Energy and Mines Minister Bill Bennett rang in 2016 with thoughts of a potential rescue package for B.C.’s beleaguered mining industry on his mind to ward off potential shutdowns.
Options for assistance to mining companies struggling with low commodity prices could include deferrals on payment of power bills and delayed payments on mineral taxes, Bennett said in an interview. There are real potential consequences if the province can’t offer any help.
“There’s urgency to this,” Bennett said.
“If we don’t find something to do that will help in early January, then by mid-January, I think you’re going to see some mining companies go down.
“You’re not going to see bankruptcies, but you’re going to see closures, and we’re talking about thousands of jobs.”
B.C. mines in 2014 directly employed 9,954 British Columbians, according to the latest industry survey by accounting and consulting firm PwC, down from 10,720 a year earlier.
That number will likely show another decline after a string of layoffs in 2015.
The pre-tax profits of mining companies in B.C. declined to an aggregate of just $288 million in 2014 from $1.8 billion in 2012, according to the PwC report.
The industry remained deep in “cost-containment” mode as 2015 wound down, said Karina Brino, CEO of the Mining Association of B.C. This year isn’t looking a lot better. Brino said many of her organization’s members were working on “partnerships” with their lenders, workforces and even government, looking for ways to weather the commodity downturn and keep existing operations viable.
Bennett said the mining industry as a whole has come to him looking for assistance, and either he or his staff has met with all the companies operating in B.C. to talk about options, and the province’s limits.
“Whatever we decide to do will not be on the backs [of B.C. Hydro ratepayers or taxpayers],” Bennett said. “We’re not asking taxpayers to foot any part of this. We’re going to do our best to find a way that avoids that, and if we can’t, we won’t do anything.”
The basic principles for the process underway, Bennett said, are that measures can’t jeopardize the Liberal government’s fiscal plan to balance the budget, can’t undermine B.C. Hydro’s existing schedule of rate increases which will see power rates increased four per cent this year already and would be in the form of loans not subsidies or grants.
“By the time we’re through this, probably by mid-January, we’ll know what we can do,” Bennett said. “And I think we’ll find we don’t have many options.”
Mining was a core plank in the B.C. jobs plan that Premier Christy Clark unveiled for the 2013 election with the objective of seeing eight new mines open and the expansion of nine existing mines by 2015. However, while new mines have been opened, such as New Gold’s New Afton mine near Kamloops, Thomson Creek Metals’ Mount Milligan Mine northwest of Fort St. James, and Imperial Metals’ Red Chris mine near Iskut in the northwest, the industry has been beset by closures and layoffs.
In November, Teck Resources announced it would look to trim its 2016 expenses by $650 million and cut another 1,000 jobs from its global operations as it continued to pare back its costs in the face of extremely low commodity prices, particularly metallurgical coal and copper.
One of the cost-cutting measures was to suspend plans to expand its Coal Mountain coal mine near Sparwood, which would mean closure of the facility once it runs out of existing reserves in 2017.
That follows suspension of its plans to reopen its Quintette Coal mine near Tumbler Ridge in B.C.’s northeast, and closure of all five operations of Walter Energy and Anglo American in the region in 2014. Last year, Walter Energy sought Chapter 11 protection from bankruptcy in the United States.
The Island’s largest mine, at Myra Falls, shut last year, throwing hundreds out of work in the Campbell River area, as ownership struggled with expensive safety upgrades amid low prices for copper and other minerals.
