Column: some economic bright spots ahead for Cariboo

The mining industry posted a solid year

Although the Cariboo experienced some economic challenges in 2017, our region had a generally favourable year compared to the past few years. NAFTA renegotiations, the summer wildfires, and layoffs at Site-C impacted jobs in the forestry, tourism, and construction sectors. However, the mining industry posted a solid year as prices for copper and gold stimulated economic activity, which helped to offset those losses.

The forestry industry is a mainstay of our economy and had a challenging year in 2017. According to CPABC’s Regional Check-Up report, layoffs in forestry and logging were responsible for most of the 1,300 job reductions in the forestry, fishing, mining, and oil and gas sector. The wildfires kept loggers out of the woods and dampened other forestry-related activities. In addition, wood products manufacturing, our region’s primary manufacturing industry, experienced a reduction of 200 jobs due to a decline in demand from the U.S., dwindling stocks of mountain pine beetle-killed wood, and temporary mill shutdowns. Furthermore, a fire that destroyed a sawmill in McBride also put 35 people out of work. However, some of the job losses in wood products were offset by new ones in paper products manufacturing as international demand for pulp increased in 2017.

The construction industry reduced its workforce by 700 jobs due to layoffs at the Site-C Project in Northeast BC, a decline in commercial construction activity, and a slowing of major project development. According to the Regional Check-Up report, projects that are currently under construction make up almost five per cent of the total value of our region’s major project inventory, which was $10.2 billion in 2017. This translates into a significant number of projects either proposed or on hold. With the provincial government’s commitment to continuing on with the Site-C project and the federal government’s support for the Trans Mountain Pipeline Project, it is anticipated that these projects will be bright spots for our region’s construction industry as it provides workers to these projects, even though most related activity may be outside of the Cariboo.

In contrast, our region’s mining industry fared reasonably well. Higher prices for some metals, in particular gold and copper, stimulated mineral exploration and increased overall output at our mines. The Bonanza Ledge gold mine east of Quesnel re-opened in 2017, creating about 90 direct jobs and spin-off employment at local businesses. Although both the Mount Polley and Gibraltar mines were forced to temporarily scale back their operations due to the forest fires, production increased at both mines compared to 2016. In addition, the Mt. Milligan open-pit copper-gold mine north of Prince George experienced some unexpected maintenance issues, which reduced mine output below target.

Looking forward, what could we expect for our region? The ongoing softwood lumber dispute with the U.S. and the management of our region’s timber supply will continue to be the top challenges for our forestry industry. However, lumber prices are expected to remain high in 2018, and plans to further diversify into new markets may mitigate some of the anticipated losses. Prices for the Cariboo’s key metals, gold and copper, remained high in early 2018, and the price of molybdenum also increased, pointing to a promising year ahead for our mining industry.

Stan Mitchell, CPA, CA is a partner at KPMG LLP in Prince George. The CPABC Regional Check-Up report is available online at: www.bccheckup.com.

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