While the current business outlook remains uncertain, PwC Canada, in its new BC Mines Report, says the British Columbia mining industry is in a good position to withstand volatility due to prudent spending over the last few years and strong environmental, social and governance (ESG) practices.
BC Mine 2019 ESG: Resilience and Opportunity in Uncertain Times, reports the ESG work that has already been established in the Province has the potential to create an internationally-recognized ‘Made in BC’ label.
PwC’s most recent global CEO survey also indicated that environmental, social and governance (ESG) issues are a growing priority for business executives, including those in the mining industry.
PwC’s most recent global CEO survey indicated that ESG issues are a growing priority for executives
These issues are even more relevant in light of the covid-19 pandemic, which has brought attention to issues—such as health and safety, community engagement and environmental impacts—that will only rise in importance in the future.
“High environmental standards, strong relationships with communities, and the unwavering commitment to health and safety, will help BC mining companies succeed in uncertainty,” says Mark Patterson, BC Mining Leader, PwC Canada.
“BC mining companies are in a good position to build on their successes by further embedding resilience into their business models,” he added.
Financial results
The BC mining sector posted price volatility and falling revenues for the year. Gross mining revenues fell to C$11.4 billion in 2019, down from C$12.4 billion in 2018.
It was a solid start to the year by the BC mining industry, but revenues declined due to a weaker outlook for global economic growth ahead of the covid-19 crisis.
Average prices for British Columbia’s key mining commodities showed a mixed result compared to a year earlier.
Metallurgical coal and copper saw year-over-year decreases in 2019, falling 10% and 8%, respectively. Gold saw increases of 10% compared to 2018.
The 2020 forecast for metals and minerals continues to be mixed with the expectation that prices for metallurgical coal and zinc will continue to fall and copper will rise slightly. Gold and silver prices are expected to continue their upward trend.
In the near term, the covid-19 pandemic will continue to dampen the outlook for the prices of many of the key metals and minerals produced in the province, according to PwC.
“No question, 2020 is going to be a challenging year from a results perspective, in terms of revenue and profits,” said Patterson.
However, Patterson said BC’s industry was fortunate that it was declared essential and never fully shut down during the pandemic.
Tax credit
In 2019, the BC government made the mining flow-through share tax credit and the BC mining exploration tax credit permanent.
Exploration and development expenditures were C$277 million in 2019, reflecting an increase from C$248 million the year before driven mostly by greater exploration and development activity at gold projects in the province.
Despite slightly lower revenues, total contribution to government coffers rose to C$1.1 billion in 2019 from C$953 million in 2018.
There were 11,784 people working in direct jobs at mining companies surveyed in the province in 2019, down slightly from 11,930 in 2018.