North of 60 Mining News - The mining newspaper for Alaska and Canada's North

British Columbia Minister of Energy and Mines Bill Bennett reported that the province is allowing mining companies to temporarily defer a portion of their hydro bills, an action aimed at keeping thousands of British Columbia's metal and coal mines workers on the job 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 the province will be able to defer a portion of their electric bill.

The amount any mine will be allowed to defer is capped at the equivalent of up to 75 percent of its electricity costs over two years of the program.

As commodity prices recover, the mines will repay the amounts deferred, plus interest.

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 percent.

Others will be charged the interest rate that BC Hydro currently charges to accounts over 30 days - prime plus 5 percent, or about 8 percent annually.

While this program can't guarantee mines won't eventually go into temporary care and maintenance, it aims to help them 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." 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.

"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 Donna Barnett, British Columbia legislative assembly member, Cariboo-Chilcotin.

"This industry is the economic lifeblood of many communities in this province." There are currently eight metal mines and five coal mines operating in the province, employing roughly 7,500 workers.

These metal and coal mines generate hundreds of millions of dollars in economic spin-offs in local communities.

"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 General Manager Richard Tremblay.

Gibraltar is expected to be among the first mines to utilize the power cost deferral program, according to Taseko Mines Ltd., operator and 75 percent owner of the southern B.C. copper mine.

"Electricity is one of Gibraltar's most significant expenses, accounting for nearly 10 percent of the mine's total operating costs," Taseko President and CEO Russell Hallbauer explained during a Feb. 9 statement announcing the company had signed a cost deferral agreement with BC Hydro.

"This cost deferral program has the potential to reduce Gibraltar's annual spending by up to C$20 million, or roughly C15 cents per pound of copper production, at the current copper price of approximately US$2.10 per pound, effective this month."

Author Bio

Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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