The Future Dynamics of the BC Mining Sector

Essay by infosysUniversity, Bachelor's October 2006

download word file, 3 pages 5.0

British Columbia (BC) is a key player in the global mining industry with enormous mineral resources. BC is one of the world's main producers and exporters of many minerals and metals, such as coal, copper, molybdenum, gold, silver, lead and zinc. Currently, BC ranks third among the Canadian provinces, after Ontario and Quebec, in terms of the total value of mineral sales, excluding oil and gas.

Future factors might positively impact the demand for BC minerals

Over the last few years, both the supply and demand for BC minerals have shifted. Demand, which is defined as the volume of minerals that will be purchased at various prices per tonne, has experienced a significant shift to the right. This shift can be ascribed to a variety of factors, including:

- Strong mineral prices driven by the high demand in China.

- Expectations that China is becoming a world economic power.

- Changes in BC housing construction - people tend to buy high-rise apartment buildings which boosts BC mineral demand.

- The impact of the 2010 Olympics on infrastructure development. Construction of roads, rails, trains and power facilities creates demand for copper, metal and coal.

Future factors might negatively impact the demand for BC minerals

The mining industry is subject to high sunk costs. The demand for minerals can be elastic, or perfectly elastic (horizontal). This is because the price for minerals is set within global markets; hence, demand will fluctuate within the world market.

The following factors might cause the demand shift back to the left:

- The rapid rise in both fuel costs and the value of Canadian dollars.

- The future mineral scarcity.

- The environmental impacts of mining.

- The safety of miners.

- The issue about how to dispose of mineral and land waste.

Government options that...