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TABLE OF CONTENTS Jan 18 - 24, 2010 Volume 95 Number 48 - 0 comments

BC's Future As Global Mining Leader Needs Nurturing

COMMENTARY

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By: Gavin Dirom
2010-01-18

Mineral Exploration Roundup 2010, the Association for Mineral Exploration B.C.'s 27th annual conference, focuses the spotlight on mineral exploration and mining in British Columbia. The province is a world centre for mining, but we must work harder for it to remain so.

Over 1,200 mining and mineral exploration companies are based in B.C., and the vast majority of these are located in Vancouver alone. Major players such as Teck Resources and Goldcorp continue to call Vancouver home, and mining remains mainstay for much of the technical, investment, accounting and legal community in the province.

British Columbia has a proud mining history and has generated an estimated $500 billion in gross revenues over the last 150 years.

The province was founded as a result of a major gold rush in 1858 and has produced some of the world's greatest mines, including the Sullivan mine, which operated for 92 years and produced ore containing over 17 million tons of zinc and lead, and more than 285 million ounces of silver, which were together worth more than $20 billion.

Rossland's Le Roi mine's opening at the end of the 19th century was a key factor in the founding of not one, but two stock exchanges in Toronto. The Vancouver Stock Exchange would follow in 1907.

B.C.'s mining booms over the past 150 years have left a legacy on the global stock markets: 57% of mining companies worldwide are now listed on the Toronto Stock Exchange and TSX Venture Exchange.

And the future could be promising. With 30 projects under government review -- or almost half of the major proposed mining projects in Canada -- being located in British Columbia, significant potential exists. Projects that could move into production in the next few years include Imperial Metals' Red Chris project, Terrane Metals' Mt. Milligan, Taseko Mines' Prosperity, New Gold's New Afton and Seabridge Gold's Kerr-Sulphates- Mitchell, among others.

The proof is, and will be, in demonstrating success. The international investment community expects nothing less.

British Columbia enjoys many competitive advantages including: an experienced, educated and professional labour force; relatively inexpensive electricity; modern, extensive infrastructure including road, rail, electrical transmission, ports and airports; world-class educational facilities; and proximity to growing Asian markets. We also enjoy a strong investment community and related support services.

It has been said that a junior exploration company can be put together in almost any restaurant in downtown Vancouver because all the expertise required will likely be in the room.

But, it is also well known that significant challenges remain. Well-developed industry clusters, such as the one B.C. presently enjoys, cannot be taken for granted.

It is difficult to artificially create industry clusters. They need to be based on local strengths, and those strengths could be diminish if governments, First Nations and industry allow competing agendas to undermine these strengths.

If Vancouver and B.C. are to remain competitive with other world mining centres such as Perth and Sydney in Australia, and Toronto and Ontario, or mining finance centres such as London and New York, then governments, First Nations and industry must work together to nurture and support the cluster.

If British Columbia is to grow and prosper as a world centre for mineral exploration, development and mining, there must be a track record of success for mineral exploration and mining in B.C.

The historical reasons for the industry being based in Vancouver cannot be solely used as a reason for its continued existence. The alternative, that B.C. be a base only for mining-related services and labour, is not viable in the long-term because other world centres already hold that advantage (Toronto as the home of the TSX, for example).

British Columbia's particular competitive advantage over such centres as London, Sydney and New York is tied to the fact that actual mining takes place here.

Therefore, it is critical that all stakeholders, governments, First Nations and industry work together to ensure that B.C. remains an attractive mining jurisdiction.

The biggest threat facing the sector in B.C. is the ongoing erosion of the land base available to mineral explorers. Increasingly more land is being placed in parks, special management zones or staking reserves. Exacerbating things are the shadows of uncertainty relating to aboriginal land claims, and illogical restrictions on the search for uranium and thorium, which further create uncertainty where these minerals are discovered in conjunction with "acceptable" minerals.

About 13% of B.C. is now held as mineral tenure, and yet the public often perceives the extremely slim possibility of a mine to be such a "threat" that it is willing to consider diminishing, for the flimsiest of reasons, the province's mineral land-base potential, which is intended for the benefit of all citizens.

Threats to exclude mineral exploration from the Flathead Valley in the province's southeast -- a place where land-use planning was supposedly completed -- are a testament to this.

In these situations, prospectors and mineral-exploration companies are often first denied access to a large percentage of the province and then denied access to a fair environmental assessment and permitting process. But, as everyone in the mining community understands, mineral exploration may or may not lead to the development of a very rare mineral discovery.

We also need to stress that the mining sector is B. C's safest heavy industry, and mineral exploration occurs under high environmental and safety standards.

Some detractors may welcome further restrictions and challenges for the mining sector, but its contribution to the B.C. economy cannot be underestimated. Mining and mineral exploration directly employ over 85,000 people and represent $8 billion in annual economic activity, including over $500 million in revenue to government -- more than forestry. And this does not include spinoffs, multipliers, or taxes paid by employees.

B.C. can choose to discover and build mineral properties here at home with our high standards and wages, or we can rely on others. We can choose to encourage the cluster, or allow it to atrophy. The need for minerals in the so-called green economy will not diminish, it's just a question as to whether or not we choose to participate.

B.C. is a centre of excellence for mineral exploration, development and mining. But it will continue to be one only if we consistently choose to make it so.

-- The author is president and CEO of the Vancouver-based Association for Mineral Exploration British Columbia (AME BC). www.amebc.ca



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