Mines across BC will be temporarily allowed to defer up to 75% of their BC Hydro Bill over two years.
Minister of Energy and Mines Bill Bennett announced the action today in Williams Lake.
“Any MLA, anybody, any person who lives in a community that has a mine close by understands the benefits that come from these mines. Now not everybody in Vancouver understands that and frankly one of the reasons why I wanted to do this in Williams Lake is I know that people here get it.”
Bennett says the province was approached by the sector asking for help with operating costs as commodity prices, mainly copper and coal, continue to fall putting jobs at risk.
“I established some principles for a program; if we were able to come up with a program, and the primary principle was that it couldn’t be a subsidy and it couldn’t fall on the back of taxpayers.”
Bennett says mines will be encouraged to borrow funds from other sources before deferring a portion of their bill.
The mines are expected to repay the amounts deferred, plus interest, as commodity prices recover.
Companies with relatively lower levels of debt will pay an interest rate of 12%. Others will be charged the interest rate that BC Hydro currently charges to accounts over 30 days-prime plus 5%, or about 8% annually.
The program will be in place for 5 years.
Bennett maintains that it is not too late for mines that have already taken a direct hit from low commodity prices, such as Huckleberry that announced yesterday it was ceasing all operations by August 31st, 2016.
“They will have the opportunity to defer their power costs up to 24 months. So if that power cost deferral was enough to make their mining operations feasible then they could conceivably choose to stay open. It’s really up to them.”
Each company that chooses to participate in the program will be required to enter into a formal agreement with BC Hydro.
Electricity makes up to 10% to 15% of total costs for metal mines, with about 5% of total costs for metallurgical coal.