It was another thriving year for BC’s mining industry in 2012, including mineral exploration and development, despite profits being lower than 2011, according to PwC’s BC Mining Industry Survey for 2012.
“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,’ said Michael Cinnamond, survey co-author and leader of PwC’s Mining practice at PwC. “Lower capital expenditures, revenues and a drop in operating cash flows resulted.”
Gross mining revenues were reported as $9.2 billion in 2012. That is 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. The prices of BC’s two largest revenue generating commodities, coal and copper, experienced slides as a result, causing a drop in aggregate BC mining revenues and profits for PwC survey participants in 2012.
Survey respondents also indicate that the aggregate pre-tax 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. Attracting and retaining skilled labour to mining operations in BC remains a top challenge.
“The industry has developed a number of education and training programs to attract workers, in particular from underrepresented segments of the population,” said Cinnamond. “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.”
“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 U.S. and Europe’s credit crisis,” said Marianne Carroll, survey co-author and Manager in PwC’s mining practice. “In spite of slimmer profits in 2012, BC producers continued to move forward with plans to expand and build new mines.”
In 2012, New Gold Inc. celebrated the opening of its New Afton mine near Kamloops, BC. This is the second new mine in BC in two years, after the opening of the Copper Mountain Mine near Princeton, BC in 2011. Copper Mountain was the first major metals mine to open in the province since 1998.
Looking ahead, the next large mines slated to open are the Thompson Creek Metals Mount Milligan project and the Imperial Metals Red Chris project, which are both currently under construction. There are a number of other projects in the pipeline which are currently in the development stage. Mining projects in the northwest of BC will get a boost from the 344-kilometre Northwest Transmission Line (NTL) currently under construction. Expansion plans at a number of BC’s ports, which serve as a gateway to key customers in Asia, are also underway.
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 will operate the Canadian International Institute for Extractive Industries and Development (CIIEID). The Institute will 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,” added Cinnamond. “The BC industry is working hard to address costs, environmental issues, labour supply and invest in new infrastructure.”
About the survey
This year’s survey included 37 participants: 19 operating metal and coal mines (including 1 smelter operation); 10 operations in the permitted or active permitting stage; 5 advanced exploration-stage properties and 3 mines in the reclamation stages.
For a complete copy of PwC’s 2012 BC Mining Industry Survey visit: www.pwc.com/ca/bcminingsurvey
About PwC Canada
PwC Canada helps organizations and individuals create the value they’re looking for. More than 5,700 partners and staff in offices across the country are committed to delivering quality in assurance, tax, consulting and deals services. PwC Canada is a member of the PwC network of firms with more than 180,000 people in 158 countries. Find out more by visiting us at www.pwc.com/ca.
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