BC shows strong mining revenue, new mines started in 2010: PwC report

Vancouver – The British Columbia mining industry saw more signs of recovery in 2010, but it was the new mines coming online that have prompted talk of a mining renaissance in the industry. Such were some of the findings of PricewaterhouseCoopers’s annual mining survey of the province, now in its 43 year.

The report shows that in 2010 BC mines generated $7.9 billion in gross revenues, up from $7 billion in 2009 but still less than the record-setting $8.4 billion from 2008.

Looking at before-tax earnings, the industry recorded $3.7 billion in 2010 compared with $3.2 billion in 2008, surging ahead thanks in part to an $805 million boost from capital asset sales.

But it was stats like capital expenditures, at $1.3 billion in 2010 compared with $568 million in 2009, that point to the fact that new metal mines are actually being constructed.

2010 saw construction start at Copper Mountain Mining‘s (CUM-T) Copper Mountain project, New Gold‘s (NGD-T, NGD-X) New Afton project and what is now Thompson Creek Metals‘ (TCM-T, TC-N) Mount Milligan project after taking over Terrance Metals last year. The authors of the report noted that this level of activity has not been seen in over a decade.

Exploration spending among survey participants was also up, with $203 million spent on exploration and development in 2010, compared with $157 million in 2009. The survey, however, does not include most junior explorers. The BC government estimates that exploration spending in BC as a whole totalled $322 million for 2010, compared with $154 million for 2009.

In terms of actual resource production, coal remains king in BC as it edged up to represent just over half of net revenues in 2010. Shipped metallurgical coal was up 32% to 22.3 million tonnes while prices have gone from US$157 per tonne in 2009 to US$181 in 2010 and US$207 per tonne in the first quarter of 2011.

Copper producers saw concentrate shipment volumes go down slightly, from 730,000 tonnes in 2009 to 712,000 tonnes in 2010, but prices rebounded nicely from US$2.35 per lb. in 2009 to US$3.40 per lb in 2010. The price boost was enough to push net revenues for the metal up 13% to $1.4 billion for 21% of BC’s total net mining revenue. With copper a prime resource in all three of the mines that were started to be built last year, the number could go up.

Zinc, Silver and Molybdenum saw price increases of 31%, 38% and 42% respectively, leading to net revenues boosts of 29% for zinc to $755 million, 44% for silver to $416 million and 6% for moly to $255 million.

Gold, largely a by-product in BC, remained a nominal part of revenues in 2010. Despite a 26% increase in the price of gold, revenues actually dropped 28% to $224 million for about 3% of revenues in 2010 due simply to lower grades.

The healthy Canadian dollar, meanwhile, boosted in part by strong commodity prices, led to $856 million in lost revenue as sales are realized in US prices.

The authors of the report, Michael Cinnamond and Erfan Kazemi, noted that BC has found innovative ways to allow projects to go ahead, such as revenue sharing agreement with First Nations and future infrastructure projects like the Northwest Transmission Line.

The report also highlighted the need to continue to work on land access issues, to boost education on the benefits of mining, to plan for future infrastructure demands and to create a skilled workforce to keep future mines running.