By Carolina Curiel (ScrapMonster Author)
May 11, 2016 02:52:02 AM
VANCOUVER (Scrap Monster): The Downtrend in commodity prices has stressed the operations of B.C’s mining companies in 2015, said 48th Annual British Columbia Mining Survey Report released by PricewaterhouseCoopers LLP (PwC). According to the report, 2015 was another difficult year for the industry. Plunging commodity prices continued to put pressure on the budget and operations of companies in the region.
Difficult times
Prices of major commodities have been in a downtrend over the past five years. Key metals and minerals, metallurgical coal and copper in particular, witnessed significant downfall during this period. This has forced many mining firms to put many operations into care and maintenance mode until recovery in commodity prices. The spending on exploration and development activities took a hit during 2015.
Commodity prices
The average prices of key mining commodities produced in the B.C dropped sharply in 2015, when compared with the previous year. Copper saw biggest slide, with average prices dropping significantly from $3.12 per lb in 2014 to $2.50 per lb in 2015. The metallurgical coal prices which averaged around $330 per tonne during 2011, fell to under $90 per tonne during 2015. Gold average prices in 2015 at $1,159 per Oz were down considerably when matched with the record price of $1,900 per Oz reached in 2011. The average prices of Silver too have fallen sharply from $19.07 per Oz in 2014 to $15.71 per Oz in 2015. Also, zinc prices averaged at $0.87 per lb in 2015, in comparison with the average price of $0.98 per lb in 2014.
Mining Revenue
The gross mining revenue from survey participants was reported at $7.724 billion in 2015, significantly lower when compared with the revenues of $8.238 billion and $8.537 billion in 2014 and 2013 respectively. Net mining revenues too dropped to $6.289 billion in comparison with $6.760 million in 2014. The net mining revenues in 2013 had totaled $7.008 billion. However, net income before taxes surged higher to $715 million in 2015 from $288 million in 2014, mainly on account of severe cost cutting measures and curtailment of loss making operations during the year.
Expenditure
Capital Expenditure during 2015 totaled $1.2 billion, falling sharply from $1.5 billion in 2014. Also, exploration and development expenditures by participants rose to $320 million in 2015, as compared with $234 million in 2014. The Brucejack mine was the main contributor in the sharp rise in exploration and development expenditure.
Cash flows
The cash flows from operations held more or less steady at $1.7 billion when compared with 2014. However, they were significantly down when compared with $2.6 billion in 2013.
Job Cuts
The number of direct jobs in the B.C mining industry dropped sharply during 2015. The headcount of direct employees totaled 8,726 in 2015, dropping steadily from 9,954 in 2014 and 10,720 in 2013. The drop in jobs is mainly on account of either closure of operations of mines or due to many mines going into care and maintenance during the previous year.
Mine activities
According to the BC Ministry of Energy and Mines, 11 metal mines operated during at least part of the year in 2015. Coal was produced from 5 open pit mines and one underground mine on Vancouver Island. Nearly 30 industrial mineral mines and over 1,000 aggregate mines or quarries were in operation. The Mount Polley mine, owned by Imperial Metals resumed operations in August 2015. On the other hand, Nystar N.V.’s Myra Falls base metal mine and Barkerville Gold Mines’s Bonanza Ledge mine suspended operations during the month of June. Banks Island Gold Ltd.’s, Yellow Giant gold mine was shut during the month of July 2015.
Industry outlook
Despite difficult times, there is some optimism among industry participants that the worst is over for the B.C mining sector. Some mining companies in BC have forged ahead with new projects. BC’s industry has done an admirable job of withstanding the prolonged downturn in the mining cycle, PwC report notes.
