Monday, October 29, 2012

The changing nature of mining in BC

BC used to be home to a mining industry that was dominated by the metals sector but since 2008 the coal industry has been the dominate part of the mining industry in BC in terms of revenues.    I am not sure this has really sunk into the public's mind but we have to understand what it means to us to have our mining industry dominated by coal production.

There are four broad areas of the mining industry in BC
  • Metal mines - gold, silver, copper, zinc, molybdenum and lead
  • Coal mines 
  • Industrial minerals - sulphur, barite, lime, cement, pumice, gypsum, zeolites and a host of others
  • Construction aggregates - sand, gravel and stone
Most industrial minerals and construction aggregates are from smaller scale operations without large scale workforces and much of the materials are used in BC.    Before 1979 the value of coal produced in BC was less than these two mining sectors combined.

Since the late 1980s BC has normally produced between 23 and 27 million tonnes of coal per year.   Coal mining is up in dollar values and not in quantity of coal produced, yet.   With the numerous new mines being proposed for the North East, BC could very well see a significant expansion in coal production in BC.

Historically BC was not much of a coal mining centre even though we had our own coal barons in the form of the Dunsmirs.   The historical industry reached a peak in 1910 with just over 3 million tonnes produced which happened during some lean years for metal mines in BC.   By 1960 coal mining was less than 5% of the value of the BC mining industry.

The modern BC coal industry ramped up in the 1970s going from less than one million tonnes in 1969 to over ten million in 1979 with value of production rising by 8000% over the same time.   The rise in value of the metal mining sector over the same time was 350%.

In terms of revenues, the metal mining sector was normally 30-100% larger than the coal sector from 1987 to 2007.

The coal sector increase in value comes in part because of the rise in the value of coal.   At the same the metal sector has seen production of some metals drop to production levels not seen since the 19th century.
Only molybdenum and copper did not see dramatic drops in production the last few years.

What all this means is that BC is getting very dependent on mining coal for government revenues.  Combine this with natural gas and oil revenues and we have a government that is setting itself up for a potential crash should more countries take the idea of climate change seriously.

Globally we will potentially become a target of the climate change movement if the provincial government is so dependent on coal, oil and gas.   The carbon tax in BC may be lauded by many, but it does nothing to deal with the production and export of the carbon based fuels.   Maybe the time has come for BC to consider applying a carbon tax on the coal produced in BC, something in the range of $30 to $50 a tonne.

Table of value of various sectors of the BC mining industry from 1980 to 2011

Industrial Metal total construction aggregates Coal Total mining revenues
2011 $456,734,763.00 $2,095,597,004.00 $349,023,032.00 $5,691,021,000.00 $8,592,375,799.00
2010 $348,512,304.00 $2,191,323,516.00 $372,892,236.00 $4,253,436,000.00 $7,166,164,056.00
2009 $283,057,000.00 $1,888,083,285.00 $303,095,604.00 $3,297,307,786.00 $5,771,543,675.00
2008 $695,681,553.00 $2,589,610,944.00 $378,205,491.00 $3,738,496,000.00 $7,401,993,988.00
2007 $424,109,938.00 $2,887,070,973.00 $347,180,884.00 $1,948,999,000.00 $5,607,360,795.00
2006 $363,206,871.00 $3,248,374,777.00 $273,732,745.00 $2,105,270,000.00 $5,990,584,393.00
2005 $364,087,860.00 $2,441,988,135.00 $278,118,675.00 $2,299,634,000.00 $5,383,828,670.00
2004 $354,618,471.00 $1,955,515,694.00 $238,521,017.00 $1,190,920,000.00 $3,739,575,182.00
2003 $336,096,928.00 $1,353,068,391.00 $226,300,499.00 $971,517,000.00 $2,886,982,818.00
2002 $309,692,978.00 $1,287,959,868.00 $230,541,229.00 $1,034,862,000.00 $2,863,056,075.00
2001 $295,985,001.00 $1,394,462,073.00 $216,625,413.00 $959,292,000.00 $2,866,364,487.00
2000 $284,146,412.00 $1,571,163,102.00 $223,914,400.00 $812,073,000.00 $2,891,296,914.00
1999 $246,407,790.00 $1,183,003,686.00 $218,524,113.00 $796,903,000.00 $2,444,838,589.00
1998 $245,494,740.00 $1,483,720,831.00 $208,078,660.00 $955,990,000.00 $2,893,284,231.00
1997 $249,376,474.00 $1,495,314,962.00 $195,365,474.00 $1,106,880,000.00 $3,046,936,910.00
1996 $251,072,820.00 $1,537,248,261.00 $189,223,177.00 $1,026,580,000.00 $3,004,124,258.00
1995 $249,220,932.00 $2,016,377,674.00 $204,133,515.00 $968,270,000.00 $3,438,002,121.00
1994 $236,907,624.00 $1,354,350,790.00 $180,323,789.00 $860,900,000.00 $2,632,482,203.00
1993 $228,700,638.00 $1,198,412,727.00 $166,060,668.00 $822,250,000.00 $2,415,424,033.00
1992 $211,629,900.00 $1,501,696,726.00 $157,130,231.00 $706,300,000.00 $2,576,756,857.00
1991 $289,960,960.00 $1,510,942,029.00 $159,101,891.00 $989,510,000.00 $2,949,514,880.00
1990 $305,483,271.00 $1,622,514,307.00 $163,300,174.00 $1,000,615,000.00 $3,091,912,752.00
1989 $278,307,289.00 $1,828,638,602.00 $177,847,749.00 $1,058,990,000.00 $3,343,783,640.00
1988 $247,060,966.00 $1,961,595,563.00 $142,034,875.00 $974,400,000.00 $3,325,091,404.00
1987 $230,258,476.00 $1,557,322,358.00 $160,950,917.00 $947,860,000.00 $2,896,391,751.00
1986 $210,233,807.00 $1,200,415,825.00 $126,861,497.00 $973,767,000.00 $2,511,278,129.00
1985 $215,399,383.00 $1,080,462,099.00 $138,110,277.00 $1,089,675,000.00 $2,523,646,759.00
1984 $197,919,044.00 $1,086,328,701.00 $124,154,204.00 $1,016,985,000.00 $2,425,386,949.00
1983 $169,352,732.00 $1,192,373,393.00 $139,540,000.00 $573,962,000.00 $2,075,228,125.00
1982 $175,094,270.00 $1,142,075,461.00 $96,446,000.00 $619,900,000.00 $2,033,515,731.00
1981 $180,322,174.00 $1,397,118,688.00 $108,272,000.00 $540,800,000.00 $2,226,512,862.00
1980 $217,816,167.00 $1,473,558,832.00 $139,992,056.00 $445,430,000.00 $2,276,797,055.00
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