Mining Industry Review
Steve: Good morning, Liv.
Liv: Good morning.
We're meeting this morning with Liv Frederickson, who is? perhaps I should ask you. What is your area of responsibility here at the Fraser Institute?
I am the Mining Survey Coordinator at the Fraser Institute. It's my job to coordinate our annual surveys of mining companies. And what exactly is the annual mining survey?
We send a questionnaire to the presidents of companies involved in mining and mineral exploration around the world to get their opinions of the various policy regimes in countries where mining is performed.
And I guess the objective is to determine which jurisdictions are more friendly or less friendly to the mining industry?
Which jurisdictions are more friendly or less friendly to the mining industry and why. Which particular policy areas they can improve upon. Which particular policy areas they excel in. Therefore the countries with the best policy regimes can be used as templates for others to follow.
I guess in British Columbia there has been sort of an anti-mining bias within certainly government and certain segments of the population. Mining is perceived as taking a bunch of dirty stuff and making great big holes in the ground and polluting the air. What do you say to that line of reasoning?
There has definitely been a perception that British Columbia's government has been against mining, and certainly parts of the population here are opposed to mining. To a certain extent the mining companies are at fault. The way the mining companies behave in British Columbia has not been exemplary, so there have been a few examples of bad behavior on the part of the mining industry. But there is very much a hostility in the sense of unfriendliness toward the mining industry in British Columbia. What British Columbia has to do, both at the government and at the population level, is to decide whether or not they want mining companies to come and develop British Columbia. The mining companies are told, on the one hand, if you follow these rules and regulations you are welcome to come and mine and develop. And then when they get here the rules change, and they invoke all sorts of arbitrary clauses saying, "Well, yes, you think you're following the laws, but that's not really what we meant. And no, we're going to expropriate your land, and no you haven't properly had community discussions." And it's a hostile and difficult place for them to operate. Now, the local communities where? they're the ones whose environment is most directly impacted. And they are also the ones who derive the greatest economic benefit in terms of jobs and taxes and so forth. So what is the typical response in small communities? because most mining doesn't take place in the big, urban areas? so what kinds of dynamics or what kinds of attitudes are there in the smaller communities?
Again, it depends on the community; you can't make any blanket statements. But in a lot of smaller communities, especially with the forest industry starting to fail in British Columbia, would welcome new jobs and new development and a chance to keep their opportunities alive in their own home communities.
People sometimes look at mining as a boom and bust type of economic activity. If you look at Tumbler Ridge, for example, which went through a period of tremendous expansion and then became, I don't know if it's a ghost town but it's nowhere near the town that it once was. Has the mining industry been a bit that way and how stable a type of economic activity is mining?
Well it is boom and bust, but most industries are. And if you find a good mineral deposit, you can expect a thirty- to forty-year lifespan of the mine. And thirty- to forty-years of good solid economic activity would be considered quite a boom for a lot of small communities along the coast and throughout the province. So, if you can say, "We can come in and offer you forty years of good, family-sustaining employment," most communities would jump at the chance because nothing else buys them forty years to find something else to do when the mine closes down. And typically mining is a relatively high-wage sector?
Very high wage.
And also with a lot of equipment and maintenance and so forth there's a lot of ancillary activity in the community? Yes.
Now, how about the other side of the coin? The image is that the big, bad mining company goes and digs a big hole, and walks away. Is that true today?
Oh, absolutely not. They go in, dig a big hole and yes, mines are ugly. To certain people who find industrial development attractive they're not ugly, but generally speaking, aesthetically mines are not attractive things. However, they take place on .01% of British Columbia's land base and they're not usually that close to populated areas. So you pretty much have to go out of your way to find a mine, to say, "Oh, look! That's ugly!" Well, yes, but how far did you drive to find this mine that's ugly? And, when the mine shuts down there are all sorts of regulations in place, and again, the mining companies are usually pretty good corporate citizens these days. So they will rejuvenate the land and put it back in pretty close to the condition they found it.
Are there many examples that you can point to where an area was a mine and now looks like just part of the local natural environment?
To use another example that environmentalists don't like, in the interior there was a mine that was a mine for years. They closed it down. They built over it, oh no, they didn't build over it, they planted trees. It was beautiful. And the largest big horn sheep ever shot in British Columbia was shot in an area that used to be a mine. They restored it to wilderness levels to such an extent that it had thriving big horn sheep populations, and that's where the hunters go now. Which also doesn't make the environmentalists happy but it shows the wildlife are happy, which counts for something. ?is a good thing. All right, let me ask one more question again. Relating to the kinds of reasons why people might be opposed to mining, and that is the other perception that a mine? you think of run offs, you think of process, people think of Sudbury, they think of air polluted, water polluted? They have this whole scenario that perhaps has been promoted at them by the media or perhaps, as you say, or you said earlier maybe some of the mining companies early on weren't good performers. What's the status of that today? It's changed dramatically. There are so many regulations in place now, too many I would say, and there are so many watchdog groups keeping an eye on the mining companies. And the media is such that if they step a foot out of line, everyone knows about it, everyone clamps down. Therefore, yes, there is some risk. There's always going to be some risk. But technology has improved, behavior has improved, public relations has improved and mining companies recognize that they need to be good corporate citizens. They can't run amuck. There's people watching them, and people care about and value the environment now, probably including the mining companies. So, if we get back to BC now. If we compare BC to other jurisdictions in Canada or in the world, is BC a mining-friendly jurisdiction or a mining-unfriendly jurisdiction?
If you just look at British Columbia's mining policies, on our scale if nothing else, British Columbia consistently finishes last. We've been known to tie with Russia; we've been known to tie with Zimbabwe. Quebec, Ontario, Nevada, Chile consistently figure one through five. Australia is a good performer. Australia is friendly to mining communities. British Columbia is unfriendly to the point of being hostile.
Has that changed now with the new government?
No, not yet.
Mark: If we're on the list, if Chile and Ontario are in the top five, if we're last, how many jurisdictions are on the list? At last count there were forty-seven jurisdictions.
Mark: And we're forty-seventh? Actually I think we were forty-five last year.
And we have then lots of potential that could be developed?
We have some world-class deposits here. Windy Craggy, up in northern British Columbia, was considered a world-class copper deposit. The mining company, the exploration company came in, they found this copper deposit, they asked if they could develop it, they got green lights all the way. They invested millions of dollars, they said, "Okay. We're ready to go." And at the last minute, the government of the times, it was the early 80s, said, "No. We've changed our mind. We think there are environmental risks here. No. You can't develop that, I'm sorry. We're turning it into a park." And the mining communities said, "Well, do we at least get our investment back?" "No, I'm sorry you're out of pocket millions of dollars. Go mine somewhere else; we don't want you." And it's horror stories like that that have left just an appalled legacy in the minds of mining communities around the world. You can talk to people based in New Zealand, operating in New Zealand, and if you say British Columbia they remember Windy Craggy.
Now, how about the, well this isn't exactly mining. There's been a lot of publicity about offshore oil and gas up the north coast here. Does that come into your area or is energy resources a different area?
It's not really my area. But it seems that the government is favourable to?
It seems that some of the government is favourable.
Right.
British Columbia is very, the British Columbia government seems to be very much in favour of lifting the moratorium on offshore drilling. If you go to Ottawa, David Anderson, Minister of the Environment, seems less keen on lifting the moratorium. But the Natural Resources Minister seems in favour of allowing offshore drilling.
There seems to be a sort-of developing shortage of natural gas, or is that not so?
There's abundant natural gas. There's abundant natural gas, okay. Because in all of these things, if you can afford to do without then you don't go for it. But then if we do need certain things, and I guess the feeling with the mining is that as long as there were other places where people could go and mine, and if British Columbia had the standard of living, and that they had, for whatever reasons, ideological or otherwise, then they didn't mine here. Now is that changing? Do you think there's an increasing demand for the metal or an increasing need for the economic activity or changing ideology? Or do you think that British Columbia will continue to be an unfriendly place for the mining industry?
Quite honestly, I don't see it changing a lot in British Columbia yet. It may well at some time but with the growth of Hollywood North and the movie sector here, and technology of various sorts, mining companies don't need to mine in British Columbia and British Columbia doesn't appear to need or want mining. But isn't that imposing to some extent the ideology of the urban elites on rural communities who have, with the fisheries in decline and forestry in decline, they need these kinds of activities to sustain themselves. It absolutely is. But the way our democracy is set up the urban elites pretty much have their say.
And what is the market for your mining survey? Is it worldwide, or is it here in British Columbia? Who reads it? Who do you target with your survey?
Increasingly it's worldwide. It's certainly used across Canada extensively and throughout the United States, and Australia and New Zealand are big fans. We're getting increase in responses and interest throughout South America and hopefully, fingers crossed, we're going to start to get increasing responses in Europe. I just had the results of the survey published in a London-based, learned trade journal. So hopefully.
Do you survey the European countries as well? Is there much mining activity in Europe?
There is a fair amount. There's not a lot, but there's certainly some. How about new, I shouldn't say new countries, but developing places like China, or India and Indonesia, are they included in your survey? They're included in the survey and they are important mining destinations. Again because they're developing, they recognize the importance of high paying, developing industries. They want to use and exploit their natural resources in a way that will benefit the people in the country. Canada and the United States have, to a certain extent, progressed beyond needing to exploit their natural resources so they are more inclined to preserve them in their natural state for the betterment of humanity.
That raises another issue when you talk about preservation. I mean, there is not an infinite supply of copper or iron or any of these other minerals, and so the argument is always made that, "Well, we may continue to find them here, there and everywhere." There is a finite amount. And so whether we have two hundred years to go, or fifty years to go, or five hundred years to go; there is a finite amount. So therefore, should we not be rationing these in some way or should we not be trying to reutilize you know, recycle the product? What's your perspective on that issue? Well, to a certain extent, we do reutilize and recycle the products, certainly. But also remember that when you hear the numbers about a two hundred year supply left, they're talking about known resources. And as commodity prices increase, as they will do as the resource becomes more scarce, and as technology increases, we're always finding new reserves. There's been a two hundred year supply of copper left for the last fifty years because we're always finding new deposits, we're always developing new technology which allows us to develop and extract different forms of copper. Mark: I think also that people like to talk about how "This is going to run out and then what will we do?" People always, when they're forced to find a way, to find a new product, come up with new technologies, they manage to do so. So if it was copper that we're talking about, if we ran out of copper people would find something else to do the job that we now use copper for. They already have. For the longest time we used copper as in copper wiring for telecommunications here, telephone lines and what have you. And as copper became expensive and rare we turned to fiber optics. So now sand, effectively glass is what we're using to transmit telecommunications signals. And we're not running out of sand. No, it's very interesting. It's like the whole Y2K phenomenon. I mean a lot of the projections of impending crises or shortages? Who knows, we may be all wireless in the next fifteen years.
And the recycling concept: One story I've heard is that at the moment, one of the largest copper deposits in the world they're looking at extracting is the old copper wiring under New York City that they're not using anymore. They've turned to fiber optics, so there's probably a ton of old copper wire that's just sitting there. It could always be pulled up and reused for something.
So it might be possible to summarize the discussion we've had and bring it back to the principles of the Fraser Institute. And that is, if you let the market decide, the market will make more intelligent decisions than regulatory efforts by government.
Oh, absolutely!
And so, that while copper is a useful material, during the period where it is useful then we should be mining it. And when it's no longer required because something else has come along or because it's all of a sudden more expensive, then the market will find some other solutions. And generally speaking, as I think it was Ken Green said as an environmentalist, you should be human-centered. I think it's the only way to be an environmentalist. Obviously, everything is connected, so if you damage a portion of the ecosystem and it comes back to hit you on the head, then that's not a good thing. But it's not a good thing, not because you're interested in this little insect but because you are interested in the impact on human beings. And so if we are able to maximize our economic opportunity, using the market, we will probably end up being better off in terms of levels of economic activity, corresponding health standards, opportunities that people have in their lives, etc, etc. And I'm sure that's what's behind the interest that you have in the mining industry. Oh, absolutely!
And even when you're in the mining industry, using the mining industry to improve people's economic state will ultimately lead to an improvement in environmental quality. Wealthier people demand healthier environments. They go hand in hand.
Well, that's been very interesting. Thank you very much.
Mark: Thank you.
You're welcome.
