B.C. mining companies get break on hydro

Struggling B.C. metal and coal mines will be able to defer up to 75 per cent of their power costs for two years within a five-year period, Minister of Energy and Mines Bill Bennett said Friday, in a program to be administered by B.C. Hydro.

Speaking at an event in Williams Lake, Bennett said deals struck by companies that apply for deferrals will be negotiated as commercial transactions with the utility with deferred amounts to be repaid, with interest, once commodity prices recover. The measure will deliver “immediate and meaningful relief to mining companies,” that have largely exhausted options for cutting costs, said Karina Brino, CEO of the Mining Association of B.C.

“There is a significant risk that some of these [mines] may not be able to continue to operate unless they continue to find ways to contain costs,” Brino said.

B.C.’s mining sector has seen six mines suspend operations over the past two years and continued depressed commodity markets threaten further downsizing as it girds to weather a downturn that is stretching into its fifth year.

“The industry is not looking for a handout,” Brino added. “What we are doing is trying to continue our commitment to British Columbia,” in maintaining jobs and being a “key economic factor in the province.”

Bennett said the measure is aimed at helping mines “stay open as long as possible, hopefully until commodity prices bounce back.”

The amount of assistance will be capped at the equivalent of 75 per cent of power costs over a 24-month period, but companies will be encouraged to try borrowing other funds before tapping the B.C. Hydro program. The program is expected to be in place for five years.

Bennett said the commercial terms will involve deferred amounts accruing interest at a rate of eight per cent, the amount Hydro normally charges on accounts that are overdue longer than 30 days. However, companies with lower credit ratings will be dinged with a 12 per cent interest rate.

B.C. has eight coal and metal mines in operation right now, which directly employ 7,500 workers, the ministry reported, and Brino said the spinoffs of that activity raise the number of jobs supported by mining activity to 30,000.