British Columbia Mining Industry

BC Construction Industry
March 16, 2018
North American Mining Industry Outlook
April 18, 2018

British Columbia Mining Industry

 Industry Overview

How far will the green initiatives go in their fight to shut down mining operations before the government realizes the depth of integration that mining has in the economy of BC? This is the underlying concern running across the industry and Crownsmen Partners has some facts to share.
The British Columbia Mining Industry is known for being one of Canada’s largest copper producers and taking advantage of accessing the global market through Vancouver, it has become Canada’s largest exporter of metallurgical coal as well. British Columbia produces a notable amount of gold, silver, lead, and zinc, and more than 30 other industrial minerals, which include gypsum and limestone. According to Mining Industry Human Resource Council (MiHR), players in the industry who have head offices in the international center of Vancouver have access to geological research, business administration, finance, management, engineering and environmental consulting. Mining companies use the province’s well-developed infrastructure, such as the integrated roads and railways to move their products. The data below represents British Columbia’s mineral production value for metal and non-metal minerals from the years 2012 to 2016.

 

Source: Statistics Canada table “Mineral Production of Canada, by Province, 2016”.
The mining industry experienced a significant drop of $1.6 billion between 2012 to 2015 in the mineral production value. According to the Mining Association of British Columbia (MABC) President and CEO Karina Brina the factors that impacted the value and production of the minerals were, citing lower commodity prices, mine closures, the Mount Polley tailings dam breach and the Supreme Courts of Canada’s decision regarding aboriginals’ rights and titles (PwC, 2014).
The mineral production value increased by approximately $500 million between the years 2015 and 2016, due to the slight increase in price for coal and copper towards the end of 2016. According to industry experts, prices in commodities is a major contributing factor that affects the overall gross mining revenue and is currently showing stability with a potential growth.

 

 

Source: Statistics Canada’s table “Gross domestic product, expenditure-based, by province and territory”
The mining industry’s contribution to GDP follows a similar trend to the gross mining revenue from 2012 to 2016. Since 2012, it has been becoming harder to make a higher contribution percentage to British Columbia’s GDP based on a year-on-year increases throughout Canada’s GDP (Statistics Canada, 2017). A further rise in the price of commodities would be expected to raise both the gross mining profit and the industry contribution to British Columbia’s GDP.

Industry Segmentation

 

Source: PricewaterhouseCoopers report “Building for the future The mining industry in British Columbia 2016”

The chart above shows the 2016 mining industry breakdown that focuses on product sales contribution to the total net revenue. The main products that make up the mining industry are gold, zinc, copper, silver, molybdenum, and metallurgical. The total net revenue of the British Columbia Mining Industry is $7.3 billion with metallurgical coal contributing approximately $3.0 billion dollars. It is the single biggest contributor to the net revenue of the mining industry which is boosted by the rise in price and an increase of 1.0 million tonnes in sales in 2015. According to MiHr the increase in sales is driven predominantly by Asian markets due to the increase in global coal consumption. Following metallurgical coal, copper and zinc are the second and third biggest contributors to the total net revenue valued at $1.8 billion and $877 million.

Industry Dynamics

There are many major factors that influence the growth of the BC mining industry. From 2016 to the first part of 2017 the prices of commodities stayed at a stable level which allowed the industry to remain stable. Prices of the commodities has an incredible effect on the mining industry, especially that Vancouver allows BC to reach global markets (MiHR, 2016). Currently there are two major projects set in place to advance the industry, these projects are the Brucejack Mine and the Seabridge KSM project. According to industry experts, the KSM project has produced 39.0 million ounces of gold and 10.0 billion pounds of copper, while still sitting in an area of 84.0 million ounces of gold and 35 billion pounds of copper. An increase in production combined with British Columbia’s world class infrastructure could lead to an incredible growth for the mining industry (MiHR, 2016).

Demand for mining commodities will influence the future of the mining industry and overall the province of British Columbia. Factors that affect the demand for commodities include: global population growth, life expectancy, the modernization of infrastructure, technology, and the advancement to ‘green’ energy sources, which could impact BC’s infrastructure, services, and sustainable products (MiHR, 2016). Although, green initiatives argue that there are impacts from mining activities that can cause harm to the environment which include the chemical processes of acid rock drainage, heavy metal leaching and non-metal leaching, Crownsmen Partners believes that mining is at BC’s core and a decline in mining will also cause a decline in many other auxiliary industries.

Current trends and factors of BC’s mining industry reveal information for established and prospective business to determine the challenges and expansion opportunities the industry may face. From 2015 to 2016 commodities prices rose, which resulted in an increase of nearly $1.0 billion to the gross mining revenue. Employment in direct mining jobs rose from 9,221 in 2015 to 9,329 in 2016. The MiHR believes that the industry will face the challenge of meeting future hiring requirements, which is estimated to be 7,000 to 20,000 positions between 2016 to 2026.

Businesses may face challenges however, with current advancements in the price of commodities, major projects and mining activities, there is a potential growth opportunity for British Columbia’s Mining Industry and for businesses, established or potential.

 

References

Auditor General of British Columbia (2016). An audit of compliance and enforcement of the mining sector. Retrieved from https://www.bcauditor.com/sites/default/files/publications/reports/OAGBC%20Mining%20Report%20FINAL.pdf

PwC (2016). Building for the future: The mining industry in British Columbia 2016. Retrieved from https://www.pwc.com/ca/en/mining/publications/pwc-mining-industry-british-columbia-2016-en.pdf

Statistics Canada (2017). Gross domestic product, expenditure-based, by province and territory. Retrieved from http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/econ15-eng.htm
Statistics Canada (2017). Annual statistics of mineral production. Retrieved from http://sead.nrcan.gc.ca/prod-prod/ann-ann-eng.aspx

Mining Industry Human Resources Council (2016). Preparing for the future: Mining labour market outlook for British Columbia 2016 – 2026. Retrieved from https://www.workbc.ca/getmedia/f7c01e3e-ea59-416b-90aa-2725ebb9c250/Mining_Labour-Market-Outlook-Report-for-BC_Feb-2017.pdf.aspx

PwC (2014). Proving resilient: The mining industry in British Columbia. Retrieved from https://www.pwc.com/ca/en/mining/publications/pwc-mining-industry-british-columbia-2015-05-en.pdf

PwC (2018). The mining industry in British Columbia. Retrieved from https://www.pwc.com/ca/en/industries/mining/publications/mining-industry-british-columbia.html

IISD, MMSD, and WBCSD (2002). Industry in transition a profile of the north american mining sector. International Institute for Sustainable Development and Alistair MacDonald (Talmac Consulting). Retrieved from http://www.iisd.org/pdf/2001/mmsd_na_mining_profile.pdf

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