Mine Games
Sitting in a room with a group of high-profile insiders in the B.C. mining industry, the one thing that stands out is a sense of rejection, of an industry that built cities and towns across the province asking, “Do you want us here or not?”
Vancouver is a centre for mining in the world, with hundreds of companies engaged in raising money and spending it on far-flung geological studies, exploration missions, mine developments and extraction efforts. But when it comes to digging mines in B.C. itself, the picture is bleak. Mines across the province are reaching retirement age, and no promising young mines have come on scene to take their place since the mid-’90s.
Not that the province’s many miners aren’t trying. But the hurdles standing in the way of digging a new hole in B.C. are enormous, be they economic, social, environmental, logistic or simply bureaucratic. It’s enough to make miners wonder if they’re really welcome here at all.
To discuss B.C.’s shifting relationship with its mining industry, BCBusiness sat down with three senior mining industry pros. Terry Lyons has been involved with dozens of mining ventures in his career and is the chair of Northgate Mineral Corp., which runs the Kemess mine in northern B.C. Len Boggio is a partner at PricewaterhouseCoopers LLP and leads the firm’s mining practice. Byng Giraud is the vice-president of policy and communications at the Mining Association of B.C.
What has been mining’s role in the B.C. economy historically?
TERRY LYONS: It’s always been known as the second industry, after forestry. Mining has built cities, towns and communities over at least the last 150 years and you can name them: Trail, Nelson, Kimberley, Tumbler Ridge, Sparwood. In Kamloops basically half of its industry was mining, and the other half was forestry. So it’s been a very, very rich part of this province.
And where is the industry today?
LYONS: Today it’s still an important contributor. But there have been no metal mines in the province constructed since the Kemess mine in 1996. Mineral expansion has been just that: expanding existing mines. Even though we’ve had relatively robust economics in the minerals business, it’s not an industry that has seen a lot of development go forward, and now we’re entering this downturn.
What effect is the current economic crisis having in the mining world?
LEN BOGGIO: Well, it’s clear we’re headed into a global recession. There has been an almost one per cent contraction in the gross domestic product in the U.S. over the past year. China is required to spend $600 billion to support its economy because its exports are shrinking. Central banks are stepping in all around the world to help banks lend, and banks still are not lending. This won’t bode well for commodities and everyone who uses products that come from mines.
BYNG GIRAUD: For the mine operators who need a certain price to maintain their operations and to meet payroll and costs, it’s more difficult to make ends meet. We saw recently that one of our mines, the Breakwater operation on Vancouver Island, was temporarily shut down. For the exploration community or those in advanced development, the issue is the access to capital. These are high-risk ventures. It’s a long period of time from discovery to first extraction, and it requires a lot of investor confidence. If that money is not being lent, then those new projects, no matter how viable they may look, may not get off the ground for at least a little while.
LYONS: Let’s put things in perspective. Eskay Creek is one of the richest gold mines in Canadian history, and it’s just about to shut down. When they were drilling, hole 109 was the discovery hole. So 108 dry holes before they made the discovery. And out of that they created a beautiful 20-year underground mining operation, and it drove an economy in northwestern B.C. second to none. A wonderful deposit. There’s the risk/reward within the mining business.
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