Lack of infrastructure slows growth in northwest B.C.

Northwest British Columbia is a vast area with significant mineral potential. Having examined this region on a variety of occasions over the past 10-15 years, the provincial government has noted that the lack of virtually all the necessary infrastructure has constrained development of the region.

A recent Mining Association of British Columbia (mabc) brief on regional development and infrastructure explains that, despite the region’s enormous mineral potential, only three mines are in production. They are the Cassiar asbestos mine and two small gold mines. All are in the Cassiar area and operate on diesel-generated electricity at four times the cost of grid customers further to the south.

The company-owned and-maintained town of Cassiar is home of most of the employees and there is a gravel road connecting the region to the more populated southern part of the province.

A great deal of exploration activity is being conducted throughout the region, especially in the Toodoggone — one of the most promising gold areas in British Columbia. Here, major and minor companies engaged in exploration activities have pumped into the area more than $60 million, creating more than 200 full-time and seasonal jobs. Proven reserves of companies like Cheni Gold, Energex Minerals and Golden Rule indicate a tremendous potential for mine development and jobs. In fact $200 million of economic activity coupled with more than 500 full-time jobs will be created if the companies go to production. Yet production decisions are hindered by the lack of roads, power and other infrastructure.

The development of Cheni Gold Mines’ Lawyers property, in the Toodoggone, is a case in point. Development is only possible with the construction of a 64.3-mile extension to an existing mining access road. The property is one of several promising gold properties in the area, yet the “first-in” (in this case Cheni) is substantially responsible for the road construction. They are also responsible for maintaining the road.

The provincial government and the company have agreed to a deal whereby the province lends the company funds to cover half the construction cost of the road (to a maximum of $4.5 million). The loan is repayable with interest at prime rate if the price of one ounce of gold plus 50oz of silver exceeds $760(US). At current prices, the loan is repayable. This can be forgiven, though, if the access road is beneficial to other users.

The government, while taking the downside commodity price risk, has greatly minimized its exposure by only taking a risk on half the cost of the road, by making the loan repayable and by setting relatively low trigger prices.

What is needed is an infrastructure support policy to ensure co- operation and realistic risk-sharing between the two senior levels of government and the mining industry. Such a policy is needed to stimulate activity and promote regional development within northwestern British Columbia.

“The mabc feels the provision of infrastructure is the most appropriate way to stimulate mining activity and thus economic development in remote regions,” says Tom Waterland, president of the association. “Industry and government can point to many examples of co-operation and risk-sharing that have resulted in major mining developments. These developments have provided employment, created additional revenues for government and stimulated economic activities in remote areas of Canada, thereby pushing back the frontier. Our view on regional development is consistent with that reflected in the federal government’s recently released Mineral and Metal Policy. This policy recognizes the industry’s contribution to regional development and states that one of its primary objectives is to foster the development of the mineral and metals sector as a foundation for growth.” Reprinted from Mining Focus, a publication of the Mining Association of B.C.