Coal and copper fuel BC’s mining boom

Vancouver — Price increases for metals and mineral commodities propelled British Columbia’s mining industry to its best performance in the 38-year history of an industry survey compiled by the accounting firm PricewaterhouseCoopers.

John Bowles, leader of the firm’s B.C. mining industry practice, told reporters that total net income rose to $1.84 billion in 2005 from $871 million a year earlier, with the star performers once again being coal and copper.

“It was a phenomenal year for the industry, with the highest net earnings ever recorded by our survey,” he said.

The survey summarizes the performance of B.C.’s 18 metal and coal mines that are either in or about to begin production, one smelting operation, seven mines in the permitting stage, eight mines under reclamation, and nine advanced-stage exploration properties.

The survey found that gross revenues increased 37% to $6.29 billion in 2005 from $4.58 billion a year earlier, reflecting significant increases for most metals and commodities.

The metallurgical coal industry generated $1.95 billion in sales during 2005, an increase of $990 million over the previous year. Total shipments were down 4%, which was more than offset by a 90% increase in the average price year-over-year. Copper prices rose 28% in 2005 from the previous year, while shipments of copper concentrates rose 32% over the same period.

Exploration and development spending rose to $148 million in 2005 from $73 million in 2004, but these estimates reflect only the spending of the 43 companies participating in the survey. Total exploration spending for the entire province soared to $220 million in 2005, which represents a 70% increase from 2004 spending of $130 million. These levels compare to an estimated $27 million five years ago, in 2000.

“Success like this comes from a confluence of two things,” said Bill Bennett, minister of state for mining, “and those are high commodity prices and a stable policy environment.”

Industry leaders cautioned that many of the mines operating in the province are older or newly revived former producers that will find it increasingly difficult to replace mined reserves in the years ahead.

“What’s really needed in this province is more spending on greenfield development,” said Michael McPhie, president of the Mining Association of British Columbia.

Other issues of concern to the industry are “the skill and drill shortage,” and the rising costs of basic items such as steel and tires. The cost of purchased energy increased to $342 million in 2005 from $268 million a year earlier. Another major concern is the stronger Canadian dollar. Based on revenues reported in the survey, a 1 change in the Canadian dollar against the U.S. dollar would cause a gross revenue drop of $52 million for B.C. companies.

The average number of people employed by the province’s mining industry increased to 7,071 in 2005, up from 6,442 in 2004. The average salary held relatively steady at $93,600.