Mining industry results for British Columbia in 2005 are "nothing short of spectacular," according to an annual survey by accountancy firm PricewaterhouseCoopers. Strong global demand helped push net income for the mining industry to $1.84 billion from $871 million in 2004 - the highest levels reported in the 38-year history of the survey. The biggest driver of the results was metallurgical coal, while copper was also a strong performer.

Metallurgical coal generated US$1.95 billion in sales for British Columbia miners in 2005, an increase of $990 million over the previous year. Total metallurgical coal shipments were down 4 percent, at 24.0 million metric tons, but were more than offset by a 90 percent increase in the average price of the commodity. Copper saw a 28 percent average price increase in 2005 and a 32 percent increase in shipments from British Columbia. The impact of increases in commodity prices, which are in U.S. dollars, was partially diminished by the strengthening Canadian dollar.

A total of 43 participants responded to the PricewaterhouseCoopers survey, up from 40 in 2004. These included 18 operating mines, one smelter (Teck Cominco's Trail), and several companies with exploration, development and reclamation projects.

Total industry cash expenditures for 2005 were $5.2 billion, an increase of $1.2 billion or 30 percent over the previous year. "Rising costs reflect increased activity at existing and newly restarted operations, coupled with the upward pressure on operating supplies and transportation costs that global demand for mining products and consumables has produced," the survey says.

Outward transportation largest cost

The largest individual component of industry costs is outward transportation, including rail costs, shipping costs and wharfage fees. Transportation costs increased by 24 percent or $198 million to $1.0 billion compared to $826 million in 2004. Expenditures on machinery, equipment and construction materials increased by $100 million to $264 million in 2005, while direct tax payments increased by $260 million to $445 million in 2005, reflecting the improved profitability of the industry.

The average number of people employed by the British Columbia mining industry increased to 7,071 in 2005 from 6,442 the previous year, according to the survey. After-tax return on shareholders' investment increased dramatically from 29.4 percent in 2004 to 54.1 percent in 2005. Exploration and development expenditures of those companies that participated in the survey increased from $73 million in 2004 to $148 million in 2005.

Molybdenum saw a 49 percent increase in net revenues in 2005, from $398 million to $592 million. Meanwhile, net revenues from zinc, lead, gold and silver decreased, despite price rises, because smaller quantities of these metals were shipped from British Columbia. They all saw decreases in shipments of between 16 and 22 percent.

"The earnings reported in 2005 attest to the potential of the industry," the survey concludes. "But one must remember that these earnings are depleting existing reserve and resource bases. If it is to continue to share in the resurgence of the global mining industry, British Columbia must continue to identify and develop new projects."