Environmental Law Centre critiquing B.C.’s environmental assessment act.
Image: Imperial Metals Corp.
Explosions trumpet renewed activity at the
Managing B.C.'s mining dollars
Tracy Gard, the interim president of the local chamber of commerce and general manager of Williams Lake radio stations The Rush and The Wolf, is thankful that Taseko owners have been patient enough to return with a revised pitch for the mine. “Taseko could have said we’re out of here and gone down to Chile but they decided to come back with a new proposal. This mine would bring $37 million in annual expenditures to our community. This would be huge for Williams Lake, but we want it done responsibly,” Gard says.
It’s not just political deadlock between provincial and federal agencies that acts as a constraint on the flow of mining dollars into rural B.C. communities; the communities themselves have a huge stake in the local environment, and public input is a key component in the provincial and federal permitting process. The polarizing effect of bringing a potential mine development to the area is evident in the public debate over the proposed Ajax mine near Kamloops.
The expected 400 full-time jobs and the $550-million investment Abacus expects to make bringing Ajax into production would be a boon for Kamloops, a city of 100,000, but Abacus president and CEO Jim Excell knows the company has an uphill sales job on the environmental and social front. Residents in the suburbs of Kamloops can toss a copper coin and nearly hit the rolling cattle rangeland of bunchgrass and sagebrush where his company proposes to excavate a massive open pit and build a processing plant and other facilities. Ajax’s 2,500-hectare footprint would impact the headwaters of Peterson Creek and Jocko Lake, both popular recreation spots for locals.
Voicing the prevailing view of those in favour of the development, Dan Sulz, executive director of Venture Kamloops, a regional business and economic development society, believes adding this mine into the mix with New Afton, less than five kilometres to the west, and a rejuvenated Highland Valley mine, not to mention the active mineral exploration sector in the Kamloops region, would have hugely positive reverberations throughout the city. “If you look at the other businesses supported by mining, like tires and manufacturing, it’s the evolution of those businesses that’s hugely important for the community,” Sulz says. “We’re reaching a critical mass with the numbers of mines so that we’re seeing mining professionals relocating to Kamloops. It’s no longer just about blue-collar workers.”
However, Kamloops mayor Peter Milobar is cautious. The city has a diverse economy, with ranching, forestry, mining and tourism all playing roles, and has invested much in promoting its image as a tourism and golfing tournament destination. At the same time, Milobar is well aware of the mining industry’s stabilizing effect on the region, which, like Princeton, Williams Lake, Houston and other resource-based towns, has been hit by the pine-beetle infestation and a soft U.S. housing market. But the mayor also knows his municipality has little jurisdiction over what will likely be a politically divisive project. “There’s no doubt there will be significant impacts. We’re still waiting for definitive plans from Abacus, so I think it’s too early to say which way this project will go,” says Milobar, choosing his words carefully.
Another key component of further mine development in B.C. is First Nations support; without it the Ajax mine and others could be a long shot, as was the case when government rejected Northgate Minerals’ Kemess North copper-gold mine in 2008 as well as Taseko’s original Prosperity proposal last year. The Kamloops Indian Band has been in discussion with Abacus, but according to the band’s business development manager Neil Leonard, has not taken an official position on the mine.
Abacus doesn’t have to search far for a template that could help bring the aboriginal community onside. New Gold, which claims that its neighbouring New Afton mine will generate $30 million a year in royalties to B.C., $65 million a year in federal and provincial corporate tax and $10 million in annual income tax from its employees, has given enthusiastic support to the B.C. Aboriginal Mine Training Association, funded in part by the province, feds and in-kind contributions from mining companies. Consequently, of New Gold’s 239 employees, 48 are First Nations, 30 of whom completed the BCAMTA program.
Jim Excell at Abacus remains upbeat, ever confident that Ajax can jump through all the hoops of provincial and federal government approval, winning the hearts and minds of Kamloops residents and bringing local First Nations on board. He’s been in the trenches for three decades, in a career that includes bringing BHP Billiton’s Ekati diamond mine in the Northwest Territories into production. Now copper has his full attention. The firm’s target start-up date of 2015 is aggressive. All the crystal balls are saying that global demand for this unassuming but essential metal is going nowhere but up.
Another veteran miner, Bob Gallagher of New Gold, describes B.C.’s copper fever this way: “I’ve been in the mining business for almost 35 years and we used to get excited when copper topped $1 per pound. Now at over $4, let’s just say it’s very profitable.”
In a world with a growing appetite for metal, the high price of copper has communities across the province debating the heady economic promise of mining alongside the environmental and social costs. It’s a gut-wrenching process in a boom and bust industry that can divide the public, but there’s no doubt rejuvenated old mines and soon-to-be-opened new deposits are giving many communities reason for economic optimism that’s been hard to come by in recent years.