B.C.’s mining industry reeling after $95-million loss in 1990

The fortunes of British Columbia’s mining industry continued a downward trend in 1990, with coal operations being particularly hard hit and the industry suffering an aggregate loss of $95 million for the year.

The downward slide began in 1989 when aggregate profits shrank to just over one-third of 1988’s peak earning levels.

Tom Waterland, president of the Mining Association of British Columbia, said 1991 is also expected to be another tough year in view of low commodity prices and the continued strength of the Canadian dollar against the U.S. dollar.

Waterland’s comments were based on an annual report on the province’s mining industry jointly released by the Mining Association and Price Waterhouse. The report, based on data collected independently by Price Waterhouse from 43 separate companies and divisions, reflects most of the province’s mining industry and includes all major mining operations.

“In 1990, both the metal/precious metal and coal producers suffered aggregate losses of $7 million and $88 million, respectively,” Waterland said, adding that gross mining revenues from all sectors decreased to $3.7 billion for the year.

Waterland noted that decreased revenues and the writedown of mining fixed assets were the two key factors that led to the 1990 loss. But he also blamed lower commodity prices and the continued strength of the Canadian dollar. “For every 1-cent increase in the value of the Canadian dollar, the industry experiences a drop in annual net mining revenues of about $25 million,” Waterland added.

During a recent press conference, Waterland and mining executives Wayne Lenton and Walter Segsworth expressed concerns about the flight of investment capital to foreign countries such as Chile, Mexico and Papua New Guinea. “Every major company based here (Vancouver) and a growing number of juniors are taking on projects in Latin and South America and elsewhere,” Lenton said. “The movement of money to other parts of the world is real, and it’s troublesome to those of us who live in British Columbia.”

Lenton said the province is now the “highest taxed” in Canada. Because 12 mines are expected to cease operations by the year 2000 in British Columbia, Waterland said the industry must be allowed to quickly generate new mines in order to continue its economic contribution as the second largest industry in the province’s industrial sector.

Concern was also expressed about declining exploration expenditures in the province because junior companies, the traditional explorationists, are having a tough time raising risk capital. The Mining Association noted that combined capital, exploration and development expenditures were $387 million in 1990, a decrease of $58 million or 13% over the prior year. Exploration and development expenditures fell from $177 million in 1989 to $142 million in 1990.