THE SEVENTIES Between a Rock and a Hard Place

Chamber Ofﬁce Photo Credit: AME BC

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he 1970s began on a positive prevent acid mine drainage. Government of capital gains and an end to certain tax note for the Chamber of Mines. scientists and fisheries experts concluded write-offs and exemptions. A few years TNewly elected president Len White however, that submarine tailings disposal later, a White Paper by Edgar Benson, fed- reported that 100 large companies and would be less harmful than land disposal eral finance minister, was released on how about 600 smaller ones were looking for (as would be confirmed by a study 24 they should be implemented. new mines in Western Canada, including years later) and the 50,000-ton-per-day The Chamber made strong represen- 50 oil-and-gas companies. mine began operations in 1971. tations opposing many of the proposed “We list 39 mines currently in pro- Island Copper was a harbinger of things tax changes to a House of Commons duction or close to it throughout British to come. committee in July of 1970, and again in Columbia and Yukon, having a total September, when Tommy Ellliott present- throughput of some 140,000 tons per ed the Chamber’s views. day,” White added. THE TAX MAN COMETH Other industries with concerns did the On the list was a porphyry copper depos- Meanwhile, the Chamber was busy same. On the other hand, the proposed it on northern Vancouver Island found in reviewing a stream of proposed legisla- tax changes found favor with those seek- 1963 by prospector Gordon Milbourne and tion with potential to curtail the mining ing “a more fair distribution of wealth” in optioned to Utah Construction and Mining. boom. Prospectors, mining companies keeping with Prime Minister Trudeau’s By 1969, Utah had enough resources to and Japanese firms with Canadian mining promise of a “Just Society.” plan an open-pit mine. investments all expressed concern about In late 1971, the federal government Island Copper became a magnet for “drastic” tax changes recommended by passed a bill that acted on some of the opponents, including Patrick Moore, a sci- the Carter Commission. Carter Commission recommendations. entist and one of the original co-founders Kenneth Carter, a Bay Street accoun- The three-year tax-free period for new of Greenpeace. Through public hearings tant, had delivered his six-volume report mines was withdrawn, with earned deple- and the media, Moore and other envi- in 1967. It concluded that the tax system tion to take effect at the end of 1976. ronmentalists challenged the company’s favored the wealthy and business interests Prospectors’ gains from the sale of proper- plans for underwater storage of tailings to over most workers, and called for taxation ties would be subject to capital gains tax,

AME BC 100TH ANNIVERSARY ISSUE although lottery winnings would not. It Harry Warren with prospectors, 1970s was a disappointing day for the Chamber. Photo Credit: AME BC

OUTREACH As negative newspaper and television reports about mining came to the Chamber’s atten- tion in 1971, members were dispatched to rebut false and misleading claims. The Chamber reorganized its committees that year, with each having a chairman, and also established an education committee. May Martin retired after 13 years of dedicated service to the Chamber. In 1972, the Chamber reported that the gross value of BC mineral production had reached a record $521 million while Yukon production had increased by 21.3% to $94 million. It was noted that one major mineral deposit had a “far employee at Cominco’s Trail smelter, was greater value per acre of land occupied appointed mines minister. He said no min- than any other basic industry,” and that ing venture would be permitted to start up BC mines only occupied a small portion anywhere in BC if it contributed to pollution. (0.025%) of the total land mass. “The whole province has become a The industry hoped this positive mes- clean air zone.” sage would be fairly considered by the The mines minister also hinted that Socred government, expected to win the royalties would be coming to ensure that 1972 election. But the Premier, now in the treasury received its “fair share” of the his seventies, ignored hints that he should exports of BC’s non-renewable resources. step aside to allow for party renewal. “The era of the free ride is over in the Times had changed. A warning that province.” “socialist hordes were at the gates” failed Hart Horn, Nimsick’s influential assis- to resonate, and for the first time in 20 tant, met with the Chamber and said that Ed Scholz years, WAC Bennett was soundly defeated. it was not the government’s intent “to put Photo Credit: AME BC a stranglehold” on the industry. Yet later that year, Horn indicated that a ment discretionary powers over mine NDP SWEEP wholesale revision of the Mineral Act was development. Dave Barrett, a former social worker planned for 1973, to include increased The Chamber passed a resolution declar- and leader of the New Democratic Party claim recording fees, instituting an annual ing its opposition to the onerous bill and (NDP), became BC’s 26th Premier on rental fee of $20 per claim, increasing the passed it along to the mines minister and to September 15, 1972. value of annual assessment work per claim the press, resulting in wide publicity. “We will now move into a people’s cen- to $300 from $100, among other measures. Others applauded the government’s tury in British Columbia,” he said. Ed Scholz was elected Chamber president moves, as this was a time when nationaliza- The Premier wasted no time, passing in 1973. Shortly after, the industry learned tion of foreign-built mines was taking place a new law on average every three days that it would be government policy not to in Africa, Chile and other parts of the world. while in power. He made it clear from allow staking and prospecting in parks. It would take those countries years to realize the start that the days of “unfettered Bill 44 — “An Act to Amend the Mineral that such policies invariably result in less access to resources” by companies was Act” — was introduced in March of that productive mines and fewer discoveries. over in the province. year. It contained drastic changes as Horn Mineral exploration is simply too risky to be Leo Nimsick, a former warehouse had predicted, and it also gave govern- financed out of the public purse.

AME BC 100TH ANNIVERSARY ISSUE Honorary Life Members, 1977 Photo Credit: AME BC

“SUPER-ROYALTY” BACKLASH Another Dave Barrett shoe dropped on “Black Tuesday,” February 19, 1974, when his government introduced a “Mineral Royalties Act.” Bill 31 called for a royalty of 2.5% of the “net value of every unit of a designated mineral” in 1974, rising to 5% in 1975, and a “super royalty” of 50% of the amount by which the gross value of a unit of a designated mineral exceeded 120% of the “basic value” of the unit. It also provided for a reduction in the royalty when basic value exceeds gross value and when smelting and refining takes place in BC. Ȁ Bill 31 also contained wide regulatory and policing powers. Minister Nimsick described it as “one of the most important” ever introduced in the legislature. “I think it’s going to change the whole course of the mining Ȁ history in the Province of British Columbia,” he said. “The uncertainty has ended.” For the industry, the uncertainty had just begun. Trying to boil down what the bill would mean to the bottom line wasn’t easy, as the calculation of “net,” “gross” and “basic value” was at the discretion of Cabinet. It also wasn’t clear whether the royalty would be deductible in calculating federal income tax, or ZZZNQLJKWSLHVROGFRP provincial taxes for that matter. But it was clear that Bill 31 would devastate the industry. An estimated 1,600 people packed the Hotel Vancouver for a special .QLJKW3LpVROG meeting of the Chamber of Mines in March, 1974. President Ed &2168/7,1* Scholz urged the government to amend its legislation, particularly Bill 31, and restore investor confidence in the province.

AME BC 100TH ANNIVERSARY ISSUE The Chamber and other industry groups also set up a “Mining After Bill 31, and using the Emergency Centre” and launched a fund-raising drive to oppose same copper price and produc- the detrimental legislation. tion cost assumptions, BC’s por- The press covered the battle between industry and the NDP, tion increased to 23 cents, the as well as the sparring over the issue in the Legislative Assembly. mining company’s share was Nimsick slammed those opposed to the bill as “defending the cut to five cents, and the federal mining companies against the people.” NDP critics said they were portion was 1.94 cents. “defending the people against this government.” By not deducting provincial Nimsick stuck to his guns, undeterred by reports that up to royalties in calculating fed- 5,000 people involved in mineral exploration had already left eral tax, BC taxes and royal- the province. Another bill was introduced in the spring of 1974, ties would be 28.15 cents, the whereby placer mining would only be allowed on leases issued federal portion would be 7.5 Rick Higgs Photo Credit: AME BC by his ministry, subject of course to Bill 31 royalties. cents, and the company would Elliott and assistant Rick Higgs were then spending 90% of their lose 6 cents per pound of copper after production costs. time fighting government policy. Almost $100,000 was raised to Minister Nimsick’s response was: “You can’t get 118 out of 100.” help this effort. A media campaign was under way to help the pub- The point was made, penny by penny, in a way that politi- lic understand the seriousness of the issue. And 5,000 “Mining— cians and the public could understand — no industry could BC’s 2nd Industry” bumper stickers were printed and distributed. survive an effective 118% rate of taxation. Hundreds of prospectors, miners and others demonstrated BC government officials later invited the Chamber and indus- against Bill 31 on the steps of the Legislative Building that year, try representatives to discuss “possible amendments” to some with Chamber officials attending only as observers. Women and legislation. No progress was made as the NDP gave the impres- their children took part in the protest, carrying banners that read, “Don’t Make Our Men Lose Their Jobs.” The Mineral Royalties Act was proclaimed in the fall of 1974, retroactive to the entire year for tax purposes. The “basic values,” as designated by Order-in-Council, were 58 cents for copper, $3.00 TSX:ETG for silver, $82.50 for lode gold (placer gold was not designated) and NYSE AMEX:EGI FRANKFURT:EKA $1.76 for molybdenum. Other minerals were not yet designated. The Chamber continued the Bill 31 fight into 1975, when Robert Sheldon of Newmont Mining was elected president. Tommy Elliott, having reached 65 years of age, announced his retirement, with tributes pouring in from far and wide.

“NEW MATH” Congratulations Newly appointed manager Rick Higgs picked up the torch to to AME BC on 100 Years of help the beleaguered industry, which just learned that provincial royalties would not be deductible in calculating federal Leadership and Advocacy income tax. With help from Ron Stokes, large colored card- Entrée Gold Inc. board charts were prepared showing the distribution of mining #1201 – 1166 Alberni Street revenue from a pound of copper before Bill 31, after Bill 31, and Vancouver, BC V6E 3Z3 the effect of the new federal tax ruling. Monica Hamm – Manager Investor Relations Higgs and Stokes were dispatched to Victoria make their case. E-mail: [email protected] Their charts were used by opposition members to reveal flaws Tel: 604-687-4777 Fax: 604-687-4770 in Nimsick’s math. Before Bill 31, the distribution of mining revenue from $1-per-pound copper showed a distribution of 16 cents for the company and 14 cents to the two senior levels of government, after production costs of 70 cents, including transportation, www.entreegold.com smelting and refining.

AME BC 100TH ANNIVERSARY ISSUE sion that it intended to be a “backseat The Chamber also fought hard against fed- per year of copper concentrates. Chester operator” at every mine. eral policies that threatened the investment Millar had staked the prospect in the mid- The NDP government did not change climate of the northern territories. 1960s, and applied percussion drilling used course, but took heat for the exodus of min- in highway construction to test its potential, ing and exploration capital from the prov- “ZAP! YOU’RE FROZEN” resulting in a copper-gold discovery. ince. Exploration spending fell to $15 million BC’s mining industry was caught between Robert Hallbauer, then vice-president of in 1975, down from $38 million in 1972. a rock, the onerous royalty and regulatory Teck, encouraged the company to acquire regime in BC, and a hard place, a deteriorat- 51% of Millar’s junior, Afton Mines, on the ing fiscal regime at the national level. open market. This was later increased to In the 1972 federal election, Trudeau’s 74% through a financing deal. The open- Liberals were reduced to a minority pit mine began operations in 1978. propped up by the NDP. Two years later, The Mining Museum at Britannia the House of Commons passed a non- Beach opened in 1975. Charles Ney died confidence motion in the Trudeau gov- that year, prompting the Chamber to ernment and defeated its budget bill. improve and name its library in honor of The economy was in crisis, partly his years of service, notably at the pros- because of high crude oil prices and pectors’ training school. competition from low-cost manufactur- Premier Barrett called a snap election ing economies in Japan and Korea, and in late 1975, and lost, including his seat, partly because of hyper government when the revived Socreds won a strong spending. Canada was gripped by “stag- majority under new leader Bill Bennett. flation,” characterized by high inflation Tom Waterland, the new mines min- rates, slow economic growth and high ister, wasted no time in repealing and unemployment rates. revising the most onerous aspects of the Trudeau won the 1974 election with a NDP legislation. majority by vowing not to impose “wage In the 1979 federal election, Pierre and price controls,” as advocated by Trudeau’s government was defeated by Conservative leader Robert Stanfield to the Progressive Conservatives led by Joe fight inflation rates, then exceeding 10%. Clark, who formed a minority govern- Trudeau mocked the idea, saying, “You ment. Soon after, Trudeau announced can’t just say ‘Zap! you’re frozen’.” plans to resign as Liberal Party leader. But as inflation continued to rise, Investment returned to BC, with Kaiser Trudeau instituted wage and price con- Resources and Denison Mines advancing trols in October of 1975, administered by coal projects. But uranium exploration an Anti-Inflation Board. came under threat as anti-nuclear groups The program was as much hated by sought a ban on the sector. The Chamber labor unions as it was by business leaders. submitted technical information and Premier Barrett independently froze briefs for a Royal Commission set up to prices of essential goods and services and examine the contentious issue. transportation and utility rates in BC. He By late 1979, the political landscape in also called for the “gradual nationalization” Ottawa changed again. After a series of pol- of Canada’s non-renewable resources, to icy mishaps, Clark’s minority government the dismay of the other western premiers. was defeated by a non-confidence motion. Trudeau was persuaded by his party to stay on as leader and fight Clark again, UPS AND DOWNS which he did, winning a majority in the A positive interlude in these years was a February 1980 election. decision by Teck Corp. to place the Afton After these topsy-turvy years, it was mine into production, and also build a hard for anyone to predict what might lie smelter capable of processing 25,000 tons ahead in the decade to come.

AME BC 100TH ANNIVERSARY ISSUE “Where do we go from here?”

s Chamber president in 1979, Don cheerily in his Scottish brogue, “but it’s not a AMustard was involved in preparing rational decision. Where do we go from here?” submissions to a Royal Commission studying the contentious issue of uranium exploration Nowhere, as it turned out. and mining in BC. To the surprise of the Several advanced uranium deposits were in the Premier’s Chamber, the government under Premier Okanagan constituency and it was soon obvious that he Bill Bennett imposed a seven-year uranium did not want uranium exploration or mining anywhere moratorium in early 1980. near the apple orchards and vineyards of the bucolic “We sent a telegram to Victoria, asked for region. a meeting, and got one,” Mustard says. Mustard argued that it would be better to The delegation entered a Cabinet room mine them out than leave them there. where the Premier sat, surrounded by his “We went at it for about an hour, but ministers, seniors in chairs and juniors lined nothing was going to change.” Mustard said. up along the outer walls. In 2008, another uranium moratorium “Gentlemen, this is my decision and it’s was imposed, this time with no deadline. not going to change,” the Premier said. A reporter called Mustard, asking it was “Where do we go from here?” “safe” to allow uranium mining in BC. Some people might be intimidated, but “I suggested they talk to the Mines not indomitable Don. Minister in Saskatchewan,” Mustard replied. “We understand your position,” he replied “They’ve been at it quite a while there.” Don Mustard Photo Credit: AME BC

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AME BC 100TH ANNIVERSARY ISSUE