“The cost to our sector is so much higher than in other jurisdictions, including across Canada. Consider that a mine in BC now pays up to 75% more in carbon tax than a similar operation in Ontario. It’s the same story with our global competitors, many of whom operate in jurisdictions with no carbon taxes at all,” he said during the launch of PwC Canada’s 53rd BC Mine report.
Taken together, BC’s established world-class environmental standards for mining, its hydropower-driven low greenhouse gas emissions (GHG), and the ESG performance factors guiding the provenance of the province’s mineral products, and it appears the industry has become a victim of its success.
“We urge the government to level the playing field for BC miners and workers and change how the carbon tax is applied.”
MBAC CEO Michael Goehring
Goehring argued the current carbon pricing system placed operations and workers at risk.
“The regime places our mines and workers at a significant disadvantage relative to our provincial and global competitors. So, we urge the government to level the playing field for BC miners and workers and change how the carbon tax is applied. It will help protect the environment and jobs,” said Goehring.
As global expectations continue to evolve, demand will increase for products from responsible sources. According to PwC, BC is well-positioned to meet this rising demand. “But we can’t assume we will retain our leadership position if we remain stagnant,” said Goehring.
“This is where innovation becomes critical. That’s why MABC partnered with the provincial government to develop the BC mining innovation roadmap.”
Red tape
In its 2020 report, Minerals for Climate Action: The Mineral Intensity of the Clean Energy Revolution, the World Bank found that the large-scale transition to clean energy will drive significant demand for the metals and minerals BC produces, including aluminium, copper, gold, silver, zinc, and steelmaking coal. These are all used to build clean technologies and infrastructure to reduce GHG emissions.
These minerals also play a critical role in building components for electric cars, smartphones, and many of the products we use every day in our lives. Electric vehicles, for example, require up to five times the amount of copper for their components as a traditional gas-powered vehicle.
“But rest assured, BC is certainly not the only jurisdiction in the world chasing this opportunity. Make no mistake; there is an urgency to make this happen. And the time is now, and this unique window of opportunity won’t be open for a lot longer,” said Goehring.
According to MABC data, the province currently has seven new or mine expansion projects nearing final investment decisions. Together, the association estimates the projects could account for about $3.3 billion (C$4 billion) in capital expenditures and more than 6,400 new construction and operating jobs associated with these seven projects. The total economic impact is expected to be around $8.25 billion (C$10 billion).
“In short, it’s a very big deal. The industry can’t do this alone. I can’t stress this enough. The permitting process in our province is too slow and too complex,” said Goehring.
The permitting process in our province is too slow and too complex.
To this end, the BC government had committed to a review of the permitting regime in BC earlier this year. “We look forward to an outcome that will lead to a permitting system that’s measured in months and not years. It is but yet another major factor coddling our ability to compete. It puts our mines and, by extension, our workers, at a significant disadvantage relative to our competitors,” said Goehring.
The MABC represents about 35 BC-focused mining companies.
Key findings
PwC’s Canadian mining leader Mark Patterson said the outlook for metals and minerals has continued to improve this year, with spot prices for essential BC metals and minerals as of March 31, either up from or in line with their 2020 averages.
According to PwC’s 2021 CEO Survey, 82% of global mining CEOs think economic growth will improve over the next 12 months. This compares to 76% for all CEOs, highlighting the optimistic outlook among industry executives.
It has many mining executives planning for future growth. According to the survey, 72% plan to pursue organic growth activities in the next 12 months.
The setting is ripe for growth, given a substantial pull-back of key mining financial metrics in 2020.
Patterson said revenues, net income and cash flows from operations were all down in 2020 from 2019 levels, mainly owing to lower prices and reduced shipments for metallurgical coal, an essential commodity for the BC mining industry. Loads of other key commodities, like gold and copper, were generally consistent with 2019 despite significantly higher prsices in the second half of the year.
PwC’s financial overview of BC’s mining industry in 2020 shows gross mining revenues fell to their lowest level since at least 2017 at $7.8 billion (C$9.5 billion) compared with $9.4 billion (C$11.4 billion) in 2019, $10.24 billion (C$12.4 billion) in 2018, and $9.66 billion (C$11.7 billion) in 2017. Cash flow from operations also fell to $2.14 billion (C$2.6 billion) in 2020, down from $2.9 billion (C$3.6 billion), $4.13 billion (C$5 billion) and $3.75 billion (C$4.54 billion) in 2019, 2018 and 2017, respectively.
