What the World Thinks of BC

The Fraser Institute’s Annual Survey of Mining Companies is designed to assess how mineral endowments and public policy factors such as taxation and regulation affect exploration investment. The 2005 survey was sent to 1,435 exploration, development and mining consulting companies around the world, of which 322 (22.4%) representing $1.8 billion in exploration activity — about one-third of the global total — responded.

The annual survey was launched as a way of providing the captive mining industry with a means to communicate anonymously to governments a frank and uncensored assessment of the effects of their policies on the industry. It was motivated by the devastating impact the former B.C. New Democratic Party government of the 1990s had on the province’s mining industry. The NDP’s policies created a high level of uncertainty and non-confidence in the mining industry and this, in turn, created a negative perception among potential investors in B.C. Compiling the results from an annual survey would clearly identify key problems facing the mining industry and establish comparative rankings of where B.C. and Canada sat with respect to other provinces and countries. An annual survey would also create a baseline by which to communicate with governments and obligate them to some level of accountability.

Interestingly, the industry in B.C. is still reverberating with negative vibes of the old NDP policies. This is telling, and governments should take particular note as it exemplifies the depth of the perceptions and the longevity of a negative perception. It is taking a very long time to fully regain the confidence levels that existed when exploration and investments flourished.

In a nutshell, the survey gave us these facts about B.C.:

* A bad reputation is easy to create, but extremely hard to lose. The hangover from the NDP’s time in office persists.

* B.C. has finally begun to move up in the rankings.

* A jurisdiction needs to prove its credibility. The trend for good policy exists today and will be good for tomorrow. However, investors are still wary that 10 to 15 years from now, another NDP government could be elected.

The situation in Saskatchewan, a province with an NDP government, was used as a comparison and to provide some scale as to how far and where this province must move in the survey rankings. In the area of policy potential, B.C. experienced a significant positive change, climbing to 23rd spot from 44th last year. The 10 most favoured jurisdictions were Nevada, Alberta, Manitoba, Chile, Quebec, Mexico, Saskatchewan, Arizona, Ontario and Utah. Zimbabwe was the worst jurisdiction out of 64.

Currently, Saskatchewan still maintains more attractive policies than does B.C.

In terms of combined policy and mineral potential, B.C. ranks 14th behind Chile and Nevada (in first and second place, respectively), Quebec in fifth, Ontario in ninth and Mexico in 12th spot. Saskatchewan ranks 23rd. As for its mineral potential and global perception of the jurisdiction as a “go-to destination” based on current regulations and land use restrictions, B.C. appears midway down the survey in 38th place, well behind Saskatchewan, which is 11th. Chile, Nevada and Mongolia are the top three, followed by Ontario in eighth place, and Manitoba at 14th.

Mineral potential, assuming no land use restrictions in place and assuming industry “best practices,” elicited some interesting results. Russia, Peru, Mali, Ghana, the Democratic Republic of the Congo (DRC) and Papua New Guinea lead the pack. N.W.T. and Nunavut, in seventh and eighth place, respectively, are the best Canadian regions; B.C. ranks 26th, Saskatchewan is 48th and Nova Scotia is in last place at 64th. Based on results of this assumed ideal “best practices” survey, B.C. has room to improve on its current regulations in order to attract more investment confidence. The survey highlighted uncertainties felt by mining companies, including their concerns regarding existing regulations. Respondents indicated a slightly higher level of uncertainty about investing in B.C. as compared with Saskatchewan, which ranks fourth in the survey behind Chile, the Yukon and Mexico.

With respect to its environmental regulations, B.C. is favourably slotted in the upper half in 24th spot; Saskatchewan is higher in 13th place. In Australia, the states of Western Australia, Northern Territory and Queensland are ranked at the very top for environmental regulations. With regard to regulatory duplication and inconsistency, B.C. falls right in the middle of the rankings in 32nd place, whereas Saskatchewan earns a high ninth place.

For its taxation regime, B.C. is favourably ranked in 12th place, just behind Quebec. Saskatchewan is 19th and Alberta holds first place. In the category of uncertainty concerning native land claims, however, B.C. appears at the bottom of the list, ahead of just three countries, Zimbabwe, Papua New Guinea and Bolivia. The message here is that there are some huge issues in B.C. — or perhaps the survey results are skewed due to bad experiences and lingering past perceptions. Predictably, uncertainty over parks, wilderness and protected areas led to B.C.’s ranking in the lower one-third (47th place) whereas Saskatchewan is near the top, in 13th place. For B.C., the nightmare of the “12 per cent parks” policy may still be haunting survey respondents.

For quality of infrastructure among jurisdictions, B.C. is ranked 23rd and Saskatchewan eighth, however, the spread of survey points from sixth to 26th is comparatively close. Not surprisingly, N.W.T.’s ranking is close to the bottom. In terms of socioeconomic agreements, B.C.’s 20th place position is still not as favourable as Saskatchewan’s third-place ranking. Manitoba holds first place.

As for political stability, there are 12 jurisdictions, including Alberta, which all ranked in first place with apparently no issues relating to political stability. Following the first 12, Saskatchewan is in 14th position and B.C. is in 29th position, or close to the mid-point.

B.C. and Saskatchewan are at 25th and 28th, respectively, when it comes to labour relations and employment agreements — which is the middle of the pack. Worth noting is that B.C. has closed the huge gap that existed between it and Saskatchewan in this category from 2000 to 2003. Manitoba and the Yukon are second and third in this category; Zimbabwe and Venezuela are at the bottom. B.C. is number one in terms of its geological database, followed by Quebec, Manitoba, Alberta, the Yukon, Nevada, Ontario, Chile and Saskatchewan. Overall, Canadian jurisdictions are providing the industry with superb geological information.

In the category of security, there is no problem as yet in B.C. or any of the Canadian jurisdictions. The DRC, Zimbabwe, Philippines, Indonesia and Papua New Guinea are identified as flashpoints for security.

As you can see, today’s policy decisions will have long-term effects on future mining industry perceptions. Current policies and regulations for exploration and mining in B.C. have changed quite dramatically since the old NDP. However, mining investment decisions are inherently long-term decisions and there are evidently perceptions in the minds of industry participants that we could experience dark days again. Perceptions are very difficult to overcome.

It is vitally important to have consistency in our policies in order to maintain a level of confidence. Key components for establishing confidence are transparency, predictability and consistency (tax structures should not be changed to adjust to certain events and circumstances).

— The preceding is an excerpt from the fall edition of Mineral Exploration Magazine, a quarterly publication of Vancouver-based AME BC. The author is a senior fellow at the Fraser Institute and president of the Fraser Institute Foundation.

Major Mineral and Metal Projects in British Columbia

Project Name< /td>	Commodity	Company	Location	Production	Operation Years
1 Afton Project	Polymetallic	New Gold	10 km W of Kamloops	3.6M tonnes/year	20 years
2 Bear River Gravel	Gravel	Beacon Ventures	Stewart, NW BC	1M tonnes/year	TBD
3 Brule coal mine	Coal	Western Canadian Coal	57 km S of Chetwynd, NE BC	2M tonnes/year	10+ years
4 Cariboo Gold	Gold	International Wayside Gold Mines	Wells	1M tonnes/year	TBD
5 Cogburn Magnesium	Magnesium	North Pacific Alloys	30 km N of Agassiz, SW BC	0.5M tonnes/year	25 years
6 Davidson Moly	Molybdenum	Blue Pearl Mining	Smithers, BC	0.7M tonnes/year	9 years
7 Galore Creek	Polymetallic	NovaGold Canada	200 km NW Dease Lk, NW BC	22M tonnes/year	20+ years
8 Gething Coal Project	Coal	Canadian Dehua International	25 km NW of Hudson Hope	2M tonnes/year	40 years
9 Hermann Coal	Coal	Western Canadian Coal	SW of Tumbler Ridge	43M tonne resource	20 years
10 Highland Valley Waste	Waste	Teck Cominco	Logan Lake, Kamloops	Region 0.6M tonnes/year	50+ years
11 Highland Valley Refinery	Cu Refinery	Teck Cominco	Logan Lake, Kamloops Region	132,000 tonnes/year	15+ years
12 Hills Bar Aggregate	Gravel	Qualark Resources	Near Yale in SW BC	12M tonnes/year	50+ years
13 Horizon Coal mine	Coal	Hillsborough Resources	25 km SW of Tumbler Ridge	1.6M tonnes/year	20+ years
14 Kemess North	Copper/Gold	Northgate Minerals	250 km NE of Smithers, BC	44M tonnes/year	15 years
15 Kutcho Creek	Polymetallic	Western Keltic Mines	100 km E of Dease Lake, BC	1M tonnes/year	11 years
16 Lodgepole Coal	Coal	Cline Mining	50 km W of Fernie, BC	2M tonnes/year	20 years
17 Morrison/Hearne Hill	Copper/Gold	Pacific Booker Minerals	65 km NE of Smithers, NW BC	7M tonnes/year	10 years
18 Mount Klappan	Coal	Fortune Coal	160 km NE of Stewart, NW BC	3M tonnes/year	20 years
19 Mt. Milligan Project	Copper/Gold	Terrane Metals	155 km NW of Prince George	500M tonne resource	20+ years
20 Prosperity Gold	Copper/Gold	Taseko Mines-Hunter Dickinson	125 km SW of Williams Lk, BC	25M tonnes/year	20 years
21 Red Chris	Copper/Gold	bcMetals	18 km SE of Iskut, NW BC	11 M+ tonnes/year	25 years
22 Ruby Creek Moly	Molybdenum	Adanac Moly	Atlin, NW BC	7.3M tonnes/year	20+ years
23 Saxon Properties	Coal	Belcourt-Saxon Coal	SE of Tumbler Ridge	5M tonnes/year	20+ years
		Limited Partnership
24 Schaft Creek	Polymetallic	Copper Fox Metals	80 km SW of Telegraph Creek	26M tonnes/year	20 years
25 Sechelt Carbonate	Carbonate	Pan Pacific Aggregates	15 km north of Sechelt, SW BC	6M tonnes/year	25 years
26 Sustut Copper	Copper/Gold	Northgate Minerals	193 km NE of Smithers, BC	1M tonnes/year	5+ years
27 Swamp Point Gravel	Gravel	Ascot Resources	50 km south of Stewart, BC	3.3M tonnes/year	20 years
28 Trend Coal	Coal	Northern Energy and Mining	Near Tumbler Ridge, NE BC	2M tonnes/year	20+ years
29 Tulsequah Chief	Polymetallic	Redfern Resources	160 km from Atlin, NW BC	5.4M tonne resource	10+ years