Jul 06 2009
Old King Coal
Old King Coal
PricewaterhouseCoopers recently released its annual British Columbia Mining Survey, which provides a succinct review of the some of the economic trends of the local mining industry. There are also some comments on environmental and social issues, however the focus is on finances. This is particularly interesting in light of this year’s economic downturn. What was striking about the report is that BC’s mining industry, overall, has not suffered a downturn, but rather, based on the answers of the 40 (aprox) respondents, gross mining revenues increased by $1.5 billion to $8.4 billion in 2008, up from $6.9 billion in 2007. This is largely because of spikes in coal prices and increased demand. Coal has been an important part of BC’s economy for many generations, but has rarely gets attention from the general public. Coal-bed methane projects have gained exposure, yet there seems to be some apathy around coal mining.
Another interesting note in the report, that may not be common knowledge, is that the largest expense of the industry is related to transportation. The PwC report notes that in BC this cost amounted to $1.2 billion (comprised primarily of rail costs of $612 million and ship costs of $171 million).
About the same time as the report came out, the BC government scheduled carbon tax increase kicked in, raising price of CO2e emissions to $15 per tonne of CO2e emissions. The carbon tax is expected to help cut B.C.’s carbon footprint by about 5% by 2020, well short of its 33% goal. It turns out that rail transportation does not get taxed under the carbon tax system, as inter-jurisdictional rail transportation can apply as a registered user for tax exemptions. This presents a huge cost saving for mining industry that relies so heavily on this form of transportation, however the question remains whether this can therefore be a contribution towards sustainability or “smart living”, as proposed under the BC plan.
The carbon tax is one answer towards building a more sustainable future. However, there seem to be many catch-22’s in the solution. 25.5% of the world’s electrical generation in 2004 was from coal-fired generation . According to the United Nations Intergovernmental Panel on Climate Change (IPCC), the burning of coal is a major contributor to climate change and global warming. Yet we see that BC industries are prospering, staying alight from financial downturn due to increased demand for coal. It will be important to continue to monitor the gas tax and mining industry relationship to understand the connections between the social, environmental and economic pillars of sustainability at the local, provincial and global level.