British Columbia’s mining industry is in a good position to withstand the challenges of 2020, having been prudent in its spending and expansion plans in the decade preceding the Covid-19 pandemic, which put much of the global economy on hold as governments worked to stop the spread of the virus.

In its latest ‘BC mine report’, PwC Canada reports that the current price volatility will mean mixed results for British Columbia’s mining industry, given that the province is the largest exporter of metallurgical coal and one of the biggest copper producers, but also a significant producer of gold.

The Covid-19 pandemic hit prices of industrial commodities, such as coal, copper, lead and zinc hard, but gold – considered a haven for investors – has experienced a price surge.

“While the future remains uncertain, British Columbia’s mining industry is in a good position to withstand volatility. First, the industry has been prudent with its spending and expansion plans over the years after surviving the 2008/9 global financial crisis and the prolonged period of lower commodity prices that took hold afterward. In recent years, a more stable pricing environment has given the industry some cushion going into the current crisis,” the report notes.

PwC Canada BC mining leader Mark Patterson adds that British Columbia mining companies are in a good position to build on their successes by further embedding resilience into their business models.

“The environmental, social and governance (ESG) work that has already been established in British Columbia has the potential to create an internationally-recognised 'Made in BC' label. High environmental standards, strong relationships with communities, and the unwavering commitment to health and safety, will help British Columbia mining companies succeed in uncertainty.”

PwC Canada says British Columbia miners have been working to build social licence with stakeholders long before ESG became a buzzword and this has stood them in good stead during the pandemic.

Unlike some other mining jurisdictions across Canada and globally, British Columbia continued to operate during the first wave of the pandemic. This is in large part owing to the industry’s collaboration with governments, public health officials and employees to ensure its mines were operating safely.

“Miners with strong health and safety protocols were better prepared to deal with their Covid-19 response, which for most companies in British Columbia meant operating under very rigorous guidelines and procedures to prevent the spread of the virus in order to gain the trust and respect of employees, communities and government. Evidence is mounting that companies with a strong ESG record are outperforming their peers, suggesting markets are recognising the link between ESG performance and business resilience,” says PwC Canada Western Canada leader for sustainable solutions, Daniel O’Brien.

2019 PERFORMANCE
Meanwhile, the 2019 report highlights that the British Columbia mining sector posted falling revenues for 2019. Gross mining revenues fell to C$11.4-billion in 2019, down from C$12.4-billion in 2018.

The start of 2019 was buoyed by the rising prices of metallurgical coal and copper, but as the year progressed, they began to retreat. This was owing to a weaker outlook for global economic growth ahead of the Covid-19 crisis.

The mining sector's price volatility led to a decrease in overall revenue and net income at British Columbia mining companies in 2019. Average prices for British Columbia's key mining commodities showed a mixed result compared with a year earlier. Metallurgical coal and copper saw year-over-year decreases in 2019, falling 10% and 8%, respectively. Gold saw increases of 10% compared to 2018.

In the near term, the Covid-19 pandemic will continue to dampen the outlook for the prices of many of the key metals and minerals produced in the province.

In 2019, the British Columbia government made the mining flow-through share tax credit and the mining exploration tax credit permanent. Exploration and development expenditures were C$277-million in 2019, reflecting an increase from C$248-million the year before driven mostly by greater exploration and development activity at gold projects in the province.