Regulatory uncertainty dampens BC gold exploration despite record prices

In Alberta, when the oil price goes up it has a ripple effect on everything from drilling to the value of energy stocks in New York and Toronto.

But British Columbia, home to some of the world’s richest gold deposits, is seeing a decline in exploration spending despite gold prices soaring to record highs in 2024. 

A new report highlights that regulatory uncertainty surrounding upcoming rule changes is dampening investment, even as Canada remains one of the world’s top gold producers.

The “British Columbia Mineral and Coal Exploration Survey 2024,” jointly published by the BC Ministry of Mining and Critical Minerals, the Association for Mineral Exploration, and Ernst & Young, found that gold exploration spending in BC by 24% despite the metal’s 38% price surge over the course of the year.

The decline comes amid policy shifts that industry experts say are making it harder to attract investment. Starting March 26, BC will require prospectors to consult with First Nations before staking a mineral claim — a move that the Association for Mineral Exploration has strongly opposed, arguing that it could further deter investment.

Regulatory hurdles such as land access restrictions, environmental regulations, and lengthy permitting delays have also contributed to the province’s struggles. “If they don’t listen to industry, if they don’t get regulations right, we’re not going to see investment,” said Karen Costello of the NWT. and Nunavut Chamber of Mines, noting similar challenges in those regions.

Iain Thompson, a partner at EY Canada, emphasized that high commodity prices alone are not enough to drive exploration. “There are a number of factors that play into the level of exploration spend beyond commodity price,” he told CBC. “The right policy environment is critical.”

While BC’s exploration spending declined, other provinces like Saskatchewan and Newfoundland and Labrador posted increases. The Northwest Territories, Nunavut, and Yukon also experienced drops, with Yukon’s 9% decline attributed to ripple effects from the Eagle Gold mine failure.

The report suggests that policy misalignment between BC and other mining-heavy provinces such as Ontario and Quebec is widening the investment gap. 

Funding for critical minerals exploration more than doubled in 2024, rising from $24 million to $49 million, aided by federal incentives like the 2022 critical mineral exploration tax credit.

The report partly contributed BC’s struggles to the fact that it mining laws, much like the Yukon, have remained largely unchanged since the Klondike Gold Rush. Critics argue that modernizing the system while ensuring clear, consistent regulations could help BC regain its leadership position in Canada’s mining sector.

“Investors are looking for a streamlined regulatory process… simplicity, predictability,” Costello said. “Right now, they’re not seeing that in BC.”

Analysts say that aligning provincial policies with those of other successful jurisdictions and providing better incentives for prospectors and junior exploration companies could help BC attract renewed investment.

One investor, speaking on background, said BC needs to streamline rules and introduce preferential tax treatment to encourage smaller homegrown — Canadian — entrants.

Even though gold is typically seen as a hedge against inflation, it is precisely inflation that is depressing the share prices of gold producers.

When asked what would spur development? “Cut red tape,” he told The Western Standard. “Miners are only going to mine if they make money. And it’s because of costs that they can’t.”