British Columbia’s mining industry stands to potentially miss a generational opportunity to become the “brand of choice” for supplying many of the critical minerals the world needs to transition to a low-carbon future, Mining Association of B.C. (MABC) president and CEO Michael Goehring told an industry event today.
Goehring urged the government to “level the playing field” for B.C. mines, specifically by changing how the carbon tax is applied in the mining sector.
“The cost to our sector is so much higher than in other jurisdictions, including across Canada. Consider that a mine in B.C. now pays up to 75% more in carbon tax than a similar operation in Ontario. It’s the same story with our global competitors, many of whom operate in jurisdictions with no carbon taxes at all,” he said during the launch of PwC Canada’s 53rd BC Mine report.
Taken together, B.C.’s established world-class environmental standards for mining, its hydropower-driven low greenhouse gas emissions (GHG), and the ESG performance factors guiding the provenance of the province’s mineral products, and it appears the industry has become a victim of its success.
Goehring argued the current carbon pricing system placed operations and workers at risk.
“The regime places our mines and workers at a significant disadvantage relative to our provincial and global competitors. So, we urge the government to level the playing field for B.C. miners and workers and change how the carbon tax is applied. It will help protect the environment and jobs,” Goehring said.
As global expectations continue to evolve, demand will increase for products from responsible sources. According to PwC, B.C. is well-positioned to meet this rising demand. “But we can’t assume we will retain our leadership position if we remain stagnant,” said Goehring.
“This is where innovation becomes critical. That’s why MABC partnered with the provincial government to develop the B.C. mining innovation roadmap.”
In its 2020 report, Minerals for Climate Action: The Mineral Intensity of the Clean Energy Revolution, the World Bank found that the large-scale transition to clean energy will drive significant demand for the metals and minerals B.C. produces, including aluminium, copper, gold, silver, zinc, and steelmaking coal. These are all used to build clean technologies and infrastructure to reduce GHG emissions.
These minerals also play a critical role in building components for electric cars, smartphones, and many of the products we use every day in our lives. Electric vehicles, for example, require up to five times the amount of copper for their components as a traditional gas-powered vehicle.
“But rest assured, B.C. is certainly not the only jurisdiction in the world chasing this opportunity. Make no mistake; there is an urgency to make this happen. And the time is now, and this unique window of opportunity won’t be open for a lot longer,” said Goehring.
Newcrest Gold’s majority-owned Red Chris mine copper-gold is but one of the important B.C. mines whose global competitivity is being impacted by the steep provincial carbon tax. Credit: Newcrest Gold.
According to MABC data, the province currently has seven new or mine expansion projects nearing final investment decisions. Together, the association estimates the projects could account for about US$3.3 billion ($4 billion) in capital expenditures and more than 6,400 new construction and operating jobs associated with these seven projects. The total economic impact is expected to be around US$8.25 billion ($10 billion).
“In short, it’s a very big deal. The industry can’t do this alone. I can’t stress this enough. The permitting process in our province is too slow and too complex,” said Goehring.
To this end, the B.C. government had committed to a review of the permitting regime in B.C. earlier this year. “We look forward to an outcome that will lead to a permitting system that’s measured in months and not years. It is but yet another major factor coddling our ability to compete. It puts our mines and, by extension, our workers, at a significant disadvantage relative to our competitors,” Goehring said.
The MABC represents about 35 B.C.-focused mining companies.
Key findings
PwC’s Canadian mining leader Mark Patterson said the outlook for metals and minerals has continued to improve this year, with spot prices for essential B.C. metals and minerals as of March 31, either up from or in line with their 2020 averages.
According to PwC’s 2021 CEO Survey, 82% of global mining CEOs think economic growth will improve over the next 12 months. This compares to 76% for all CEOs, highlighting the optimistic outlook among industry executives.
It has many mining executives planning for future growth. According to the survey, 72% plan to pursue organic growth activities in the next 12 months.
The setting is ripe for growth, given a substantial pull-back of key mining financial metrics in 2020.
Patterson said revenues, net income and cash flows from operations were all down in 2020 from 2019 levels, mainly owing to lower prices and reduced shipments for metallurgical coal, an essential commodity for the BC mining industry. Loads of other key commodities, like gold and copper, were generally consistent with 2019 despite significantly higher prices in the second half of the year.
PwC’s financial overview of B.C.’s mining industry in 2020 shows gross mining revenues fell to their lowest level since at least 2017 at US$7.8 billion ($9.5 billion) compared with US$9.4 billion ($11.4 billion) in 2019, US$10.24 billion ($12.4 billion) in 2018, and US$9.66 billion ($11.7 billion) in 2017. Cash flow from operations also fell to US$2.14 billion ($2.6 billion) in 2020, down from US$2.9 billion ($3.6 billion), US$4.13 billion ($5 billion) and US$3.75 billion ($4.54 billion) in 2019, 2018 and 2017, respectively.
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