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Province of British Columbia
NEWS RELEASE
For Immediate Release
2016MEM0002-000167
Feb. 5, 2016
Ministry of Energy and Mines
Government takes action to keep mine workers on the job

WILLIAMS LAKE – Minister of Energy and Mines Bill Bennett today announced action to help keep thousands of B.C.’s metal and coal mines workers on the job by allowing mining companies to temporarily defer a portion of their hydro bills – supporting families and communities during the current slowdown in the sector due to low commodity prices.

“Rural communities across B.C. depend on the high-paying jobs that their mines provide residents,” said Bennett. “We are in the midst of a challenging time for the sector and this will provide some temporary support to help the mines stay open as long as possible, hopefully until commodity prices bounce back.”

Under the five-year term of the program, which will be delivered by BC Hydro, companies operating metal and coal mines in B.C. will be able to defer a portion of their BC Hydro electricity payments. The amount any mine will be allowed to defer is capped at the equivalent of up to 75% of its electricity costs over two years of the program. As commodity prices recover, the mines will repay the amounts deferred, plus interest.

“With Family Day right around the corner, I think it’s important to remember that mining provides thousands of families with good paying jobs,” said Cariboo-Chilcotin MLA Donna Barnett. “This industry is the economic lifeblood of many communities in this province.”

Low copper and coal prices have put operations at a number of British Columbia mines at risk and some have already been forced to reduce production and employee levels. There are currently eight metal mines and five coal mines operating in the province, employing approximately 7,500 workers. These metal and coal mines generate hundreds of millions of dollars in economic spin-offs in local communities.

While this program can’t guarantee mines won’t eventually go into temporary care and maintenance, it will help mines stay open for as long as possible.

“This offers immediate and meaningful relief to mining companies facing significant power costs during a steep economic downturn,” said Mining Association of B.C. president Karina Brino. “This is an important measure that will help keep mines open and support an industry that provides over 30,000 direct and indirect jobs for people in this province.”

Mines will be encouraged to borrow funds from other sources, if they can, before deferring a portion of their power bills. Companies with relatively lower levels of debt will pay an interest rate of 12%. Others will be charged the interest rate that BC Hydro currently charges to accounts over 30 days – prime plus 5%, or about 8% annually.

“It’s been 12 years since we re-opened the Gibraltar Mine and we now employ more than 600 people who live here in the Cariboo Region – largely in Williams Lake, Quesnel and 100 Mile House,” said Gibraltar mine general manager Richard Tremblay. “We are invested in our employees and these communities. Gibraltar spends roughly $1 million every day to operate, most of which goes directly into the local economy and this flexibility from government will help us continue to operate.”

Each company that chooses to participate in the program will be required to enter into a formal agreement with BC Hydro.

Learn More:

For more details about mining in British Columbia and its economic impacts visit:

Metallurgical coal prices: https://www.flickr.com/gp/bcgovphotos/5F55Lp

Copper prices: https://www.flickr.com/gp/bcgovphotos/Md1HD4

Map of operating mines in British Columbia: https://www.flickr.com/gp/bcgovphotos/e2n9e0

Impact of mining on communities: https://www.flickr.com/gp/bcgovphotos/4kz2fA

A backgrounder follows.

 
Media Contact:
 
Suntanu Dalal
Media Relations
Ministry of Energy and Mines
250 952-0628
 

 
Province of British Columbia
BACKGROUNDER
For Immediate Release
2016MEM0002-000167
Feb. 5, 2016
Ministry of Energy and Mines
Government moves to help protect thousands of mining jobs

The province’s metal and coal mines generate hundreds of millions of dollars in economic spin-offs in local communities, including expenditures by suppliers and mine employees. For example, it is estimated that Gibraltar spends about $100 million annually in the B.C. Interior.

The threat of closures is being caused by the drop in copper and metallurgical coal prices. Reduced economic growth in Asia, particularly China, has reduced demand for copper and steelmaking coal which has had a significant effect on prices. Copper prices have fallen to US$2.10/lb in December 2015 from a high of nearly US$4.00/lb in early 2012. In the same period, metallurgical coal has dropped from US$220/tonne to under US$90/tonne.

Electricity makes up 10% to 15% of total costs for metal mines. Power costs are less significant for metallurgical coal, at about 5% of total costs.

There are eight metal and five coal mines currently operating in B.C. These mines directly employ more than 7,500 workers.

List of the metal and coal mines in B.C.: https://news.gov.bc.ca/files/Rate_Relief_BCHydro.pdf

This measure is intended to assist operating mining companies while commodity prices remain low.

The amount any mine will be allowed to defer is capped at the maximum accumulated deferral rate, equivalent to up to 75% of electricity costs over two years of the program. As commodity prices recover, the mines will pay a surcharge up to 75% above the standard rate to pay back the amounts deferred, plus interest.

Similar programs have been used in British Columbia before. The Economic Development Electricity Rate Discount Act and the Critical Industries Act were implemented during the 1980s as a response to BC Hydro having surplus power and to support industry as it emerged from a recession. And, in 1997, the government of the day implemented the Power for Jobs Development Act to provide specific industries with a preferential development power rate based on available surplus power.

In each of these cases the programs provided a direct subsidy to industry and the taxpayers assumed the bulk of the risk.

 
Media Contact:
 
Suntanu Dalal
Media Relations
Ministry of Energy and Mines
250 952-0628
 

 
Connect with the Province of B.C. at: www.gov.bc.ca/connect