TORONTO (miningweekly.com) – British Columbia’s (BC’s) mining industry has experienced another thriving year in 2012, including mineral exploration and development, despite profits being lower than in 2011, international auditors PricewaterhouseCoopers’ (PwC's) BC Mining Industry Survey for 2012 has found.
"BC's mining industry faced significant headwinds in 2012, including lower commodity prices as a result of global market jitters and a range of rising costs - labour, raw materials and energy. Lower capital expenditures, revenues and a drop in operating cash flows resulted," survey co-author and leader of mining practice at PwC Michael Cinnamond said.
Gross mining revenues were reported as $9.2-billion in 2012, which was down 7% from $9.9-billion in 2011, when the price of copper reached a new high and coal was near its peak. Commodity prices slid as a result of slower global economic growth and a deepening debt crisis in Europe.
As a result, the prices of BC's two largest revenue-generating commodities, coal and copper, experienced slides, causing a drop in aggregate BC mining revenues and profits for PwC survey participants in 2012.
Survey respondents also indicated that aggregate pretax net earnings fell 51% to $1.8-billion, down from $3.7-billion the year before. Cash flow from operations decreased to $2.2-billion in 2012 as compared with $4-billion in 2011.
In terms of employment in the BC mining industry, staff figures increased to 10 419 in 2012, up 12% from 9 310 in 2011, and respondents indicated attracting and retaining skilled labour to mining operations in BC remained a top challenge.
"The industry has developed a number of education and training programmes to attract workers, in particular from under-represented segments of the population. The hiring of temporary foreign workers was a hot topic in BC's mining sector in 2012 and is expected to remain in the spotlight in the industry, and across all sectors in Canada, for the next while," Cinnamond said.
New Beginnings
"The decline in prices of coal and minerals produced in BC came along with investor fears of slower growth in China, a sluggish economic recovery in the US and Europe's credit crisis. In spite of slimmer profits in 2012, BC producers continued to move forward with plans to expand and build new mines," survey co-author and manager in PwC's mining practice Marianne Carroll added.
In 2012, New Gold celebrated the opening of its New Afton mine near Kamloops. This was the second new mine in BC in two years, after the opening of the Copper Mountain mine near Princeton in 2011. Copper Mountain was the first significant metals mine to open in the province since 1998.
PwC said the next large mines slated to open were the Thompson Creek Metals Mount Milligan project and the Imperial Metals Red Chris project, which were both currently under construction.
There were a number of other projects in the pipeline, currently in the development stage. Mining projects in the north-west of BC would get a boost from the 344 km Northwest Transmission Line (NTL) currently under construction. Expansion plans at a number of BC's ports, which serve as a gateway to critical customers in Asia, were also under way.
Two prominent BC universities were chosen in October 2012 to lead an international coalition to help developing countries benefit from corporate social responsibility in the extractive industry. The University of British Columbia and Simon Fraser University would operate the Canadian International Institute for Extractive Industries and Development (CIIEID). The institute would be supported with a $25-million contribution from the Canadian International Development Agency.
"While 2013 is already proving to be another tumultuous year for BC's mineral exploration, development and operations, demand for resources is expected to remain steady for the foreseeable future. The BC industry is working hard to address costs, environmental issues, labour supply and invest in new infrastructure,” Cinnamond said.