Wednesday, November 11, 2009

British Columbia is so bogged down in regulations, it is a miracle of bureaucracy the place exists at all

Liberals and NDP should get behind the mining industry


British Columbia has been faithful to the federal Conservative Party. In the election a year ago, it returned 22 Conservative MPs to the House of Commons and gave the party 44 per cent of the vote. Only nine New Democrats and five Liberals were sent to Ottawa from the province, drawing 26 per cent and 19 per cent of the vote respectively.

The Conservative ridings represent the heartland, the locus of B.C.'s vast resource wealth. Mining rules in these regions where deposits of gold, copper, zinc and coal have attracted people and investment for 150 years. The value of mineral sales in B.C. last year was $6.6 billion, and roughly 14 per cent of provincial exports, or $4.6 billion, was metallic minerals and fabricated metal products.

In 2008, the mining industry paid government $545 million in direct taxes, levies and payments related to employment. Speaking of jobs, mining companies employed 7,607 workers directly last year while the B.C. government figures the mineral and metal economy accounts for 28,000 jobs. And these are highly paid jobs. Average annual compensation in salary and benefits tops $112,000.

The provincial government seems to understand all this and has taken steps to enhance B.C.'s mining industry's competitiveness. For example, harmonizing the provincial sales tax with the federal goods and services tax, which the government has promised to do in July 2010, is expected to reduce the cost of building a mine by $10 million and cut operating expenses by $1 million a year. The province has also given a green light to a $404-million transmission line through northwestern B.C. that could create $15 billion in private investment. The federal government has pledged to cover $130 million of the cost.

Yet no major mines of sufficient size to replace the soon-to-close Kemess and Huckleberry mines have been opened in more than a decade. The main stumbling block is regulation; specifically, a duplicate approval process that delays projects for years.

B.C. has argued that Ottawa should leave regulation and permitting to the provinces to prevent delays in developing mines. But the federal government is dragging its feet, apparently because some provinces are not ready to take on that responsibility. B.C. boasts a relatively efficient environmental assessment process and there's no need for Ottawa to conduct its own. The federal government could simply rubber stamp B.C.'s rulings under a bilateral agreement -- of the sort it routinely negotiates with Quebec. The state of other provincial regulatory regimes need not be a factor.

Perhaps the Conservative government is wary of taking on the potentially controversial issue of relinquishing control over environmental assessments of mining projects while in a minority position. But other parties should see that it is in their interest to support the measure.
Outside the urban areas, NDP strength is in Skeena and the southern Interior. Skeena is home to Galore Creek, a property held jointly by NovaGold and Teck Resources, thought to be one of the world's largest undeveloped copper-gold-silver deposits. It is also the location of the Red Chris mine, approved by the province in 2005, but tied up ever since by the federal process and litigation.

In the southern Interior, Copper Mountain, with a reserve of five billion pounds of copper, could be producing 100 million pounds a year by 2011 if the approvals process can be accelerated.
The federal NDP should align itself with those who want to develop these mines and create highly paid, unionized jobs. Incidentally, the mining industry is the largest private sector employer of first nations workers in the province.

Similarly, the federal Liberals must recognize that many of their urban supporters depend on the mining industry for their Howe Street jobs. About 60 per cent of Canadian exploration companies are based in B.C., most with headquarters in Vancouver. It is the nation's capital for exploration financing. Thousands of consulting, accounting, banking, legal, engineering and other professional jobs are closely tied to the mining industry.

All parties have common cause in helping the mining industry overcome this bureaucratic barrier and support the minority government when it proposes to delegate environmental impact and other assessments to the province.

Additionally, as we've urged before, the province needs to set up a one-stop approvals shop, like the Oil and Gas Commission, to allow the mining industry to realize its full potential.

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