Higher Profits and Capital Investment for B.C. Mining

After five consecutive years of losses, British Columbia’s mining industry in aggregate reported positive earnings in 1987. According to a survey conducted for the Mining Association of B.C., this dramatic turnaround in profits has led to a substantial increase in new capital investment to expand and upgrade existing capacity in the province.

The annual survey, which has been conducted for the Mining Association for the last 21 years, was prepared by Price Waterhouse based on data gathered independently by them from the industry.

“The positive net income of $164 million (after taxes) in 1987 is largely a result of higher metal prices which began strengthening in the last half of 1987, combined with increased sales volumes and continued productivity improvements,” said Tom Waterland, president of the M.A.B.C.

The report shows that increased shipments of minerals in response to improved world demand and price movements contributed to gross revenues of $3.2 billion, a record for the industry and a $212- million increase over 1986. Copper revenues increased 35%, while gold revenues also showed a large increase of $49 million, or 42%, over 1986.

Waterland said the industry continued to improve productivity as indicated by the lowest total cost of production since 1983, a year in which gross mining revenues were $1 billion lower, and the volume of production was lower.

Commenting on the cyclical nature of the mining industry, Waterland noted that the coal industry, which represents 40% of the B.C. mining industry, is still faced with depressed prices and substantial capacity world wide. “The coal industry remains under significant cost pressure,” he said. “The m etal industry is also facing increasing competition as new mining projects are being brought into production. As a result prices are expected to soften somewhat over the ensuing months.”

Waterland adds that the trend of declining capital expansion experienced each year since 1985 has reversed itself. Total capital expenditures were $269 million in 1987, more than double the 1986 expenditure of $125 million and the highest level experienced in three years. The steady drop in employment experienced over the last five years also appears to have leveled off; employment increased marginally over 1986 to 14,293 jobs.

The report also shows that Japan continues as the largest market (56%) for B.C. mineral products.