AME BC pres: ‘Hang on to your seat’ in next upswing

VANCOUVER — It’s been a tough few years for mineral explorers globally, and the junior markets in B.C. have been especially hard hit by stingy capital markets and industry-wide budget cuts. These circumstances set a rocky stage for the Association for Mineral Exploration British Columbia’s (AME BC) annual Mineral Exploration Roundup conference in Vancouver in late January, but according to president and CEO Gavin Dirom there are reasons for industry optimism.

To begin, there are some basic business metrics that AME BC relies on to determine how Vancouver’s third-largest annual trade convention is trending. This year’s 32nd rendition of Roundup attracted more than 6,700 participants from 35 countries, blowing past the 5,000-delegate milestone, and up 100 from last year. Dirom added that, despite the industry’s challenging conditions, event sponsorship remained right on target.

“Of course exploration expenditures are down globally, as there just isn’t the capital to pursue these extensive programs,” Dirom said during an interview on the conference floor. “The big trend to watch, however, is the percentage of expenditures per jurisdiction. I think by that metric it’s quite interesting from a B.C. context.”

This approach removes variables like commodity prices and related factors, he said, and focuses on where the industry is willing to invest in exploration. “Obviously we’re down [in B.C.] overall year-on-year, but over a fifteen year spread the jurisdictional comparative analysis indicates we’re attracting more of the investment than we ever have. It speaks to a government that’s welcoming and a place that has real mineral development potential,” noting that B.C. has attracted between 15% and 20% of Canada’s exploration investment over the past four years.

One of the big themes at Roundup was how to best position the industry to benefit once what’s widely viewed as a cyclical downturn in commodity prices has run its course and prices recover. Dirom said he’s witnessing the natural evolution of the B.C.-based exploration and development sector, which is facing challenges on two fronts.

First and foremost is the hardship of the current economic environment, while the second  is growing First Nation empowerment at home and the critical task of achieving long-standing social license to operate globally.

Dirom recounted how AME BC has been working in an often under-appreciated advocacy role alongside the B.C. government to establish mechanisms to promote investment and achieve social sustainability. This work resulted in a few key moments at the conference, including B.C. Premier Christy Clark’s announcement of a major mines permitting office to improve coordination of operating permits.

Her Liberal government also earmarked funding for the mining and mineral resources division of B.C.’s Ministry of Energy and Mines, and extended a $10-million mining flow-through share tax credit program to the end of 2015.

“Government policy and interaction are really critical components to the business, and it’s something that’s allowed B.C. to shift away from the previous century,” Dirom said. “A lot of the negativity surrounding mining has stemmed from historic issues, and it’s apparent that our government is sending the message that they want the business here, and that it will be responsible.”

He said the industry’s relationships with First Nations have been increasing in importance, and that “it’s an issue we recognized as an organization a decade ago. We’ve been putting efforts into building stronger, respectful relationships that can move everybody forward. It isn’t like a switch went off a couple months ago with a single court decision. It’s a natural progression in our business. Our members see it as an opportunity, and frankly a lot of them have been doing great work with community engagement. I think we’re heading down a very positive path.”

Major efforts have also gone into aligning government, community and industry when it comes to infrastructure projects that have province-wide impact. AME BC worked extensively on the Northwest Transmission Line (NTL) project, which brings electricity to Imperial Metals’ Red Chris mine and is supported by the regional Tahltan First Nation. AME BC also continues work relating to B.C. Hydro’s US$8.8-billion Site C project, which proposes a third dam and generating station on the Peace River.

Ten proposed new mines in northwestern B.C. would require 328 megawatts of electricity — a demand equivalent to roughly 4% of the province’s total electrical capacity. Site C would have the capacity to produce 1,100 megawatts of electricity.

“It was a lot of work to align all the stakeholders on the NTL decision, and I think it’s a generational effort that is really directional and foundational,” Dirom commented. “In the B.C. context, the wider benefits of mining are seen in many ways. It starts with socio-economic benefits to local communities, including jobs and training. Then it continues to evolve into sharing the mineral tax in the province. That’s sharing the wealth once it is created, but now that moves into companies themselves doing impact-benefit agreements and working with stakeholders.”

Many of the keynote speakers at the conference — including Franco-Nevada’s David Harquail and Goldcorp’s Chuck Jeannes — focused their talks on the need for the mining industry to innovate in all areas of activity, from operations to exploration to social license issues.

Dirom has a similar message, but stressed that miners continue to evolve even in times of low commodity prices and stalled capital markets.

“We’re still seeing just how prominent the sector is in B.C. even when things are not at their best,” Dirom said “Can you imagine when things turn around? I’d say hang onto your seat. We’ve established the foundation and bench strength to really capitalize.”