VANCOUVER (miningweekly.com) – The British Columbia provincial government has released its Budget 2018 plan, confirming that the provincial flow-through exploration tax incentive will be extended for another year until the end of this year.
The mining flow-through share programme is seen as critical to reinforcing the province's competitiveness on the world mining stage. The incentive allows individuals who invest in flow-through shares to claim a nonrefundable tax credit of 20% of their British Columbia flow-through expenditures.
"Mineral exploration and development provide real and significant socio-economic opportunities and benefits to communities and First Nations in all regions of British Columbia, and are essential to discovering the metals and minerals required for a low-carbon future," Association for Mineral Exploration British Columbia (AME) president and CEO Edie Thome noted in a statement.
In its three-year revenue overview, the British Columbia government advised that it expects revenue from mineral taxes, fees and miscellaneous mining receipts to decline by an average 27% a year, mainly owing to the impacts of assumed weakening coal prices and increasing mine production costs, partly offset by the effect of rising copper prices.
Metallurgical coal spot prices rose significantly in 2017, reflecting short-term tight supply and transportation issues. Coal prices are forecast to decline over the three-year fiscal plan period as the short-term global issues that restricted supply are resolved.
The provincial government also provided C$2-million over the next three years to strengthen the mining oversight and energy roadmap initiative, building on the C$6-million-a-year base budget increase provided for mining oversight in Budget 2017. This additional funding is being provided to the provincial Ministry of Energy, Mines and Petroleum Resources to meet regulatory requirements at several tailings storage facilities at abandoned mines throughout the territory.
The provincial government also set aside C$4-million over three years to assist large carbon emitters in key transportation and industry sectors to adjust to economically choking low-carbon policies.
Meanwhile, the province expects natural gas royalties will rise by 57.9% in 2018/19, reflecting higher production volumes, decreased utilisation of royalty programme credits and higher prices for natural gas and natural gas liquids. Over the next two years, royalties are expected to fall by, on average, 2.4% a year, on expected declines in production volumes and increased utilisation of royalty programme credits, which will be partly offset by the effect of rising prices for natural gas and natural gas liquids.
The forecast assumes an average price of C$1.08/GJ at the plant inlet in 2018/19, up from C$0.96/GJ in 2017/18. This assumption is within the twentieth percentile of the private sector forecasters, continuing the prudence incorporated since 2013/14, government said.
Prices are forecast to increase over the next two years, averaging $1.17 in 2019/20 and $1.39 in 2020/21, consistent with the growth of the average of the private sector forecasts. Over the three year fiscal plan period, the projected natural gas prices average C$0.73 lower than the average of the private sector forecasters.
Further, government advised that natural gas royalty rates are most sensitive to prices in the C$1.22 to C$2.22 range, prompting it to expect the effective royalty rate to rise as prices increase, depending on the take-up of royalty programme credits.
Meanwhile, revenue from bonus bids and rents on drilling licences and leases is forecast to decline by 58.2% over the next three years, from C$376-million in 2017/18 to C$157-million in 2020/21. The decrease over the three years reflects declining deferred revenue and cash sales that are expected to average just C$10-million a year.
British Columbia also forecast 2.7% growth in revenues derived from electricity sales under the Columbia River Treaty, petroleum royalties and fees collected by the Oil and Gas Commission over the next three years. It expects petroleum commodity prices to increase owing to higher assumed Mid-Columbia electricity and oil prices.
The AME said it would continue to work with the British Columbia Energy, Mines and Petroleum Resources Ministry and its Minister, Michelle Mungall, to encourage exploration and development investment, as well as geoscience research and technical assessments in the province.
"We appreciate our working relationship with the Minister and her staff in supporting BC's socially responsible mineral exploration industry, which provides benefits for all British Columbians. We will continue to advocate for the government to provide the fiscal resources that are required to facilitate the Minister's mandate of creating a viable and sustainable future for the mineral exploration and development industry in British Columbia, an industry that all British Columbians can be proud of," AME chairperson Dr 'Lyn Anglin stated.
NO OIL, NO WINE
Meanwhile, British Columbia asserted its anti-Canadian oil sentiment, stressing at length how a potential oil spill outweighs the intergenerational economic opportunity exporting Canada's crude oil reserves presents.
"The potential of a diluted bitumen spill in British Columbia's pristine coastal waters poses a significant risk to our economy and our environment. Government committed to use every tool available to protect Britsh Columbia's interests against the significant harms an oil spill will cause.
"Our first step was to appear as interveners in a federal Court of Appeal hearing. We also engaged at the National Energy Board (NEB) to uphold provincial jurisdiction, including powers to oversee permitting and ensure that the environment and public safety is protected. We will continue to explore other ways to protect the interests of British Columbians against the significant harms an oil spill will cause," the minority provincial government stated.
The British Columbia government on Monday formally challenged Alberta's ban on imports of British Columbia-produced wines, in retaliation for its Western neighbour deploying stall tactics to prevent the critically important Kinder Morgan Trans Mountain pipeline expansion. The existing pipeline has been operating to world-leading standards for about 50 years, and a tripling of capacity is required to allow Canada, which holds the world's third-largest oil reserves, to reach new markets across the Pacific Ocean in the Far East.
Minister of Jobs, Trade and Technology Bruce Ralston initiated the dispute settlement process under the Canadian Free Trade Agreement (CFTA). The province has notified Alberta that it is formally requesting consultations under the CFTA regarding Alberta's actions to ban the sale of British Columbia wine. This will be the first formal dispute to occur under the new CFTA.
Earlier this month, Alberta Premier Rachel Notley established a task force of prominent Canadians to respond to what she termed "British Columbia's unconstitutional attack on the Trans Mountain Pipeline and the jobs that go with it".
Notley said Ottawa needs to step up and assert its authority to build approved intra-provincial economic infrastructure such as Trans Mountain.
"This is not a fight between Alberta and British Columbia. This is British Columbia trying to usurp the authority of the federal government and undermine the basis of our Confederation. Ottawa needs to say clearly and unequivocally that British Columbia's actions won't stand. Sadly, British Columbia decided to pick this fight with the country. No one wants it and it could end tomorrow, but as long as British Columbia continues, Alberta will fight for jobs in Alberta and speak up for a Canada that works," Notley stated.
Last week, the federally mandated NEB issued three decisions giving Trans Mountain the authority to start construction on the Burnaby Mountain tunnel entrance – part of the Westridge Marine Terminal property, in Metro Vancouver – to avoid potential impacts on migratory birds that could use that area later in the spring. The NEB also granted Trans Mountain relief from all remaining preconstruction conditions specific to the tunnel portal at Westridge Marine Terminal.
While Trans Mountain now has the NEB's regulatory approvals to begin work at the Westridge portal for the Burnaby Mountain tunnel, construction is not yet authorised along the rest of the pipeline route. Construction in those areas can start once the necessary preconstruction conditions have been satisfied, and the applicable portions of the detailed route are approved.
To date, nearly 56% of the entire 1 150 km detailed route has been approved by the NEB.
The expansion, if approved, will create a twin pipeline that will increase the nominal capacity of the system from 300 000 bbl/d to 890 000 bbl/d.
The existing line will carry refined products and synthetic and light crude oils, with capability to carry heavy crude oils.
About 73% of the proposed route will use the existing right of way; 16% will follow other linear infrastructure, such as TELUS, hydro or highways; and 11% will be new right-of-way infrastructure.
The project includes the reactivation of 193 km of pipeline; the construction of 12 new pump stations; the addition of 20 new tanks to the existing storage terminals in Burnaby (14), Sumas (1) and Edmonton (5); and the expansion of the Westridge marine terminal by three berths.