Miners Lead B.C.'s Top Companies

This year's list is varied, but all the companies pack a powerful punch

Wednesday, October 26, 2005

British Columbia's strongest and fastest-growing publicly traded companies pack a tremendous economic punch, employing some 170,000 people and earning $45.9 billion in revenue during 2004, Business BC's third annual Top 100 ranking shows.

The province's top firms also had a collective market value of $82.6 billion.

And while it is tempting to point to explosive growth in the revenue line of B.C.'s top performers (revenue to the 2005 Top 100 is 20.8 per cent more than the $38 billion earned by the 2004 Top 100), it is important to note the list has changed.

The 2005 list still recognizes the fastest-growing companies, but it has been split to also recognize the strongest and mostly largest mainstays of B.C.'s economy that have weathered its roller-coaster ups and downs, and are currently enjoying a wild ride up a steep incline.

B.C.'s top companies on the 2005 list proved to be a varied lot, although miners -- buoyed by a tremendous global resource boom -- play a significant role.

Vancouver-based Methanex, the world's biggest maker of the important chemical ingredient methanol, saw its substantial revenue shoot up to $2.238 billion Cdn in 2004, a 26-per-cent increase from 2001, to earn the first-place ranking on the list of fastest-growing firms.

Vancouver-based Amerigo Resources saw revenues grow by more than 510,300 per cent, which gave the firm No. 2 spot on the fastest-growing list. Victoria's Carmanah Technologies placed third, Great Canadian Gaming placed fourth and Goldcorp Inc. placed high on both lists: fifth on the fastest-growing companies list and first among the strongest companies' list. Other firms on the strongest companies list included Teck Cominco, Angiotech Pharmaceuticals, Placer Dome and Teekay Shipping. (See section F for full rankings and stories.)

B.C.'s mining sector proved to be the single biggest player in this year's Top 100 lists of fastest-growing and strongest B.C. companies. Indeed, the greatest global commodity boom in a decade was solid gold for B.C.'s mining industry, and experts say it's helping to solidify the province's reputation as a leader in that sector.

Mining Association of B.C. president Michael McPhie describes the merger of Wheaton River Minerals and Goldcorp as a sign to financial markets that companies need not locate in Toronto's national financial centre to be successful.

"That's a pretty significant signal to the market," McPhie said of Goldcorp CEO Ian Telfer's decision to move Goldcorp's head office to Vancouver. "You also have BHP Diamonds, with their mining operations in the Arctic, choosing Vancouver as their headquarters here -- and it's one of their world exploration hubs as well,"

One of the reasons companies such as Teck Cominco have thrived during the up-cycle for copper, zinc and coal, is that they came into the cycle as a mean, lean operator poised for exceptional growth when prices improved.

"There was a period of time over the early '90s through to the early 2000s where only the strong companies survived," McPhie said. "That had to be competitive at substantially reduced commodity prices.

"Copper dropped as low as 65 cents a pound. `In September 2005` it's now at $1.70."

The companies that could remain in business -- and be at least modestly profitable during a period when commodities were only about a third of what they're selling for today -- are going to enjoy pretty strong upside during this current cycle."

Without adjusting for inflation, gold hasn't traded this high in U.S. dollars since 1988, copper is trading 75 per cent above its 20-year average, and zinc is registering its best performance since 1997.

Meanwhile, Teck is awash in record amounts of revenue in the wake of record global prices for metallurgical coal, and new coal projects are springing up all over northern B.C.

The commodity cycle isn't just a boon to companies such as Teck, which has enjoyed successive revenue boosts from rising prices for copper, zinc, coal, molybdenum, lead and indium.

It's also driving an economic recovery in parts of the province where one-time mining and exploration projects had been languishing since the 1990s because of depressed commodity prices, McPhie said.

Even a moderation of metal and mineral prices from their present range will make many new projects economically viable.

That should mean more mines and thousands of new jobs in B.C. over the next decade, according to a report from the Mining Industry Training and Adjustment Council of Canada.

"Much of this economic development is occurring in regions of the province that are in desperate need of really solid economic growth opportunities," McPhie said. "One of the most pressing issues that's facing British Columbia in the next five to seven years is the pine-beetle kill. The forestry companies are doing really well right now. But what happens when that wood supply is exhausted in the next five to seven years?

"Forestry-dependent communities may have a real upside if the mining sector continues to expand. It means a large number of direct jobs in the community.

"I think you are going to see growth in regional centres like Kamloops, like Prince George, like Cranbrook, Smithers, Campbell River and Courtenay."

Stephen Poloz, chief economist for Export Development Canada, expects commodities prices to fall -- but he doubts they will tumble back into the recessionary range they occupied from the late-1990s to the early part of this decade.

That means good, but not outstanding, opportunities remain for the mining sector in the coming years, Poloz suggests.

"We see 2006 as not too hot, not too cold, just an ordinary economic performance -- but the last time we saw that was 1996. If you go back 10 years to 1995-96, the world was in its conventional place, it was an economist's dream.

"The big caution for me is to make people understand that a great deal of the price action we've seen over the last two or three years has been a return to normal as opposed to some new era.

"2004 was a boom and here we are in 2005, sort of coming off that boil.

"In the world we describe, the economy is doing well, exchange rates are closer to their normal levels, central banks are more or less done tightening because the world economy has more or less moderated to where it belongs.

"It's a very good environment, one in which the pricing of those commodities in some cases is extraordinarily good but on average it's kind of about where it was 10 years ago."

IN PURSUIT OF EXCELLENCE:

Here are the winners of this year's BusinessBC Top 100:

Bruce Aitken, CEO

Methanex

Steven Dean, Chair

Amerigo Resources

Art Aylesworth, CEO

Carmanah Technologies

Ross McLeod, CEO

Great Canadian Gaming

Ian Telfer, CEO

Goldcorp

Don Lindsay, CEO

Teck Cominco

William Hunter, CEO

Angiotech

Peter Tomsett, CEO

Placer Dome

Bjorn Moller, CEO

Teekay Shipping

Full Report: F1. Ran with fact box "In Pursuit ofExcellence", which has been appended to the end of the story.