mining

The value of real estate, as both an income source and as a vehicle for growth, is dependant on people!  People need food, clothing, and housing.  The nice thing about providing for people’s needs is that you are making sales as soon as people enter your area, and you are still being paid if there is a temporary slowdown.  Needs are always purchased before wants, before fun, and before luxuries.

As a provider of needs I have an easy formula:

Follow the people and profit will follow.

 

People move and stay where there are jobs. Kamloops has many opportunities for employment at many income levels.   This is the first in a series of articles I am preparing on Kamloops’ employers, and this month’s feature employer in Kamloops is Mining.

mining kamloops

Quick Facts:

  1. The Kamloops Mining industry(mining, exploration and manufacturing mining equipment)  requires 506 additional  workers according to a Thompson Rivers University study.
  2. There will be 692-892 more workers needed if the new mine is approved(Ajax).
  3. Average employee earnings rose to $98,200 in 2012, up from $93,900 in 2011- PricewaterhouseCoopers
  4. 2198 employees currently work at the two closest active mines in Kamloops – New Gold and Highland Valley Coppers
  5. these mines have 23+ years estimated life span(Highland Valley is rumored to have been expanded to 2040)

 

Materials Mined Near Kamloops:

Copper

Copper is in almost everything, from electronics to food. The major applications of copper are in electrical wires (60%), roofing and plumbing (20%) and industrial machinery (15%). – Wikipedia There has been an ever increasing demand for copper for over 100 years.

With this ever increasing demand for copper has come a huge increase in prices.  This makes projects in the Kamloops area more viable, because mining the lower grade deposits is now profitable.  Reopening old mine sites, and building new sites that were previously not economically viable becoming more common.

Copper prices 2003–2011 in USD per tonne

 

Gold

Gold is highly sought after as a hedge against inflation(although it produces no income, it does hedge off inflation just like real estate), as a metal used in industry, and for centuries as a decorative material.

For the same reasons as copper, higher demand for gold is leading to mining lower grade deposits, and there are many in the Kamloops area.

Molybdenum

The ability of molybdenum to withstand extreme temperatures without significantly expanding or softening makes it useful in applications that involve intense heat, including the manufacture of armor, aircraft parts, electrical contacts, industrial motors and filaments. – Wikipedia

The world production of molybdenum has been increasing in response to demand.  Employees at Highland Valley tell me that the molybdenum pays for the operations of the mine, and the copper is the profit.

 

Future Projects:

Galaxy Propertygalexy project

The Galaxy Property is within Kamloops City Limits, 7km east-southeast of the New Gold Mine, and 4km northwest of the KGHM Ajax Project.  There has been significant exploration in this region, and according to this Oct 2013 report there will be $250,000 in further exploration soon.

 

Many Other Projects:

There are many other mining projects in the region that are poised for development, and mining will be a major employer in the central interior and Kamloops area for many years to come. For a detailed map, click here.

legend mines

mines kamloops

 

 

 

Ajax/KGHM Gold and Copper Mine on the Cusp of Approval:

There has been some local controversy surrounding the Ajax project due to the proximity to Kamloops and  health concerns(ground water, dust).  This doesn’t change the fact that several major players who have a vested interest in the project proceeding are likely to get their way.  Here is a news article from yesterday that illustrates the determination of the federal government to proceed in an expedient manner.2014-02-28 11.05.15

City council has made numerous requests for a “panel review”(at the bidding of a vocal minority who oppose the mine) and have repeatedly been told no, a faster “comprehensive review” is sufficient.

My opinions on Ajax do not matter.

Whether I like Ajax or not, just like the perpetual inflation/government of printing money, the fact is it is coming.  The question is:

Q: What can I do within my sphere of influence to benefit from the facts?

With a current labour shortage in the mining industry of~500 people, and a further injection to the Kamloops workforce of 692 upon approval of the Ajax mine, there are a lot of people on their way to Kamloops in the near future who will need housing.  These mining workers earn on average $98,200/year, and can afford to pay a premium for housing, first as renters, then later as buyers. This will help drive the prices of rents and homes up.

There is a building pressure for housing in Kamloops.  Rents are high and more than support current market prices. Current job and population grown within the mining industry alone are enough to influence rents and real estate price.  Given the facts, I will benefit most from the facts by continuing to:

A: Purchase as many rental units as possible before the next big increase.

 

I hope you join me next month to learn about next month’s feature employer – forestry.  Forestry is an industry that has been hard hit in recent times, but subscribe here and I will send you my article on how Kamloops is poised to weather the storm just as soon as it is ready. Subscribe today!

 

Until next time,
Stay S.A.F.E.