5/12/05

Mining revenues hit record 3.49b in '04

Last year's B.C. total expected to be surpassed in '05

BY SCOTT SIMPSON
VANCOUVER SUN

Global commodity prices lifted the British Columbia mining industry to a record $3.49 billion in net revenues in 2004 - and this year will be even better, PricewaterhouseCoopers reported on Wednesday.

PricewaterhouseCoopers said in its annual survey of the B.C. mining industry that the earnings increase was fuelled by higher metal and coal prices - with coal possessing "staggering" earnings potential in 2005, according to mining practice leader John Bowles.

"It's the highest net income that has been reported in the 37 years that PricewaterhouseCoopers has done this survey," Bowles said.

"It's an unbelievable year and the biggest story of the year is that next year's survey will record an even better year in 2005."

Net income for 2004 was greater than the net income from the previous eight years combined, said Michael McPhie, president of the Mining Association of B.C.

Gross revenues reached $4.5 billion, compared to $3.6 billion in

2003, dividends to shareholders quadrupled to $448 million, and employment rose by 314 full time jobs, reversing a three year pattern of declines.

Coal accounted for 30 per cent of net revenue in the mining industry in 2004 - but that's expected to jump because the 2005 2006 contract price for metallurgical coal has increased from about $55 US per tonne to $125.

Bowles said metals prices, which were up anywhere from 13 to 206 per cent in 2004 depending on the commodity appear fairly stable at their current high levels for the short term at least.

"Metals prices ares staying where they are, and with coal, because we're shipping 25 million tonnes, it's going to have a huge impact on net revenue next year," Bowles said.

This year B.C. will also get a boost from a full 'year of operations of new mine operations that came on at the end of last year.

However, Bowles sounded a note of caution about the industry's ability to continue as a strong contributor to the provincial economy.

Last year the province attracted $130 million in exploration investment toward the discovery of new projects.

"Better commodity prices have certainly revitalized the industry, making existing projects more profitable and creating new life for older projects," Bowles said.

Bowles said British Columbia has the right geology to reward exploration investment with the discovery of major new mines to replace existing mines as they are depleted.

"Although the number of projects going through permitting is encouraging, few of them are truly new projects.

"To make the industry truly sustainable new projects will need to be brought on line.

"What we've got to do is find some really new world class mines. Ideally a new Highland Valley, or a new Sullivan. Sullivan ran for 100 years."

McPhie called 2004 "an extraordinary year for mining in British Columbia."

"What really demonstrates what'S happening on the ground in this province is that three new mines opened up in the latter part of 2004. This is the first time since 1998 we've seen anything like that," McPhie said.

"More importantly, B.C.'s share of exploration spending in Canada has improved, having grown from less than five per cent in 2001 to more than 12 per cent this past year, proving that the resurgence of new mining is being driven by more than just commodity prices."