Kootenay East MLA and Minster of Energy and Mines, Bill Bennett, made an announcement on Friday that can have a big impact on the future of mining in the province.
From Williams Lake, Bennett announced that B.C. mines will be able to defer 75 per cent of their power and energy bills for two years. If mines choose to defer their power costs, they will enter into a legal contract with BC Hydro that stipulates they will pay back the fees with interest. If every mine were to participate in the offer, it would amount to a total of $330 million in deferred power costs.
“After four or five years of very low commodity prices and a steady decline in the price of copper and coal in particular, it was becoming readily apparent that many of our 13 operating mines were going to be faced with a decision as to whether to continue operating and employing the people that they employ or close and wait for commodity prices to come back up,” said Bennett to the media. “We were asked to look for any ways that the government might be able to help in terms of operating costs at the mines. There were a number of different ideas. The only thing that really made sense for it, where it was not a subsidy and where the taxpayer wasn’t essentially on the hook for the program was to allow mining companies to defer 75 per cent of their power costs for up to 24 months or two years.”
Bennett said there would be two interest options for repayment: a lower payment of prime plus five per cent and a higher interest rate of 12 per cent. The payment will depend on the financial abilities of a specific mine.
“If there are any mines out there that can borrow money still, and there aren’t very many if there are any, but if there are, they can borrow money at a reasonable rate, they will be expected to do that. But if they want to avail themselves of the program, they would pay the higher rate of 12 per cent,” he said.
Bennett underlined the point that the people the government was hoping to help most with this initiative were mine employees, not shareholders or management of mines.
“Another thing I want to say right up front is that we are not doing this for the corporations, we are not doing this for the shareholders, we are doing this for the people who work at these mines. There are 30,000 people in this province who depend on mining,” he said. “The reason we are doing this is to help these companies make the decision to stay open as long as possible while these commodity prices are low so people can continue to be employed and can continue to put food on the table at home.”
Similar programs have been utilized before, under both the Social Credit party in the 1980s and the NDP in the 1990s. Bennett said this initiative differed from its predecessors’ as it was less like a subsidy and more like a commercial agreement.
“In both of the cases of the Social Credit government and the NDP government, their programs looked a lot more like a straight up subsidy. The program that we have designed here is specifically designed to be on the basis of commercial terms and that is why it is a deferral, it’s not a grant or a gift or a subsidy,” he said.
When asked about the risks of a mine closing and being unable to pay back the deferral, Bennett said BC Hydro, the government and the mine would “sit down” and figure out a solution. He added that he didn’t anticipate any mines to go insolvent.
Nic Milligan, Community and Aboriginal Affairs Manager at Teck, said the mines in the Elk Valley are happy the government is active in supporting them.
“We appreciate any steps by the provincial government to support the mining industry during these challenging market conditions,” he said. “We look forward to learning further details of this program.”