Governments cooperate for B.C. mineral development

The Mineral Development Agreement (mda) between the governments of Canada and British Columbia is at the mid-point of its 5-year (1985-1990) term. It is, therefore, a natural time for review.

Briefly, under the terms of the mda each government has committed $5 million to mineral development programs in British Columbia. It is one of a number of subsidiary agreements included in the Canada-British Columbia Economic and Regional Development Agreement signed by Ottawa and the province in 1984. The mda is primarily administered by the Mineral Resources Division of the British Columbia Ministry of Energy, Mines and Petroleum Resources, under the direction of the management committee composed of federal and provincial nominees.

The major thrust of the work undertaken has been the upgrading of the province’s geoscientific database by, among other things, producing regional geochemical surveys and 1:50,000 scale geological maps. Other scientific projects include studies in metallogenics, coal, industrial minerals and platinum-rich ultramafic rocks.

The success of the mda, based on results of the first two years, seems assured and is out of proportion with the modest amounts of money ($10 million over five years) being spent on it by the two levels of government. Exploration increases

The beneficial impact on the mining industry is reflected in the amount of exploration being done. Jack Patterson, managing director of the British Columbia and Yukon Chamber of Mines, anticipates that this year will see mining companies spend between $120 and $130 million on mineral exploration in the province. “That’s money spent in the outlying areas, the towns and communities hardest hit by recession.”

Patterson looks to future prosperity. “The mda is providing a database which shows the geologically attractive places in British Columbia and that is what British Columbia needs to attract companies interested in mineral investment.”

One sure indicator of interest is active exploration. The summer of 1987 saw a sharp increase in units staked, especially in the Omineca Division. British Columbia Mineral Titles Branch statistics for the Omineca Division for the month following the release of the 1987 Regional Geochemical Survey in Smithers, last July, show an increase of about 2,000 units over the figures for August, 1986.

One of the roles of government is that of providing infrastructure for corporate and business enterprise. Airports and a postal service are examples of federal government responsibility. Roads, highways and most harbors come under provincial jurisdiction. Research and development is another type of infrastructure.

Since both levels of government have a taxation interest in the natural resource industries, both are involved in scientific research related to those industries. The mda is an example of two levels of government combining to provide research and development support to the British Columbia mining industry. Providing database

Ten million dollars is a modest amount,” explains Dr Ron Smyth, chief geologist, British Columbia Geological Survey Branch, “and there was internal competition for mda funding: geochemistry, geoscience, coal studies and industrial minerals. This meant that we did a lot of pre-planning and, consequently, got more bang for our research bucks.

“Prior to the mda, the mineral industry told us they needed maps of acceptable scale for exploration. The main thrust of the mda has been to provide this database in the form of the 1:50,000 scale regional maps.”

Al Clark, who works in Ottawa for Energy, Mines and Resources Canada, and who is co-chairman of the mda management committee, expresses similar feelings of satisfaction. “The benefits we’ve seen thus far include a lot more communication between Energy, Mines and Resources Canada, the British Columbia Ministry of Energy, Mines and Petroleum Resources, and the mining industry.

“Also, it took time for the industry to become aware of the mda program, but now that they understand it, we’ve been getting positive feedback, as well as a better indication of what the industry needs and wants done.”

Mining men are fond of pointing out that their industry is really composed of two parts: exploration and mineral production. As Jack Patterson has pointed out, the mineral exploration part of the industry is thriving. However, the mineral production end of the business has been going through hard times in recent years.

The collapse of world markets for coal and for base metals such as copper, lead, zinc and molybdenum in the early 1980s brought on the closure of many mines in British Columbia and Yukon.

Mining companies have re-evaluated their operations and have made great gains in productivity. And recently markets have begun to improve. Some of the closed mines, such as Placer Dome’s Endako molybdenum mine near Fraser Lake, have reopened. And mines that continued operating through the slump are beginning to show a profit.

The most remarkable change of fortune has been experienced by the copper producers. Copper prices, which fell to the 60 cents -per- pound range in the past few years, rose to more than $1.10 per pound in November, 1987. Gold

The province saw two major new gold mines, the Blackdome and Nickel Plate mines, open in the past two years. For most of the 1980s, gold has been one of the few dependable profit centres in the industry. Gold prices have remained buoyant relative to base metals, and many mining companies have devoted more and more effort towards gaining gold production. South Africa

Pressure from anti-apartheid groups has prompted investment managers to reduce their holdings in South African gold stocks in favor of the same in North America and Australia. Japan

In 1986, demand for gold in Japan amounted to more than 650 tonnes of gold (the equivalent to South Africa’s total output). Minting

Canada (with the Maple Leaf), and the U.S. (with the American Eagle), entered the gold coin market in competition with the South African Krugerrand. Australia, China and Japan have also begun minting and selling gold coins. Tax break

A Canadian government tax incentive known as flow-through share financing provided an enormous stimulus to mineral exploration. An estimated 90% of the funds raised by flow-through shares are spent on the search for gold. Hoarding

A substantial proportion of newly mined gold is hoarded, either as jewelry or as coins and wafers. Hoarders of one-kilogram gold bars include governments. Technology

One of the most significant developments in gold mining in recent years has been heap leaching. This process involves piling ore on a impervious pad and sprinkling a cyanide solution over it to extract the gold. Another is that of recovering gold from abandoned tailing dumps by a process developed by the Canada Centre for Mineral and Energy Technology.

As a result of all these factors, Canada’s production of gold has increased almost three-fold in five years. This year’s estimate is 3.5 million ounces. If the world market holds, it could rise to four million ounces by 1990.

The mda is succeeding in its role as a catalyst to stimulate the mining industry. By bringing together the resources and commitments of two levels of government, prominent consultants and university researchers, and companies and individuals from the industry, the mda will create a positive and lasting impact on the economy of British Columbia.