Mining Resilient Despite Price Slump

resources | BCBusiness
The Mt. Milligan mine began processing ore in 2013

Mines and Energy Minister Bill Bennett defends price hikes in face of difficult times for the mining industry

2013 offered signs of hope for the province’s mining industry despite discouraging financial results. That’s the conclusion of an annual survey of mining operations in B.C. presented by PwC at a Vancouver event attended by representatives of the province’s mining industry this morning.
Summarizing the report’s findings, Marianne Carroll, co-author of the report, told attendees that revenue from mining operations in the province totalled $8.5 billion last year, down from $9.2 billion in 2012. Net income before taxes was $1.4 billion, less half what it was two years ago.
The declining returns were due primarily to falling commodity prices, Carroll told the audience, but increasing costs also played a role. Coal accounted for 46 per cent of total mining revenues, while copper accounted for 23 per cent. The price of copper on global markets fell eight per cent last year; coal fell 17 per cent.
There were reasons for optimism: shipments of metallurgical coal (90 per cent of the province’s coal output) increased to 28.1 million tonnes, from 24.2 million tonnes in 2012. Shipments of copper increased to 884,000 tonnes, compared to 787,000 tonnes in 2012.
“It was a challenging year for the B.C. mining industry due to falling commodity prices, rising costs and tight credit markets,” Mark Platt, leader of PwC’s mining practice in B.C., told those attending the release of the annual survey.
Minister of Mines and Energy Bill Bennett addressed the audience, defending cost increases implemented by his ministry. “I could probably get really defensive because I’m the guy who raised the Hydro rates and is proposing [permit] fees under the Mines Act,” Bennett said. “But I’m not going to do that because we’re all in this together.”
Bennett defended the Hydro increases by citing the need for upgrades to infrastructure, and said increased fees are needed if the mining industry hopes for improvements in streamlining the permitting process. “We need to streamline the process,” Bennett said. “We know how to do it, but we need more resources in the ministry.”
Bennett pointed to reasons for optimism, citing the opening of the Mt. Milligan copper/gold mine north of Prince George having already started production, and the Red Chris copper/gold mine in the province’s northwest scheduled to start production this summer. He also cited the opening of the Northwest Transmission line, which will open the northeast sector of the province to further development.
Gavin Dirom, president and CEO of the Association for Mineral Exploration told the event’s attendees that the junior exploration side of the industry continues to weather the storm and has proven surprisingly resilient.
“2013 was tough and our members had a tough time, particularly raising venture capital, but we’re a very resilient bunch and there are elements of some hope and optimism coming back, so the outlook is good,” Dirom told the audience. “I think 2014 is going to be a bit bumpy, but the worst is behind us.”
A few key indicators included in “Digging Deep; The Mining industry in British Columbia 2013,” the report released by PwC:
• people employed B.C.’s mining industry: 10,720
• average salary+benefits: $114,600
• B.C. mining industry payments to government, 2013: $511 million