The Impact of Mining on British Columbia’s Economy
Posted by Jonathan Culley on 2/13/2012 6:30:40 AM
Highlights from the Mining Association of British Columbia’s Economic Impact Analysis
The Mining Association of British Columbia has released an Economic Impact Analysis, prepared by PriceWaterhouseCoopers LLP, which quantifies the impact of mining on British Columbia’s economy. Direct effects of mining on the economy in terms of output, jobs, and taxes were calculated and reported. In addition, an input-output approach was used to estimate the broader impacts of mining on the B.C. economy in 2010.
The mining industry spent nearly $5.2 Billion in British Columbia in 2010 for goods and services.[1, p.12] These expenditures were directly related to mining and were used for operations (materials, salaries), capital (land & mining rights, construction, machinery), exploration and development, environmental control (reclamation, waste permits), and public interest (donations, grants).
The economic benefits of mining extend beyond this direct spending however, since the purchase of these goods and services will stimulate further purchasing. For example, when a mining company purchases goods from a supplier, the supplier must purchase additional stock from others. Suppliers to the mining industry include heavy equipment, engineers, metal fabricating, machining, transport equipment, and water treatment.[1, p.7] The mining industry also uses various contractors and consultants for everything from construction to accounting.
The total economic impact of mining in British Columbia was estimated to be more than $8.9 Billion when these indirect and induced effects are included and contributed 2% of the province’s GDP.[1, p.12] Expressed as a ratio, this works out to $1.73 of total impact for every dollar spent by the BC mining industry. The estimated $4.7 billion added to the GDP through direct, indirect and induced impacts was broken down as follows[1, p.11-12]:
- Direct impacts - $2.73 Billion in direct expenditures from mining operations and activities
- Indirect impacts - $1.03 Billion in spending by contractors and other businesses providing services to the mining industry
- Induced impacts - $622 million stimulated by mining and supplier employees spending their earnings on goods and services “of which a portion can be attributed to the mining industry”[1, p.11]
British Columbia’s mining industry also contributes to government tax revenues. Direct tax contributions to all levels of government totaled $495 million with $37.3 million going to municipal governments, $223.2 million to the provincial government, and $234.5 million to the federal government.[1, p.12]
Using the input-output approach, the total tax revenue impact was $938.6 million in 2010. This included direct ($495 million); indirect ($253.3 million), and induced ($190.3 million) tax contributions to all three levels of government.[1, p.13]
The BC mining industry employed 21,112 workers directly in 2010. [1, p.12] These jobs included 8,195 workers at operating mines, with the rest working mostly in mine construction or in the transportation of mine output.
The employment benefit of the mining industry also extended beyond these direct jobs to create indirect and induced jobs. The indirect jobs were created as suppliers – such as contractors and engineering firms - hired new workers in response to spending by the mining industry. There were 16,590 indirect jobs created by B.C.’s mining industry in 2010.[1, p.12]
In addition, employees of mining firms and their suppliers used their salaries and wages to purchase goods and services (ex. restaurant meals and clothing). These purchases induced businesses to create an estimated 8,001 jobs.[1, p.12] The direct, indirect and induced jobs created by mining totaled 45,703 jobs or 2% of B.C.’s employment. [1, p.12 & 17] The commodities and minerals produced by mining are also crucial to other industries including steel making, manufacturing, construction, and pharmaceuticals.
Labour shortages are the most significant challenge to B.C. mining industry growth in the next five years, and 15,000 job openings are expected by 2017.[1, p.9].
1 PricwaterhouseCoopers, Economic Impact Analysis, 2011, Mining Association of British Columbia [cited 2012, January 9] Available from: http://www.mining.bc.ca/economic_impact_analysis2011.htm