The Government's Action: Smart Economics Or Scared Politics?
By Peter Caulfield
07 Oct 2008 at 02:00 PM GMT-04:00
resourceinvestor.com
The British Columbia provincial government breathed new life into hydro line to mineral-rich “golden triangle;” it's an announcement praised by mining industry, but panned by a pundit as “political rescue plan”
VANCOUVER (ResourceInvestor.com) -- British Columbia Premier Gordon Campbell recently announced the province will re-start the environmental assessment process and First Nations consultation for a northwest transmission line along Highway 37.
The premier, who made the announcement during his address to the annual meeting of the Union of BC Municipalities (UBCM) in Penticton, called the move the first step toward building a power line that has the potential to generate billions of dollars in capital investment, create thousands of new jobs and open economic opportunities on a global scale in the northwestern part of the province.
The province had cancelled work on an environmental assessment for the transmission line in late 2007 when plans to build a copper mine at Galore Creek, a potentially large consumer of power from the line, but the only one for the foreseeable future, were halted due to escalating construction costs.
Richard Neufeld, Minister of Energy, Mines and Petroleum Resources told Resource Investor the province has already spent $7-8 million on environmental assessment and First Nations consultations and was set to spend another $10 million-plus now. Neufeld said it would take “about a year” to complete the assessment.
The environmental assessment is the first stage of the project and must be complete
before construction begins. The line is expected to cost around $600 million and generate more than 2,000 megawatts of electricity per year. The province is looking for a private sector partner to help pay for the project.
The 287 kilovolt line will extend 335 km from Terrace to Meziadin Junction and north to Bob Quinn Lake, providing access to the electricity grid for customers while supporting the economic diversification of the area. Currently, the electrical power grid along Highway 37 ends at Meziadin Junction to the north and Stewart to the west.
Political sleight of hand?
But some British Columbians are sceptical about the government's change of heart. For example, North Vancouver-based economist and provincial government watcher David Schreck – and a former representative of the opposition New Democratic Party (NDP) in the provincial legislature – calls the government announcement “pure politics.”
“It's a political rescue plan for Campbell,” Schreck told Resource Investor. “The announcement is probably the result of the NDP catching up to the Liberals in the polls.
If the economy were going well, the preparations for the hydro line would be prudent planning. But in the current economic climate, the government will probably have to wait for a long time to find a private sector partner who will share the costs of building the line.”
An August 2008 online poll by Angus Reid Strategies reported the opposition NDP first in BC voters' preferences with 41 percent, followed by the government Liberals with 38 percent and the Green Party with 14 percent.
The poll results, if accurate, represent a major change in the province's political landscape. The BC Liberals defeated the NDP in 2001, taking 77 out of a possible 79 seats. The party was re-elected in 2005 with 46 seats compared to 31 for the NDP. A provincial election is scheduled for May 2009.
One of the reasons for the Campbell government's fall from grace is arguably the provincial carbon tax, which came into effect in July 2008. Although it has been generally well received in the province's cities, it is very unpopular in rural areas, including the region where the transmission line is slated to be built.
The carbon tax is part of the BC government's goal to reduce greenhouse gas emissions by one-third by 2012. The tax, which adds 2.4 cents per litre on gasoline and other fuels, is slated to rise to almost eight cents per litre by 2012. Rural communities complained the tax falls disproportionately on their residents. Compared to cities on the Lower Mainland and Vancouver Island, they face colder winters and longer driving distances.
At the same UBCM meeting, Campbell announced a grant program for communities to refund the money they pay in carbon tax after members of the organization had voted to ask him to soften the impact of the tax.
But the mining industry is all smiles
Although the government's decision to breathe new life into the transmission line project might be seen to be the right decision for the wrong reasons, the local mining industry is delighted at the news, whatever the motivation.
Rimfire Minerals Corporation [RFM] has three projects in the so-called golden triangle in northwestern BC. Rimfire president and CEO Jason Weber told Resource Investor the announcement gives investors a measure of comfort.
“It reduces the perception that our projects in northwestern BC are in a really remote, out-of-the-way part of the province,” he said.
Laureen Whyte, Vice President, Policy and Sustainability of the Association for Mineral Exploration British Columbia, told Resource Investor, “We're very pleased. It's something we've been asking for for more than a year. The power line is important to the long-term foundations for economic development in the region, mining included. The northwest is still one of the most attractive areas in the province for mineral exploration.”
Pierre Gratton, president of the Mining Association of British Columbia, told Resource Investor, “We're thrilled. It's what we've been looking for all along from the government and the premier responded.”
The MABC Report on the Electrification of the Highway 37 Corridor cited 10 potential mining projects in the northwest triangle. According to the report, the power line, when completed, has the potential to attract more than $15 billion in investment, create 10,700 jobs and generate $300 million in annual tax revenues to governments. |
