High taxes, land-tenure uncertainty stunts B.C. mining

High taxation levels and uncertainty surrounding access to land and mineral tenure are stunting the growth of British Columbia’s mining industry, according to a report by Price Waterhouse.

For each of the past 26 years, the state of mining in the province has been documented by the accounting firm, with assistance from member companies of the Mining Association of British Columbia (MABC).

Exploration spending by these companies plummeted to $9 million in 1993, the lowest level since the survey began in 1988. “Security of mineral tenure and uncertainty as to where we can and can’t explore are still major unresolved problems,” said MABC President Gary Livingstone. “And there has only been minimal progress with respect to compensation for Windy Craggy.” Last June, the British Columbia government expropriated claims held by more than 20 companies or individuals in the Alsek-Tatshenshini region, the most advanced being Geddes Resources’ (TSE) Windy Craggy deposit. Yet, so far, not one claim-holder has been compensated.

If the expropriation of Windy Craggy still rankles the industry, so too does the province’s high taxation levels. “We are the highest-taxed mining jurisdiction in Canada,” Livingstone said.

As an example, waste discharge permit fees charged by the government to all industries in 1992 were $4.5 million. These rose to $7.5 million in 1993 and will be $15 million this year. B.C. Hydro water rental fees increased by $2 million in 1992 and again in 1993, regardless of a reduction in the number of operations.

“We cannot pass these costs on to our customers,” said Walter Segsworth, president of Westmin Resources (TSE). “This is a galloping tax burden that erodes the ability of the industry to keep jobs in the province.” On a positive note, the report said co-operation has improved among industry, government and labor. It also noted some signs of financial improvement, largely due to a rejuvenated coal sector and the decline in the Canadian dollar.

Overall industry losses for 1993 were $14 million, down considerably from losses in 1992 ($119 million) and 1991 ($485 million). The coal sector recorded earnings of $38 million this year (the first profitable year since 1988), following a loss of $98 million in 1992.