BC Business
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The contribution of B.C.’s top miners to the province’s economy jumped $4.2 billion in one year.
When the Gibraltar mine shut down in 1998, putting 270 people in the Cariboo out of work, it marked a turning point of sorts for the B.C. mining industry. The government had refused operator Boliden Ltd. a $20-million bailout, and the industry knew it would have to fend for itself. Oppressive regulations weren’t making it easy, however, so companies stayed away. That’s changed in the past three years – dramatically. The demand for commodities worldwide has boosted the fortunes of local miners, whose rising revenues were the single most important factor in the 8.2-per-cent gain in overall revenues for companies on this year’s Top 100 list. The biggest miners chipped in $4.2 billion more to their aggregate revenues this year than they did last year. Rising revenues put Imperial Metals Corp. and Pan American Silver Corp. on the list for the first time; others made the list following mergers or acquisitions; while yet others (Bema Gold Corp. and Placer Dome Inc. among them) left the list following acquisitions, which speaks to the attention local companies have garnered in the current market. The Mining Association of B.C. backs up the bullish picture, reporting that revenues of B.C. mining companies have doubled in the past three years and net incomes have tripled. But the Gibraltar mine in South Central B.C., sold to Vancouver-based Hunter Dickinson Inc. in 1999 and now operated by Taseko Mines Ltd., is especially emblematic of the turnaround. Copper prices have rebounded from a low of US$0.60 a pound in the years after Gibraltar was shut down, and the commodity currently sells for US$3.60 a pound. Taseko began preparing the mine at the first sign of rising prices in 2004 and reopened it the following year. It now produces 32,000 tonnes of copper and 450 tonnes of molybdenum annually. A $110-million expansion and upgrade currently underway is expected to boost production capacity and add 16 years to the mine’s life. Taseko is also seeking approvals for its Prosperity property near Williams Lake. Current estimates suggest the property could yield 1.8 million tonnes of copper, making it the largest undeveloped copper deposit in Canada. The site also has approximately 260 tonnes of gold. If all goes well, the mine could be in operation by 2011. None of this prosperity in the mining patch would be possible without changes to provincial regulations that have made B.C. more welcoming than it once was to mining companies. Older properties are being resurrected and new properties discovered, and Taseko president and CEO Russell Hallbauer credits the interest to changes that have made it easier to establish and operate a mine in the province.
Small wonder then that, of approximately 50 major mine exploration and development projects currently on the books in Canada, two-thirds are in B.C. That’s as much a testimony to the resources of the province as it is to the ease of doing business here. And investors are buying in. Damien Reynolds has spent 23 years in the mining business, starting at age 16. He now serves as chair and CEO of Vancouver-based Longview Capital Partners Inc., which, since its inception in autumn 2004, has invested in 30 mining companies with operations around the world. Reynolds sees long-term demand for metals from emerging economic powers and expects geopolitical uncertainties to compound demand for stable supplies in the future. One of the most stable sources he knows of is Canada, and particularly B.C. The current rise in commodity prices heralds a sustained run for metals, whatever the kind, and that means opportunities for investors willing to stick with the industry. “There’s a new price floor that is much higher than the price floor before for commodities, in my opinion,” says Reynolds. “That’s going to drive the macro trend in these markets, possibly for the rest of my life. You’re going to have your cyclical ups and downs, and you’re going to have your shakes and your bumps, but investing long term in this business? In my opinion, everyone should have a piece of it.” Longview is already reaping the benefits, with $56.5 million in revenues ranking it among the top publicly traded companies in the province and certainly among the fastest-growing of the newcomers. The economic benefits are also flowing into communities around B.C. Unemployment in B.C. fell below four per cent early this year, a feat Statistics Canada attributed primarily to the demand for mine workers. There are currently 10,300 people employed in the sector and upwards of 30,000 when workers in associated industries are factored in. The jobs are fuelling business opportunities in communities such as Williams Lake, where city staff have issued more than 1,000 business licences this year, a level not seen in more than 15 years. But more workers are needed for the boom to continue. Michael McPhie, president and CEO of the Mining Association of B.C., says the workforce is aging rapidly, and the industry is still reeling from the downturn of the late 1990s when opportunities for employment just didn’t exist and people went elsewhere. Attractive wages in Alberta haven’t helped the current situation. “The question is, are these projects going to be held back if we can’t find the people?” McPhie asks. “We’re developing strategies and we’re working with the colleges and the universities to address the issue, but our concern is matching the timeline for training to when you need the people.” Related stories: A View from the Top Missing in Action Ones to watch