President's Message - July to October 2013
President & CEO’s Message
Although most metal prices remain at or near ten-year averages, the past quarter of 2013 was characterized by significantly scaled-back or cancelled field exploration programs. While the overall markets may have hit bottom in June, many AME BC members, particularly the juniors, continued in survival mode due to the historic and unprecedented downturn in the venture capital market. As many of the 800 plus delegates who attended the Society of Economic Geologists conference held in Whistler from September 24 to 27 would attest, this is shaping up to be a critical year. The year 2013 will define for many in the industry their ability to build strategic partnerships, raise venture capital and private equity, enter into joint agreements and successfully explore, not just here in BC, but anywhere in the world. As eternal optimists, these difficult times also present an opportunity for our members and for AME BC to step up even more as leaders and advocates for the mineral exploration and development sector in important public policy areas such as taxation, land access and security of tenure, permitting and community and Aboriginal engagement. Over the past three months, for example, AME BC has made its voice and perspectives on policy heard at the New Prosperity environmental assessment hearings, federal Energy and Mines Ministers conference, the Union of BC Municipalities convention, and in the annual provincial budget consultation process.
As outlined in the BC government’s Mineral Exploration and Mining Strategy of 2012, the BC-based mineral exploration and development industry must work to seize global demand and continuously compete for international investment. As such, this past summer, AME BC reinitiated discussions with the BC government about their tax policy, including relative tax competitiveness between jurisdictions. Since the BC Mining Exploration Tax Credit was first introduced in 2000, and the BC Mining Flow-Through Share Tax Credit was established in 2001, BC mineral exploration expenditures have grown from $32 million in 2001 to $680 million in 2012. While the overall growth in expenditures is positive, it’s very important to understand that the most of the expenditures are occurring at advanced mineral and coal exploration and development projects and not in grassroots exploration projects in BC. Mineral exploration, especially work undertaken by junior companies, is the lifeblood of the mining industry. Sustained investment in grassroots exploration and geoscience is required to discover new deposits. These will lead to advanced projects and ultimately new mines in British Columbia, such as Mt Milligan, a $1.5-billion open pit copper and gold mine developed by Thompson Creek Metals Company that employs 350 people north of Prince George. Construction of the mine started in late 2010, and the first ore was processed in August and shipped in September.
Many AME BC members, however, are unduly paying the increasing cost of consultation with First Nations during all phases of exploration, even though it is the duty of the Crown to consult with First Nations. In fact, a recent sample study by Ernst & Young found that the weighted average of consultation costs borne by representative companies as a percentage of their total exploration expenditures in 2012 was estimated at over 21%. This increasing cost of consultation is not currently defined as a qualifying expense under the BC Mining Exploration Tax Credit unlike expenses incurred in the course of prospecting, carrying out geological surveys, trenching, digging test pits or preliminary sampling. Given this, AME BC has recommended that the BC government change the definition of qualifying expenses eligible under the Mining Exploration Tax Credit to include expenses incurred as a result of consultation with local and First Nations communities. Also, the BC Mining Flow-Through Share tax credit expires on December 31, 2013, and AME BC has recommended that the BC government extend this tax credit to December 31, 2016 and consider making it permanent to encourage companies to explore for more in British Columbia.
Aboriginal relations and engagement continues to be a top priority area for AME BC and we are busy preparing to host another successful Aboriginal Engagement Forum and Gathering Place Pavilion at Mineral Exploration Roundup 2014. As well, the completion of AME BC’s new Aboriginal Engagement Guidebook will be a key deliverable for our membership. Members should also be aware that on September 19, 2013, the Supreme Court of Canada dismissed an application for leave to appeal the Yukon Court of Appeal decision in Ross River Dena Council v. Government of Yukon, 2012. At this time, the dismissal means that the Yukon must now adhere to the Court of Appeal decision for the Ross River area (southeast corner of Yukon) and incorporate consultation with First Nations in their mineral claim acquisition process and exploration work permitting. To be clear, the Court’s decision means status quo for British Columbia and for a majority of Yukon. Importantly, AME BC is intervening in the William v British Columbia case that will be heard by the Supreme Court of Canada in November 2013. Communications on this critical legal matter will reflect industry’s need for legislative and regulatory clarity, while recognizing the constitutionally enshrined rights of Aboriginal peoples in Canada, and our business reasons for recommending early and continuous engagement to our members.
Other key strategic focus areas for AME BC include membership engagement, public awareness and stakeholder education. On October 4, AME BC’s well-regarded Speaker Series luncheon event featured the Honourable Bill Bennett, Minister of Energy & Mines, as keynote speaker. To a sold out audience, Minister Bennett provided an update on government policy concerning current issues in the mineral exploration and development industry. As we heard from Minister Bennett, there is pressure from some communities in BC to amend the Mineral Tenure Act, which many do not realize was significantly amended in 2005 and again in July 2012. To help bring a more common understanding to this key issue, AME BC will be redoubling our public relations and communications efforts to explain the modern mineral tenure system and the lifecycle of mineral exploration and development in British Columbia.
And with much enthusiasm, preparations are well underway for AME BC’s Mineral Exploration Roundup 2014 conference, to be held from January 27 to January 30, 2014. This will be our 30th anniversary of Roundup and an opportunity to bid farewell to our long-time host, the Westin Bayshore, before we transition to our new home at the Vancouver Convention Centre East in 2015. Confirmed keynote speakers for Roundup 2014 include Derek White from KGHM, Martin Murenbeeld from DundeeWealth, Robert Quartermain from Pretium Resources, Walter Heneghan from Canadian Helicopters, Duncan Trapp from CHC Helicopter and Anthony Hodge from International Council on Mining and Metals. I look forward to seeing you there. Please visit http://www.amebc.ca/roundup/ to register.
On behalf of the staff and board of AME BC, I wish you a prosperous fall season and a safe day, every day, wherever this quarterly message finds you!
Gavin C. Dirom, M.Sc., P. Ag.
President & CEO
Association for Mineral Exploration British Columbia
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