British Columbia is on the cusp of a mining boom.
The provincial government's environmental approval this week of Taseko Mines Ltd.'s $800-million copper-gold Prosperity project adds to a growing slate of industry developments set to bring some much-needed vigour to the local economy.
Prosperity, scheduled for construction this summer, joins the $440-million Copper Mountain Mining Corp. project, which is already under construction and set to pump out copper and gold next year. Terrane Metals Corp. is ready to start building its $915-million Mt. Milligan copper-gold mine this spring.
The biggest project of them all - the proposed multibillion-dollar Galore Creek copper-gold mine by NovaGold Resources Inc. and Teck Resources Ltd. - is also on the verge of reality. The mine was shelved in late 2007 due to soaring costs, and NovaGold barely skirted defaulting on its debt in late 2008 during the financial crisis.
Now, buoyed by surging gold and copper prices sparked by the global economic recovery, NovaGold and Teck are working toward a goal of starting construction in 2011.
At Taseko, chief executive officer Russell Hallbauer had watched the company's stock collapse to less than $1 in 2008 from a peak of around $6. It has steadily recovered alongside rising commodity prices, and Friday, a day after the province issued environmental approval for the Prosperity development, the shares jumped 16 per cent to $5.17.
"It's been wild," said Mr. Hallbauer.
"The industry mood is radically better. This is a big, big deal for the province."
Like many political jurisdictions, B.C.'s provincial budget is deep in the red. Mining has long been an important sector for the province, but new mine construction has been a long time in the making. The last new mine was built more than 10 years ago. In the 1990s, mines in the province were shutting down because of low commodity prices.
The province's Liberal government, elected in 2001, made the mining industry an economic priority.
Environmental controversy and poor relations with first nations communities have slowed development, but companies eventually managed to assuage concerns over open-pit projects that will scrape copper and gold from the earth.
In the case of Vancouver-based Taseko, whose Prosperity project is about 125 kilometres south of Williams Lake in the province's interior, the plan to drain a popular fishing lake for the storage of mine tailings garnered significant opposition from the local first nation and environmental groups. Taseko will now be required to build another lake near the one it plans to drain and stock the new site with fish.
The B.C. government said Prosperity is expected to generate $340-million annually for the province's economy, as well as provide Victoria with $400-million in revenue over the predicted 20-year operating life of the mine.
"When gold breaks $1,100 [U.S. an ounce] things are looking pretty good," Energy and Mining Minister Blair Lekstrom said.
Copper, a metal in heavy demand by China and used widely in manufacturing, has also soared. In the 1990s, it generally fetched less than $1 (U.S.) a pound. Today, copper is at about $3.40 a pound.
Prosperity will be successful at a copper price of $1.65 and gold at $650, Mr. Hallbauer said. (The company still needs federal approval for Prosperity, but expects to receive a green light in the next several months.)
Analysts are bullish on B.C.'s mining outlook. "The projects in British Columbia stand out because there are not a lot of copper projects coming on in major copper producing areas like Chile and Peru," said analyst Peter Campbell of Jennings Capital Inc. in Toronto.
At Vancouver-based NovaGold, the company is spending this year working on detailed plans for Galore Creek, a happier prospect than the financial implosion it avoided during the crisis.
"Compared with a year ago, we're much more relaxed," said Rhylin Bailie, manager of investor relations. "It was a nasty world for mining companies."