BC power line could spark $3.5 billion mining investment

Vancouver – A power line into northern British Columbia could attract an estimated $3.5 billion in mining investment, according to the preliminary results of an independent study.

Grid power currently extends as far as Terrace, roughly two-thirds of the way up the province. Over the last few years, as exploration in northern B.C. increased with the current metals cycle, so did calls for an extension of the province’s plentiful hydro power along Highway 37 into the north.

Last October the B.C. government announced a deal with NovaGold (NG-T) and Teck Cominco (TCK.A, TCK.B-T)), joint venture partners on the mega-Galore Creek project, to build the first part of that line. The deal, which was structured as a $400-million public-private investment, would have seen a 335-km transmission line extend from Terrace to Bob Quinn Lake.

But when NovaGold and Teck shelved Galore Creek due to soaring costs, Energy and Mines Minister Richard Neufeld cancelled the power line project. The cancellation left in limbo several advanced stage exploration projects, development of which depended on inexpensive grid power.

Several years ago many of the mining companies in the area, together with mining associations, First Nations groups, and other interested parties, formed the Highway 97 Coalition. When the power line was cancelled the coalition regrouped and decided to commission an independent study to demonstrate the viability of the project, even without Galore Creek.

Macquarie North America recently released its preliminary findings. Key among them was the conclusion that a northwest power line extension could attract an estimated $3.5 billion in mining investments.

Several other findings were just as significant. Macquarie determined that the power line project holds the potential to create 2,000 jobs in a part of the province in need of economic stimulation. The study also determined that the line would create more than $300 million in economic activity and would direct more than $75 million to governments annually from taxes.

The coalition says it is not asking for a major commitment from the province. It is asking that the province go ahead with the preparatory work needed in advance of a line development project such as consultation with First Nations, environmental assessment, and engineering studies.

The group argues that waiting for a viable mine project to stimulate the line could leave the project in limbo indefinitely, with mine investors waiting for a power line commitment from the government and the government waiting for mine development before committing.

In B.C.’s northwest, the unemployment rate is considerably higher than in the rest of the province. Moreover, the region’s population declined by 7% between 2001 and 2006, compared to a 5% increase in the rest of the province.

Exploration in B.C. hit an all-time high of $416 million in 2007, more than double the record spending of 2006. The $416 million was spent on 472 exploration projects, of which 102 had exploration budgets of more than $1 million. And the northwest region of the province saw the most exploration activity, with companies spending $107.2 million on 144 projects.

Imperial Metals‘ (III-T) Red Chris copper-gold project, Copper Fox Metals‘ (CUU-V) Schaft Creek copper-gold-silver-molybdenum property, Carmax Explorations‘ (CMX-V) Eaglehead copper project, and Hard Creek Nickel‘s (HNC-V)) Turnagain nickel property are all located in northwestern B.C. and could benefit from a power line into the area.