Wildfires’ economic toll mounting for miners and other B.C. businesses

Mine production suspended, mills closed, shop owners facing huge losses from forest fires   

A water bomber unloads fire retardant on a wildfire near Ashcroft | Government of B.C.   

The Elephant Hill fire raging in B.C.’s Central Interior is starting to take a significant economic toll, following the shuttering of the West Fraser Timber’s (TSX:WFT) Chasm operation and the prolonged closure of Highway 97, which is making it difficult for small businesses in areas like Clinton and Cache Creek to stay afloat.

About 95% of businesses that called into a “wildlife recovery hotline” set up by the BC Economic Development Association (BCEDA) reported lost revenue as a result of the fire, which has swallowed more than 117,170 hectares since July 7 and is the second largest blaze burning in B.C. 

As of August 9, it was just 30% contained.

“In places like Clinton that mill is extremely important,” said BCEDA CEO Dale Wheeldon. “If you don’t have jobs, you’re not spending money. How does that keep the local economy going?”

The mill, which employs residents not only from Clinton, but Cache Creek, Ashcroft and 100 Mile House, suspended operations on July 9, along with two other mills in Williams Lake and 100 Mile House. Operations were also scaled back or shut down as a result of wildfires in the Cariboo, including Tolko Industries in Williams Lake and Imperial Metals’ (TSX:III) Mount Polley open-pit copper and gold mine near Williams Lake. The latter operations have since resumed.

West Fraser said Tuesday it’s too early to gauge the impacts of the suspended operations, which “will continue until the evacuation order for Clinton is lifted and we get notification from government authorities that it is safe to resume,” communications director Hannah Seraphim said in an email.

By the end of the week, Seraphim said the situation in Chasm had stabilized and West Fraser’s mill had resumed operations.

However, other resource operations that have restarted, such as the Mount Polley mine, say they are still reeling from the effects of the wildfires, which meant they needed more time to ramp up production and led to detours to haul materials around the roadblocks.

“We’ve lost half a month’s production, but we can’t quantify the cost to the company,” said Steve Robertson, vice-president of corporate affairs for Imperial Metals. “The cost continues to go on even though we have our workforce back. When you lose revenue for a time, it’s difficult to make up.”

Paul Quinn, an analyst in paper and forest products at RBC Capital Markets, said the closures of local mills, along with a curtailed timber harvest are likely to have a significant effect on the economy, but noted it would be far worse if a mill burned down. Although insurance would cover the loss, it would take at least a year to rebuild.

“[The impact] is really hard to determine right now,” Quinn said. “It all depends on how long it lasts. It’s hard to make lumber without logging.”

Doug Donaldson, Minister of Forests, Lands, Natural Resource Operations and Rural Development, said in an email that while there would likely be significant impacts to timber supply in the area, licensees will typically harvest burnt wood quickly to try to recover economic value. The ministry might also issue short-term salvage licences.

“We won’t know the full impact until after the fires have finished, and it’s too early to provide definitive cost estimates,” Donaldson said. “There [are] also varying degrees of damages to trees by wildfire, and some may still be suitable for harvesting.”

Meanwhile, small businesses affected by the fires are hoping the government will help provide some relief as they struggle to stay afloat.

Sandra Schwindt, owner of the Cache Creek-based Bear Claw’s Lodge, said she has already had to dip into her overdraft to run her businesses since returning to Cache Creek after being evacuated. Although she is renting her 15 rooms to helicopter pilots, police and evacuees, she hasn’t opened her restaurant – her “bread and butter” – because there isn’t the traffic to sustain it, mainly because her lodge is at the north end of town where the highway is blocked.

“This is terrible. Our business, and probably the majority of Cache Creek, is 100% tourism,” Schwindt said. “Until things get back to normal you don’t have any business. There is nothing for us.”

Jeremy Stone, a University of British Columbia PhD student with a background in disaster recovery, said there is not usually short-term funding available to businesses, which he said should have access to emergency grants of $10,000, rapid loans to bridge insurance payouts and technical assistance.

Jinwoo Kim, who owns the local Shell gas station and grocery store in Clinton, said his revenue is about one-third of the $1 million in sales he typically pulls in for this time of year.

The evacuation and highway closure has had a major effect on his business, which has remained open to provide fuel to the firefighters working in town. Part of the problem, he said, is the town was on alert for so long, and he can’t claim insurance for that time.

“I’m losing sales like crazy now,” he said. “Usually this makes up for the whole winter. I don’t know how I’m going to survive.”

Wheeldon noted 50% of those who called the hotline don’t know if they are covered for loss of income, inventory or interruption of their business. The BCEDA is working with local businesses to help them get local assistance and “rebuild the local economy.”

“The longer term impacts of this fire are going to be more than they are today,” he said. “[The fire] seems to be growing, not shrinking.”

Wheeldon noted the calls are not just limited to businesses, but also extend to cattle ranchers, who are worried about the loss of cattle and rangelands.

Upset ranchers and local residents near Clinton have also called on the B.C. government for compensation, following a controlled burn that went “terribly wrong” and led to untold losses of livestock and property.

The group said it is unhappy with orders to light a controlled burn on Hart Ridge Mountain near 20 Mile House during adverse wind conditions, which caused the fire to jump Highway 97. That fire rapidly expanded, causing numerous evacuations and highway closures.

The ranchers want more consultation from wildfire officials before they light controlled burns in the area.

Heather Rice, the fire information officer for the Kamloops Wildfire Service, maintains controlled burns are the only way to deal with a fire of this size and complexity, but acknowledged there’s always a risk.

“Unavoidable damage can happen with any kind of fire,” she said. “This particular fire is one of the more complex and challenging ones in the province.”

Donaldson said under the Wildfire Act and regulation, people can be compensated for damage on private land for “avoidable damage caused by fire control by government.”