B.C. allows miners to defer electricity bill payments The Government of British Columbia, via B.C. Hydro, has provided a temporary life preserver of deferred electricity bill payments for mining companies in the province struggling to stay afloat in rough economic waters. The aid is worth a total of $330-million owing to B.C. Hydro if all mines in the province take advantage of the program, which gives companies the opportunity to defer 75 per cent of their power costs for 24 months. Premier Christy Clark announced at the Association for Mineral Exploration British Columbia’s (AME BC) annual conference in late January that she is working on the plan with energy and mines minister Bill Bennett and finance minister Mike de Jong, which will be taken to cabinet this year. Low commodity prices, particularly copper and metallurgical coal – the two main commodities in B.C. – contributed to the decision.
“It was pretty clear that companies were not going to be able to remain operating if prices went down any lower,” said Bennett. Continuing low copper prices forced Imperial Metals to announce it was closing its open-pit Huckleberry mine as of August 2016, and cutting the number of employees to 100, down from 260. In light of the recent announcement, Imperial Metals is now investigating ways to keep Huckleberry open. Similarly, Teck Resources may benefit from the new measure after facing challenges to its cost-reduction program, owing in part to higher electricity costs. “We appreciate any steps by the provincial government to support the mining industry during these challenging market conditions,” said Teck spokesman Chris Stannell in a statement to CIM Magazine. “Similar programs have been initiated in past mining down cycles, as electricity costs are one of the largest single costs for mines.”
A dropping dollar somewhat shielded B.C. companies from the low commodity prices that yielded low mineral tax profits, but not enough to make a difference. “We landed on electricity costs because that’s about the only lever that the government of B.C. has to assist with operating costs,” said Bennett. He stressed that granting the deferral is not a gift and will have no impact on the provincial budget. The legal relationship of the deal is between mining companies and the public utility of B.C. Hydro. The province is acting only as facilitator. B.C Hydro will charge any amount not paid in deferrals at an interest rate of prime plus 5 per cent, which is the rate B.C. Hydro charges for their plus30 days overdue accounts. There is no payment schedule, but it is a five-year program. At the end of five years, direct commercial arrangements will have to be made with B.C. Hydro for payment terms of overdue accounts. – Leah Kellar
Anglo American exits coal, cuts iron ore assets Anglo American revealed in midFebruary the details of an “extensive, but essential” restructuring that will see the mining giant reduce global assets to 16 from 45 and downsize its workforce by 60 per cent. The company will focus on its most competitive sites in diamonds, platinum group metals and copper, announced CEO Mark Cutifani in a video released by the London-based company on Feb. 16. “We are taking decisive action to sustainably improve our cash flows and materially reduce net debt,” said Cutifani, detailing the plan to pull out of coal and iron ore in order to free up $3 to $4 billion in 2016. The company is attempting to cut its net debt to less than $10 billion this year. However, financial ratings companies Standard & Poor’s Financial Services and Moody’s Investors Service downgraded Anglo’s debt to junk status following the news, citing concerns 16 | CIM Magazine | Vol. 11, No. 2