Despite Vancouver’s eco-friendly reputation, one of the most controversial industries around continues to dominate business in the downtown core: mining.
Although you’re not likely to find ore-crushers or giant dump trucks zipping up and down Robson Street, the industry continues to quietly drive loads of corporate activity between False Creek and Coal Harbour.
“It’s unparallelled anywhere in the world in terms of the concentration of people and the number of companies that are located here,” said Mike McPhie, president and CEO of Curis Resources (TSX-V:CUV) and former president and CEO of the Mining Association of B.C. (MABC). “I can’t walk 15 feet out the front door of our office without bumping into somebody I know.”
He’s not alone.
Industry insiders say Vancouver is one of a handful of cities around the world that’s considered a global centre for mining activity.
Approximately 63% of the 1,208 mining companies listed on the TSX Venture Exchange are headquartered in B.C., primarily Vancouver.
And some 30% of the mining companies listed on the TSX’s big board are also headquartered in B.C.
That means there are 879 mining companies based in a province better known for its environmentally friendly attitudes than its grip on global resource extraction.
Last year, the TSX and TSX-V raised 60% of the world’s mining equity capital.
Even though the industry has a global reach, a lot of that money is cycling through head offices in Vancouver.
“People don’t readily recognize that … mining companies make significant large expenditures in Vancouver by virtue of their head office being here,” commented Brian Battison, spokesman for Taseko Mines (TSX:TKO). “Having a head office here means it’s run out of Vancouver, which means all the ancillary services of legal, accounting, engineering are all concentrated here … so if you lose a head office here you lose a lot.”
The top 10 mining companies in Vancouver employ 603 people locally.
That’s only a fraction of the 37,611 people those same 10 companies employ worldwide, but their Vancouver employees make most of the spending decisions.
“We make a very conscious decision to spend our money locally, because that’s best for our company,” Battison said.
Taseko, which has 21 employees in Vancouver, spends millions of dollars on tax and audit, legal and engineering services locally.
That means accounting firms such as KPMG LLP, PwC, Deloitte & Touche and Ernst & Young are generating revenue thanks to services they provide to mining companies.
The same goes for engineering firms such as AMEC, Golder & Associates, Ausenco Sandwell, Stantec Consulting and Hatch, which count mining companies among their clients.
Although the days of the Vancouver Stock Exchange (VSE) are long gone, the industry remains so prevalent that the TSX-V is co-headquartered in Vancouver and Calgary.
“The economic benefit of the exchange here is very significant to the Vancouver and B.C. economy,” said John McCoach, president of the TSX-V.
The exchange employs some 40 people locally, including three who represent the TSX big board.
Mona Forster, executive vice-president of Entrée Gold (TSX:ETG) and chairwoman of the Association of Mineral Exploration B.C., said local TSX employees helped her company graduate to the big board from the TSX-V.
“It was important to have people here in town … that get what it takes to complete a financing,” Forster said.
Lindsay Bottomer, Entrée’s vice-president business development, said the fact that there are hundreds of mining companies within four blocks of his office makes it easier to have face-to-face meetings with local executives, and forge long-lasting business relationships.
The story is the same for Hunter Dickinson (HDI), a private mining house that launches junior companies.
HDI houses 11 companies in one office where it employs approximately 150 people.
After 26 years in Vancouver, the group moved to a new office on West Georgia last week.
President and CEO Ron Thiessen said the average salary for an HDI employee exceeds $100,000 a year.
“What a lot of people fail to take account of is the impact of all of these mainly junior resource companies in Vancouver … I would say we’re the highest paying wage sector,” Thiessen said.
The size of the sector also means that mining professionals often bump into one another on the street or at social events, which sometimes leads to future business partnerships.
A perfect example is Curis Resources.
McPhie said HDI offered him the opportunity to launch Curis after he’d left MABC.
“It all began over lunch, to be honest,” McPhie said.
In fact, a lot of mining business in Vancouver is still done over lunch and dinner, though Thiessen said it’s lessened somewhat since the days when VSE stock promoters ruled the city.
Local mining magnate Ross Beaty believes the cluster continues to survive because Vancouver is home to top-notch professional programs at local universities and a global investment industry.
But, perhaps most importantly, no shortage of people who want to strike it rich with rocks.
“Why this has happened is a more complicated question,” said Beaty, but it has and it is prospering today, making Vancouver one of only two or three global centers for the resource industry.”
63% the amount of TSX Venture-listed mining companies based in B.C.
603 the number of people the 10 largest mining companies employ locally
38,461 the number of people the 10 largest mining companies employ worldwide