Commodity prices have been dropping for the past five years, pressuring B.C. mining budgets and operations.
The continued drop in the price of key metals and minerals, particularly metallurgical coal and copper, has led to a number of mines in B.C. being put into care and maintenance until prices recover, finds the annual PwC B.C. Mining Industry Survey for 2015.
Despite difficult market conditions, some B.C. companies are advancing projects, a sign that the worst could be over.
The PwC survey found aggregate gross mining revenues fell to $7.7 billion in 2015, compared to $8.2 billion in 2014. Cash flow from operations was the same as 2014 at $1.7 billion. As a result of ongoing market volatility, capital expenditures declined to $1.2 billion in 2015, compared to $1.5 billion in 2014.
In 2015, the average U.S.-dollar price for key mining commodities produced in B.C. fell compared to a year earlier, and are down significantly from record or near-record highs five years ago. Since then, China’s economy has slowed and its demand for coal, copper and zinc has dropped.
Copper, B.C.’s second-largest commodity by revenues, was hit hard in 2015. The price of copper averaged US$2.50/lb in 2015, compared to US$3.12/lb in 2014. That compares to early 2011, when copper traded at a record of just over US$4.60 per pound.
Metallurgical coal prices were hovering around US$84 per tonne in the spring of 2016. The price of metallurgical coal has been on a downward slide since reaching a record of around US$330 per tonne in 2011, which is when major flooding in Australia created supply shortages. Since then, a slowdown in Chinese steel production has decreased demand for the steelmaking ingredient.
There is optimism, spurred by a recent uplift in gold and silver prices. While investment and output are down, the sector has been working on initiatives to help ease the pressure on the industry overall. For example, a program was announced by the B.C. government in early 2016 to allow certain operating mines to defer up to 75% of their power bills for two years.