The Mining Suppliers Association of B.C. supports mining industry advocacy through a variety of initiatives; these are the B.C. mining industry’s current advocacy priorities.
MABC Study on the B.C. Mining Industry and Carbon Pricing
UPDATED: OCTOBER, 2020
On Friday, October 16, MABC released a new study prepared by Ed Mansfield which analyzes carbon taxation on mining in B.C. and competing jurisdictions. The study found that B.C. mining is at a significant competitive disadvantage relative to all competitors because those competitors either do not price carbon, or they protect their mining industries from increased costs due to carbon pricing and policies.
Mansfield’s report compared carbon pricing for B.C.’s aluminum, copper and steelmaking coal to those in competing jurisdictions, including the US, Australia, Chile, Russia and the Middle East. Key Findings include:
- 46 national & 32 subnational jurisdictions price carbon.
- At $40/tonne of CO2e, B.C.’s carbon tax is highest in North America & among highest globally.
- All jurisdictions with carbon pricing regimes, whether a tax or emissions trading systems (ETS), provide support for their Energy Intensive, Trade Exposed (EITE) industries to protect firms and workers and prevent carbon leakage. This includes every other Canadian province.
- By not protecting EITE industries, B.C. risks “carbon leakage,” when investment, industrial activity, and associated emissions shift to a jurisdiction with less stringent carbon pricing.
To avoid carbon leakage and job losses, MABC is advocating for targeted, transparent and temporary support to EITE industries. Specifically, MABC is asking government to:
- Modify the existing CleanBC Industrial Incentive Program (CIIP) so it applies to the carbon tax paid by mines, smelters and other EITEs below the $30/tonne CO2 e threshold (currently, only the incremental carbon tax paid above $30/tonne CO2e is eligible for the CIIP program).
By changing the CIIP, government can provide an equivalent level of support provided by other Canadian jurisdictions to level the playing field for BC’s mining industry while maintaining a price signal to incent emission reductions.
- BC Mining and the Carbon Tax: Helping the World Transition to a Low Carbon Economy, MABC
- BC Mining and Carbon Pricing, By Mansfield Consulting Inc, October 2020
Additional information can be found here: https://www.mining.bc.ca/carbontax
The B.C. Mining Industry in 2019
UPDATED: AUGUST, 2020
- Mining generated $12.3 billion in economic activity in 2018, supporting more than 33,000 jobs in every region of our province. The sector’s spend on goods and services injected almost $3 billion into more than 3,700 small and medium sized businesses in 215 B.C. communities. Strikingly, more than 1,200 of those businesses call Metro Vancouver home, earning nearly $1 billion for the region. The industry also made nearly $1 billion in direct payments to government in 2018, helping support public services we rely on.
- B.C. is Canada’s number-one producer of copper and steelmaking coal, number two producer of silver, and only producer of molybdenum. We’re also a significant producer of aluminum, gold, lead, zinc, and 20% of the world supply of Germanium, a critical component in thermal scan thermometers. Together these commodities account for 24% of our province’s exports.
- B.C. is a global mining centre. With one of the largest concentrations of mining-related professionals on the planet — from engineering, finance, accounting, programming, environmental and more — our expertise and services are in demand the world over.
- B.C. is a world-leading exporter of low-carbon metals and minerals essential to the low-carbon economy. B.C. has some of the lowest GHG-intensive mines and smelting operations in the world. Our products are essential and sought after for the production of electric vehicles, renewable energy infrastructure and consumer technologies like iPhones.
- Innovation and technology are key to mining’s success. The sector now employs artificial intelligence, big data, and electrification — in collaboration with B.C.’s clean tech and digital sectors — to conserve more, waste less, and reduce our environmental footprint. We are continuously improving our environmental performance while operating to some of the world’s toughest regulatory standards.
- Mining is a leader in advancing economic reconciliation with B.C.’s Indigenous peoples. Our industry is a major partner with Indigenous businesses, purchasing $265 million in goods and services from 120 Indigenous-affiliated suppliers in 2018. Today, more Indigenous people work in mining than in any other heavy industry.
- Mining has huge potential in B.C. With our province’s mineral wealth, skilled workforce, education and infrastructure assets, there is real opportunity for mining to help our economy recover from COVID-19 and create jobs, particularly for the young adults most affected.
- To help realize this potential, policymakers must focus on improving the fiscal and regulatory conditions in our province to enable our industry to compete and succeed in global markets.
Improving British Columbia’s Competitiveness as a Mining Jurisdiction
Mines are high-risk investments due to sizeable upfront capital requirements and long-lead times to achieve production and generate cash flows. The cost to operate a mine in B.C. is higher than in many other jurisdictions due to the characteristics of the resource and our geography. Fiscal and regulatory policies, therefore, can significantly help or hinder mining projects in B.C.
1. PRIORITIZE REGULATORY EXCELLENCE
Mining companies need a clear, predictable, and timely regulatory regime and an attractive fiscal framework that will facilitate the investment and investor confidence necessary to build and operate a mine or expand an existing one. These are the primary considerations to ensure B.C. remains a world class, globally competitive mining jurisdiction.
In the Minister of Energy, Mines and Petroleum Resource’s February 11, 2020, mandate letter from the Premier, Minister Ralston was directed to undertake a regulatory efficiency initiative to expedite permitting and reconciliation initiatives in British Columbia’s mining sector. The mining sector fully supports this initiative. Improvements to B.C.’s regulatory competitiveness that enable innovation, support reconciliation, and uphold the high standards of health, safety and environmental protection are crucial to sustaining B.C.’s existing mining operations, and to attracting investment for the mines of the future.
To ensure the B.C. mining industry can compete globally, and fuel the province’s economic recovery, the government’s “regulatory efficiency initiative,” the regulatory framework governing the mining sector, must be assessed for competitiveness on a priority basis. Processes should be optimized to focus on health, safety and environmental outcomes, performance indicators reviewed, redundancies removed, and measures taken expeditiously to ensure timely decision making and industry competitiveness.
2. SUPPORTING THE LOW CARBON ECONOMY BY LEVELLING THE CANADIAN PLAYING FIELD
B.C.’s mining operations are among the lowest GHG emission-intensive in the world. Increasing the market share of British Columbia commodities will help decrease global GHG emissions.
Energy intensive and trade exposed (EITE) sectors like mining sell products at prices set in international markets where there is currently no premium paid for low carbon metals and minerals. As price-takers in these global markets, miners are unable to pass their increasing production costs to customers.
Mining companies in B.C. support a price on carbon and have actively sought to reduce their GHG emissions for some time. However, B.C.’s main competitors—Australia, China, Chile, Peru, Russia, and the United States—do not price carbon, putting our mines at a competitive disadvantage in the global markets.
Other Canadian mining jurisdictions that compete with B.C.—Alberta, Ontario, and Quebec— have designed their carbon regimes to protect the competitiveness of their mines and their workers. B.C. mines should have the same protection afforded to mines and smelters in other Canadian jurisdictions, providing a neutral fiscal framework and placing B.C.’s industry and workers on a level playing field within the federation.
The B.C. government should make the necessary changes so the CleanBC Industrial Incentive Program is available for every dollar of carbon tax paid (i.e. below $30 per tonne), effectively aligning B.C. with the federal government’s output-based pricing system. This will increase our competitiveness and reduce carbon leakage risks while maintaining a price signal and its incentive to reduce emissions.
3. BC HYDRO RATE CERTAINTY
Electricity is one of the most significant operating costs mines pay. Since 2001, industrial electricity rates in British Columbia have increased by 70%. Government has recognized the importance of reliable, low-cost electricity to British Columbia’s competitiveness.
The mining industry is supportive of government measures that will best position BC Hydro to provide accessible, reliable, and competitively priced line power to mining operations. To achieve this the Province and BC Hydro must continue to identify and implement measures to reduce upward pressure on rates. This should include an examination of opportunities for alignment of federal, provincial, and utility incentive programs to encourage electrification.
Government should also consider new programs that would incent new mines and the expansion of existing mines through both low-cost electricity and a timely, low-cost interconnection process. Additional measures for consideration include: a review of how B.C.’s interconnection tariff compares to those in other jurisdictions (e.g. the split of interconnection costs between the new customer and the utility) and removing the Northwest Transmission Line Supplemental Charge to encourage electrification of new mines in Northwestern B.C.
4. ELIMINATE THE PROVINCIAL SALES TAX ON INVESTMENT IN PRODUCTION MACHINERY AND EQUIPMENT
When the B.C. Ministry of Finance introduced Social Service Tax (PST) exemptions for the purchase of certain production machinery and equipment (PME) used for mining, forestry, oil & gas and manufacturing it was not a comprehensive exemption. The exemptions were based on the physical location or use of the equipment, with ministry auditors artificially creating boundaries within a mine site, such as the “qualifying part” of a mine site. To qualify for the exemption, the PME must be used primarily and directly in the “qualifying activity.” These restrictions resulted in significant administrative costs to industry to monitor and measure the use and location of PME, and additional capital costs to purchase separate PME for different activities. The exemptions also placed a complex burden on government auditors, who need to track the different uses of PME to ensure those uses are qualified activities in qualified parts of the mine site.
Budget 2020 provided manufacturing and resource industries with a PST exemption for PME used for pollution control and waste management regardless of where it is used, which was a step forward in removing cumbersome geographic restrictions. However, it added an additional layer of complication to an already administratively cumbersome tax system, and some PME remains excluded from the PST exemption.
By removing the requirement to pay PST on PME at mine sites, both industry and government will realize significant savings by administering and auditing a less complex exemption. The PST exemption on PME should apply to all PME used on the mine site (as defined by the Mines Act).
For additional information on policy priorities for the B.C. mining industry, visit www.mining.bc.ca
For information on policy priorities focusing on mineral exploration in B.C., visit www.amebc.ca
For information on federal policy priorities for the Canadian mining industry, visit www.mining.ca