With the annual Natural Resources Forum taking place this week in Prince George, it’s a good time to revisit the place of resource industries in the provincial economy. Below, we highlight the fact that natural resource industries continue to supply the lion’s share of the goods that B.C. sells to the rest of the world.
In a small jurisdiction, developing and sustaining industries that produce “tradable” goods and services is essential. These industries bring many benefits. They support high-paying jobs. They are big customers for local suppliers of intermediate inputs, such as professional, transportation, engineering, maintenance and environmental services. Tradable industries also furnish the income that allows local businesses and households to pay for the imports that help to ensure British Columbians enjoy a high standard of living.
Our province relies heavily on a handful of “traded” industries that export much of their output to outside markets. Collectively, natural resources — forestry, energy, mining and agri-food — and the related processing and manufacturing businesses occupy a dominant place in the overall export sector.
Over the past couple of years, B.C. exported goods valued at approximately $46 billion to other countries and earned at least another $15 billion selling goods to other Canadian provinces. In aggregate, more than two-thirds of these exports to other countries and other provinces are derived from natural resources.
Let’s look more closely at the contributions of natural resource industries to B.C.’s export base.
Despite its current troubles, forestry continues to account for more than 30 per cent of merchandise exports and for two-fifths of manufacturing shipments in 2018. The province’s top forestry exports are lumber and pulp and paper.
Almost one-quarter of B.C.’s merchandise exports in 2018 came from the energy sector, with coal and natural gas being the principal export commodities.
Metallic minerals made up 13 per cent of B.C.’s exports in 2018, with copper, aluminum and zinc ranking as the three leading mining-related exports.
Agriculture and seafood products provide almost 10 per cent of the province’s merchandise exports. B.C. is fortunate to have a substantial and diversified agri-food sector that includes numerous sub-industries that supply a wide array of agricultural and seafood products to both foreign and local markets.
Natural resource industries will remain foundational to B.C.’s economy for the foreseeable future. Examining the sources of B.C.’s relatively strong economic performance over the past decade shows that most natural resource clusters expanded at a pace in excess of the economy-wide average. Add in the spinoff activities noted above, and it’s clear that resource-based industries still lie at the heart of the province’s export economy.
Looking ahead, a key challenge for government is to establish a business environment that encourages companies, entrepreneurs and investors in these sectors to invest in the province. Without new capital and management attention to improve operations, expand production capacity and develop new products and markets, B.C.’s leading export industries are at risk of stagnating, shrinking or withering away.
Unfortunately, the competitive landscape for B.C.’s natural resource industries has deteriorated in recent years. This is due to a number of factors:
- Increasingly cumbersome and delay-prone provincial and federal government regulatory and permitting processes that affect both new and existing business operations;
- The fact that B.C. has the highest carbon tax in North America, with virtually no measures in place to offset any of the added cost borne by our natural resource and manufacturing industries;
- Complex requirements to address the legitimate interests and concerns of Indigenous communities, many of which are located in regions where natural resource activity is concentrated;
- Transportation and other infrastructure bottlenecks that make it harder to move some B.C. resource goods to end-use markets; and,
- A general lack of government support for natural resource producers and the communities where they are located.
As the 2020 Natural Resources Forum gets underway, B.C. policy-makers should commit to address these and other home-grown impediments to the continued commercial success of the province’s leading export industries.
Both Jock Finlayson, executive vice-president, and Ken Peacock, chief economist, are with the Business Council of B.C.
As published in the Province.