B.C. mining shrouded in uncertainty: study

British Columbia’s mining industry had another profitable year in 1996, though its future may be in jeopardy, according to a study by Price Waterhouse.

While the industry recorded a profit for the third consecutive year, the earnings of $208 million represent a 59% decline from the previous year.

“Primary exploration expenditures continue to be low in British Columbia,” says Michael Smith, author of the study. “They are considerably below the level required to maintain a prosperous mining industry in this province.” Even with a profitable 1996, the industry managed just to break even over the past 10 years.

Gross mining revenues declined by 6% to $3.87 billion in 1996, mainly as a result of the drop in copper prices to an average price of $1.04 per lb. for the year and a 10% reduction in copper production. The reduced output is due to the final phase-out of the Island Copper mine.

On a positive note, the study observes that “continuing profitability of the mining industry, notwithstanding significant price declines in key products, demonstrates the resiliency of the industry to changing world market forces.” Smith also calls for more support from government, stating, “Without provincial government support and action to promote and attract new investment, the potential of the mining sector to enhance the economic well-being of the province will not be realized.”

Exploration spending by respondents of the survey totalled $30 million in both 1995 and 1996. Primary exploration spending continued to be “very low,” decreasing to $8 million in 1996 from $10 million in the previous year.

Operating and capital expenditures rose for the fourth consecutive year, to $3.7 billion. Capital spending was $411 million, or 17% higher than in 1995.

The increases are a reflection of mine development at the Huckleberry project and ongoing work on the Trail smelter.

Direct employment rose slightly, to 9,750 in 1996 from 9,738 employees in the previous year. Despite the shutdown of three mines (Nickel Plate, Island Copper and Premier), mine expansion and the Huckleberry development left job levels slightly above 1995 figures. The coal sector employed 41% of the industry’s workforce in 1996, compared with 39% in 1995.