BC mining sits under cloud of 2013 election

Denial and defiance came first. It seemed inconceivable for miners that a New Democratic Party government could take the reins following a B.C. election in May 2013. But as political tides swell in favour of NDP leader Adrian Dix — and a party that has formed the official opposition since being ousted from power in 2001 — the time has come to look at a changing of the guard in Victoria with a degree of introspection.

For many in the province’s mining industry, a near decade-long existence under NDP governments run by Mike Harcourt and Glen Clark in the 1990s has turned the left-leaning party into a sort of curse word — a still raw reminder that socialist policy and environmental activism mark the death knell for natural resource companies, which traditionally perform at peak efficiency under clear and concise free-market regimes aimed at realizing the economic potential of B.C.’s resource sector.

If the coalition-style B.C. Liberals now in power were operating under such a platform, it’s possible the NDP would not be coasting to what is looking like a clear-cut victory in 2013. But Premier Christy Clark’s incumbent party appears increasingly lost in its drive to appeal to either side of the political spectrum.

In The Globe and Mail, election analyst Éric Grenier used Angus Reid’s latest polling to determine that the NDP would win 48.7% of the popular vote if elections were held on Nov. 21, which would mean 62 seats in the Legislative Assembly. Grenier notes that Clark would require a 19-point swing in the next six months to extend the Liberals’ 12-year hold on the B.C. government — an extremely rare occurrence in the political arena.

The headline economic numbers during the NDP governments of the 1990s look fairly bleak. Over the decade that the NDP was in power, B.C.’s gross domestic product (GDP) per capita grew 8.9%, while Canada’s jumped 25.3% in comparison. After the Liberals ousted the NDP, B.C.’s per capita GDP rose 6.9% over four years, compared to a 5.3% advance for Canada.

On the mining side, exploration expenditures plummeted in B.C. from 1992 through 2004. According to statistics from the National Mining Exploration Survey, spending on exploration hit a record high of C$227 million in 1990 before dropping to C$25 million in 1999 — marking the lowest point since 1971. In contrast, the industry hit a new high-water mark in 2011 when it spent C$463 million in B.C. on mineral exploration.

But it’s important to differentiate between public policy and macroeconomic machinations outside of governmental control. In the mid- to late 1990s gold prices had trended below US$300 per oz., while copper prices sat under $1 per lb. The dot-com bubble — which ran from 1997 to 2000 — hurt mining investment, as did the Bre-X Minerals scandal in 1997.

The question on many minds is obvious: Who is Adrian Dix, and how will his and his party’s policies influence natural resource development in the province?

Dix served as Glen Clark’s chief of staff from 1996 to 1999. In 2005, Dix won the Vancouver-Kingsway riding, and followed up by securing a victory in the NDP leadership race in 2011. He campaigned on a fairly typical party platform that involved increases in corporate tax rates, reduced carbon emissions, minimum-wage increases and restored corporation capital tax on financial institutions.

How much of that agenda is likely to be implemented after the general elections in May? It would be a strong wager that corporate tax rates will rise. B.C. is sitting on $50 billion in provincial debt and posting substantial annual deficits, and assuming the NDP wants to keep spending money, more will need to come out of corporate pockets.

For example, during the debate surrounding imported foreign labour at HD Mining International’s Murray River longwall underground coal mine project, the NDP has been vocal in criticizing the Liberals for not investing enough in skills training, which has resulted in a lack of available Canadian workers for mining projects. This is not an unreasonable assertion, though the capital for those training projects can only come from one place under NDP doctrine: taxation.

The two other elements of an NDP regime that have mining companies nervous involve the party’s tendency to side with environmentalists and unions. The first causes problems with permitting and project development, while the second can lead to labour-cost inflation via rising real wages.

It seems like another smart bet would be the NDP staying in-line with the union mantra and its support of collective bargaining initiatives. On the environmental side, however, things get unclear.

So far, the NDP has been critical of the Liberal policy involving mine permitting and project review, but not just on an environmental level. On Aug. 3, the NDP released a statement criticizing the Liberals for extending the turnaround in mine permitting and creating an unreasonably large backlog in project applications.

It almost seems feasible that the NDP might be ready to tap mining to fund a likely large-scale spending spree if the party takes office — though that only tells half of the story.

Reading the fine points, it’s evident that the NDP will champion greater government involvement in natural resource development in B.C. Dix has condemned Enbridge’s (ENB-T, ENB-N) Northern Gateway pipeline proposition, and the party favours higher spending on environmental reviews through greater bureaucratic involvement.

It is unlikely that Dix and the NDP will rule in a vastly different way than the outgoing B.C. Liberals, which have been moving to the “centre” politically over the past four years. Mining companies witnessed the Liberals cave in to environmental pressures during the recent Pacific Booker Minerals’ (BKM-V, PBM-X) ruling on its Morrison Lake copper-gold project, and that looks likely to continue under either party.

What does the NDP mean for B.C.? Higher taxes and more paperwork. Radical change is off the table with unsustainable provincial debt levels and a global economic landscape marked by uncertainty and risk.