The last bricks of coal from the Quinsam mines near Campbell River were hauled out of the ground last week. The once-mighty industry, with more than 150 years of history on Vancouver Island, will vanish once the processed ore is shipped out and the mine slips into care and maintenance.
Gary Gould, Quinsam Coal Corp.’s general manager, keeps hearing that the B.C. economy is leading the country and that there are jobs aplenty for skilled workers. “It’s hard to listen to that,” he admits. Brutal, really, when you are busy overseeing the company’s final shifts.
British Columbia’s coal companies have been hammered by sustained low commodity prices and, for the thermal coal producers on Vancouver Island, shrinking markets as the world looks for cleaner fuels.
But it is not an isolated patch of trouble in an otherwise bright outlook.
The province’s resource industries are the weak link in the economy right now.
Right across the resource sector – mining, forestry and oil and gas – weak commodity prices are expected to continue for the coming year.
Government finances have recorded slumping resource revenues – a $180-million drop in revenue forecasts just in the first half of the fiscal year.
Karina Brino, president and CEO of the Mining Association of British Columbia, says the picture has likely darkened in recent months.
The number of B.C. residents employed in mining declined by roughly 20 per cent since the Endako molybdenum mine west of Prince George shut down in December, 2014. Six other mines across the province have fallen silent since.
Like Mr. Gould, the cheery economic news doesn’t match Ms. Brino’s reality. “These companies are not leaving B.C.; they are hanging in and waiting for the cycle to turn. But we are not expecting things to shift any time soon.”
Throughout November and December, Premier Christy Clark spoke about her government’s intention to start paying dividends to British Columbia because years of austerity measures have paid off and the treasury is firmly in the black.
But Finance Minister Mike de Jong – who has always had a tendency to sound like Eeyore, the perennially depressed pal of Winnie the Pooh – has been fretting about consumer debt loads, rising housing prices and evaporating resource revenue.
After meeting with his economic forecast council in December, Mr. de Jong allowed that he was gratified that his province was leading the country in economic growth. But then he quickly pivoted to more familiar territory, looking past the silver lining to the dark storms on the horizon.
“Look at what is happening around us. The jurisdictions with which we trade – elsewhere in Canada, elsewhere in North America, elsewhere in the world – are all facing downward pressure,” he said. “If the people who are buying from you are not growing or are in recession, that will ultimately have an impact here.”
At a speech last week in Prince George, the Premier sounded more like her Finance Minister. “Every day when we go to work, there is way too much to risk for us to relax now,” she said.
She pointed to the impact of low oil prices on Alberta’s economic fortunes. “It’s really easy to just spend your way to prosperity, to spend your way to smiles, unicorns and rainbows when commodity prices are high, as they they have learned in Alberta after decades of spending without a second thought.”
This was a welcome pivot for Ms. Brino. “I am almost relieved government has been able to understand that things are pretty tight right now.”
But economist Bryan Yu of Central 1 Credit Union says the province is in good shape even with the pressures on the resource sector, which now makes up only about 10 per cent of the province’s economy. He sees solid growth, not just in the coming year but right through to 2019.
“Right now, what is driving our outlook is largely on the consumer side, the housing sector and demand for non-commodity products. The low Canadian dollar is driving up our tourism numbers and the TV and film sector,” Mr. Yu said. “B.C. is quite diversified.”
The Premier may have overdone the promise of dividends, creating the impression that this next budget will be filled with unicorns and rainbows. What is happening now, in advance of the delivery of the Feb. 16 B.C. budget, is an effort to rein in expectations.
Editor's note: A previous version of this story included in incorrect spelling of Bryan Yu's first name.Report Typo/Error