After a strong year in 2015, northwest B.C.’s economic growth slowed last year. According to the Chartered Professional Accountants of British Columbia’s annual regional check-up, our region’s unemployment rate increased, our population declined, and business activity declined due to low commodity prices and stalled LNG development in 2016.
The multi-billion dollar LNG projects proposed for the region spurred four years of growth. However, between 2015 and 2016, the total value of major investment in northwest B.C. declined by 4.1 per cent to $225.7 billion.
The future of B.C.’s softwood lumber exports to the U.S. is also unclear until a new trade agreement is signed. The Trump administration has introduced a tariff of up to 24 per cent on our softwood lumber exports, which may impact demand from south of the border. Luckily, northwest B.C.’s forest products also ship to Asia, primarily China and Japan, and these economies are expected to remain robust over the medium term, despite slowing growth in China.
Given these developments in LNG and forestry, any economic growth in the region will hinge on mining. Overall, B.C.’s mining industry saw signs of a comeback as commodity prices began to pick up late 2016 and into 2017. The stability of prices and a more optimistic outlook have led to an increase in mining investment.
Higher copper prices should help the recently opened Red Chris Copper and Gold Mine, which achieved its first full year of commercial production in 2016, as well as other mines in the region. The recently modernized smelter in Kitimat also ramped up to full production, perfect timing to take advantage of a rebound in aluminum prices. The Mount Milligan Mine, which produces copper and gold, celebrated its third year of production and successfully completed its ramp-up phase in early 2016.
In addition, construction at the Silvertip Mine south of the Yukon border was underway in 2016, and commenced operations in the last quarter of the year. Construction at the Brucejack Gold Mine is complete and is set for commercial production later this year, at which point the mine is expected to hire approximately 500 full-time workers.
As a resource-driven economy, there are many variables outside of our control that impact our growth prospects. Looking forward, if commodity prices continue on their path to recovery it would be highly beneficial for northwest B.C.
Partner at Edmison Mehr in Smithers