British Columbia’s mining policy performance: Improving BC’s attractiveness to mining investment
British Columbia’s mining industry is cyclical and responsive to global market forces, but policy remains an important factor in maximizing the benefits of mining. Part 1 of this study reviews the recent history of mining in the province and examines the links between policy factors and exploration investment. Part 2 uses data from the last five years of the Fraser Institute Survey of Mining Companies to identify which policy areas have been most deterrent to mining investment.
The role of uncertainty as a deterrent to mining investment is common to the four main investment barriers identified. Uncertainty creates risk for mining investment by decreasing investor confidence in their ability to recoup and profit from their investments. Mining is already an inherently risky endeavor, with a lengthy and time-consuming process to discover and develop mines and move them into production. Bringing a new mine into production is also costly, with profitability subject to volatile and cyclical commodity prices, variable input costs, and currency exchange rates. Policy uncertainty and instability can compound risk for mining companies and threaten the viability of projects.
The paper concludes with recommended policy changes to improve the attractiveness of British Columbia for mining investment, specifically, recommendations to reduce uncertainty concerning disputed land claims; recommendations to reduce uncertainty concerning which wilderness, parks, or archeological sites will be protected; recommendations to reduce uncertainty concerning environmental regulations; and recommendations to reduce regulatory duplication and inconsistencies.
In recent years, British Columbia has made progress towards greater policy certainty. This is reflected in mining survey results and in a decline in investment that has been deterred due to the four key factors reviewed. However, further improvements are needed to maintain competitiveness and to help sustain the exploration investment necessary for the long-term success of this sector.
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