– Mark Platt, CPA, CA is a partner at PwC in Vancouver and is the BC Region Mining Leader for PwC. The 49th annual British Columbia Mining Report is prepared by PwC and can be found here. The CPABC Regional Check-Up report will be available online June 2017 at www.bccheckup.com.
NORTHERN BC – As a resource-based economy, Northeast BC has experienced some significant ups and downs over the years. After a few years of economic expansion, the region’s economic growth slowed and hit a sharp downturn last year.
According to the CPABC Regional Check-Up – Northeast BC, an annual economic report published by the Chartered Professional Accountants of British Columbia, 2016 was a “perfect storm” of low commodity prices, and investment decisions continued to stall on multi-billion dollar projects in the region.
In fact, there was a decline of 2.8 per cent in the region’s total value of major projects. This led to a loss of 1,000 jobs collectively in both the goods and service sectors. As a result, the region’s unemployment rate jumped 3.8 percentage points to 9.7 per cent, which was unprecedented within the past decade.
However, a bright spot appeared towards the latter half of the year. A weak Canadian dollar and recovering metallurgical coal prices led to an increase in the province’s overall mining revenue in 2016. According to the 49th annual British Columbia Mining Report, prepared by PwC, this led to an improvement in net mining revenue, which increased by $1.0 billion to $7.3 billion in 2016.
These improved market conditions benefitted Northeast BC’s coal mining industry and led to the re-opening of both the Brule and Wolverine coal mines. This has brought new hope to Northeast BC, as the region’s economy had been hit hard by the most recent downturn in commodity prices. The re-opening of the Brule mine created 170 jobs in the vicinity of Chetwynd. And with the re-opening of the Wolverine Mine just west of Tumbler Ridge, another 220 jobs were added to the region.
“The opening of the Wolverine Mine by Conuma Coal is the best Christmas present Tumbler Ridge could have asked for,” says Don McPherson, mayor of Tumbler Ridge, in a news release in December 2016. “We have had a tough three years, and this will put people back to work and improve our economic outlook.”
Conuma, a Canadian company owned by West Virginia’s ERP Compliant Fuels, which now owns the Brule and Wolverine coal mines, also expects to re-open the Willow Creek mine this summer. According to the PwC report, once all three mines are in full-operation, Conuma would employ approximately 700 people in the region. Activity at the three mines will also generate some spin-off business activity and employment in the region.
While there are still other mines yet to re-open in Northeast BC, the recovery of coal prices and the restart of the Conuma projects is bringing renewed optimism. According to the CPABC Regional Check-Up – Northeast BC, the first quarter of 2017 saw a turnaround in job creation.
Total employment in the region grew by 700 jobs, with positive gains in both the goods and service sectors. This, along with a decline in the size of the labour force, helped bring the region’s unemployment rate down to 6.5 per cent.
Continued improving commodity prices should benefit the region’s economy. If prices continue to improve, we may see the re-opening of Anglo American PLC’s Trend mine and Teck Resources Ltd.’s Quintette mine in the future.
