Lower commodity prices impacted the profitability of the B.C. mining industry last year. Further, the continued drop in the price of key metals and minerals, particularly metallurgical coal and copper, led to reduced revenues and margins, finds the PwC BC Mining Industry Survey.
Aggregate gross mining revenues fell to $8.2 billion in 2014, compared to $8.5 billion in 2013. Net income before taxes came in at $288 million, down from $1.4 billion in 2013, amid a drop in prices for key metals produced in the province, particularly coal.
Spending also fell, as companies continued to hunker down and weather the ongoing market volatility. Capital expenditures, for example, fell to $1.5 billion, compared to $1.8 billion in 2013.
2015 looks to be another challenging year for metal and coal prices. While some metals will do better than others, miners will continue to manage their costs to reflect the ongoing downturn in the cycle, and are expected to treat any price recovery with great caution.
The impact of several mines being put into care and maintenance during 2013 and 2014 will also be seen in the 2015 numbers. While the position of these mines isn’t good news for the economic growth in B.C.’s mining industry, other mines do continue to move toward production. What’s more, in 2014 exploration and development expenditures from survey respondents increased to $234 million, which is an increase from $185 million in 2013, but below the $305 million spent in 2012.
Many miners are also holding up relatively well, despite lower prices for their commodities. PwC’s latest Junior Mine Report, which looks at the top 100 mining companies by market capitalization on the TSX Venture Exchange, showed the environment is tough for juniors today, but their grit and determination could soon pay off.
“B.C.’s mining sector is not showing any early signs of improvement in 2015,” says Mark Platt, partner and leader of PwC’s B.C. mining practice. “But investment in the mining industry must continue, despite today’s challenging conditions. Miners need to keep exploring if they are to find the discoveries today that will be developed into the mines of tomorrow. This is the only way to ensure the industry remains competitive in the long term.”