Mine profits down in BC

Despite increased production and shipments, British Columbia’s mining industry posted a 26% decline in profits in 1997, according to a report by Price Waterhouse.

Mining Industry in British Columbia 1997 notes that net earnings from the province’s 20 coal and metal mines and the Trail smelter-refinery complex fell to $154 million last year from $208 million in 1996, primarily as a result of lower world metal prices. Revenue was lower for production of copper, silver and lead, higher for coal and zinc, and roughly unchanged for gold.

Michael Smith of Price Waterhouse’s B.C. office says exploration and development expenditures continued their decade-long decline in 1997. That profits were down in 1997, despite significant increases in productive capacity, illustrates just how sensitive B.C.’s mining industry is to world pricing, he notes.

“We expect profitability to be enhanced in the short to medium term as metal prices recover. The long-term future of the industry is less certain, given the perilously low levels of exploration spending we’ve seen throughout the 1990s.”

The provincial government estimates that total exploration and development spending in B.C. dropped 25% in 1997, to about $75 million. Roughly 72% of total exploration dollars was spent on established or previously drilled properties, 22% was spent at existing mines, and just 6% was allocated to grassroots or less-advanced projects.