A Time To Take Stock: New AME BC Pres

The mineral exploration and mining industry was a cornerstone of British Columbia’s economy long before the province joined the Canadian Confederation 138 years ago.

Today, the industry safely contributes more than $7 billion of revenue annually and directly employs more than 28,000 skilled professionals and technicians in the province in a broad range of disciplines.

The resource wealth and new economic opportunities generated over the past century have also attracted to the province world-class technical expertise and global investment capital for the benefit of B. C., Canada and the world.

And so British Columbia has earned its status as a leading international centre of excellence for mineral exploration and mining.

Our industry is socially and environmentally progressive, safer, and more open and inclusive than ever before. The challenge now is to preserve this hard-won position under market conditions that have worsened profoundly from just one year ago.

Most of the world’s major economies are fighting to curb a recession brought about by the lax lending, monetary and regulatory policies of their financial institutions. This, in turn, led to a credit crunch that has severely restricted capital available for mineral exploration and development projects.

We are once again seeing mine closures because of lower commodity prices and increasing costs, projects placed on hold because of a lack of capital, falling stock prices across the board and reduced exploration budgets.

Despite such hard realities, we can overcome these trying times, as our innovative industry has done many times before.

January is a “taking stock” month for B. C.’s mining and exploration community –a process that begins with the mid-month release of the latest provincial exploration expenditures and employment numbers, which are further scrutinized at month’s end at the annual Mineral Exploration Roundup in Vancouver.

As expected, exploration expenditures were lower in 2008, but still relatively strong and quite respectable. Companies of all sizes spent $367 million to explore a total of 388 projects in 2008, down from $416 million in 2007,which marked a seven-year period of increased spending in the sector.

In contrast, exploration spending in 2001 totalled a mere $29 million, or 8% of current levels.

Looking ahead, exploration spending in the province may continue to decline as companies curb spending in order to weather the current economic crisis.

But what is most encouraging about the latest numbers is that proportionately more money was spent on early-stage exploration than on development. Five years ago, expenditures were almost exclusively focused on defining known resources in order to reopen dormant mines or reactivate advanced development projects in established mining camps.

The latest numbers clearly show that junior companies are once again exploring grassroots projects in underexplored terrain with remarkable success. With 32 reported new mineral discoveries in 2008, and 98 projects with budgets exceeding $1 million, the future looks promising.

The challenge at hand, however, is to convert exploration expenditures into feasible and permissible mining operations that can safely produce materials we all need and depend on.

The windows of such opportunity are quite small and must be capitalized on by all stakeholders, governments and First Nations. Most analysts expect a recovery in commodity prices starting in mid-2009, with some predicting a second wave in the commodity cycle driven by the continued industrialization of China, India and other emerging nations.

British Columbia is well positioned to benefit from commodity price appreciation because of its resource wealth, technical expertise and geographic proximity to Asian markets.

But until this turnaround begins, we must prepare for a difficult period of financial restraint without losing sight of the opportunities for recovery in the next phase of the cycle.

Toward this end, the Association for Mineral Exploration British Columbia (AME BC) has adopted a five-year plan to advance the top five issues of the mineral exploration community: permitting, land use and access, aboriginal relations, infrastructure and human resources, and taxation.

The success of these initiatives will depend on our collective will to strengthen B. C.’s status — and by extension, Canada’s status — as an international centre of mining and exploration excellence. We must continually expand our technical knowledge and expertise, implement world-leading environmental, health and safety standards, forge new social and economic partnerships at home and abroad, engage local communities and First Nations at the earliest possible stage, attract more young people to our industry, and better communicate its social and economic benefits to the general public and governments.

AME BC is doing its part to usher in a new era in mineral exploration by working with all levels of government to improve permitting and maintain B. C.’s competitive advantages in securities regulation, taxation, and flow-through share programs, including the creation of private-sector investment incentives to explore the mineral potential of pine beetle-ravaged areas. We’re looking at ways to improve access to credit and capital in weak financial markets. And in the visionary style of W. A. C. Bennett, past premier of B. C., we’re encouraging the building of new roads, power lines and infrastructure in remote, mineral-rich areas of the province.

AME BC is also developing initiatives such as an Aboriginal Engagement Toolkit to help communities increase their awareness and understanding of other cultures and build strong, mutually beneficial partnerships with First Nations.

Together with government, mining and aggregate associations, First Nations and labour unions, we’ve established a Labour Shortage Task Force focused on how to attract new talent to our industry.

Our industry has met many tough challenges in the past, starting in the days of the gold rush that helped build the province. With the same pioneering spirit, I am confident that we have the fortitude to successfully meet the challenges now and in the future.

–The author is the new president and CEO of AME BC (www.amebc.ca),having recently worked for the Mining Association of British Columbia as vice-president of environment, health and safety. He also served as a senior policy adviser with Natural Resources Canada on environmental assessment and mining regulatory issues. Dirom earned an M. Sc. in environmental management from Royal Roads University and a B. Sc. in physical geography and environmental science from the University of Victoria.