Mining activity is expected to remain strong across Canada this year, say industry and government officials.

The optimistic outlook comes even though a recent report shows British Columbia's mining industry experienced a 48-per-cent drop last year in year-over-year net earnings.

According to Natural Resources Canada (NRC), Ontario will lead the country in exploration this year, based on dollar numbers that are on par with provincial figures. The province should see a plus-20-per-cent increase over 2007.

Quebec will have the second-largest jump - 16.8 per cent - to $463.6 million from $429.9 million. B.C. expenditures will climb 15.8 per cent to $437.2 million from $428 million. Nunavut and Saskatchewan will round out the top five increases, at 11.6 per cent and 11.5 per cent, respectively.

A report by PricewaterhouseCoopers (PwC) shows net earnings for B.C. mining companies fell to $1.2 billion in 2007 from a record $2.3 billion the previous year. But shareholders earned dividends of $635 million, prompting claims from industry and government officials that mining has a promising future in the province.

"It's been another very good year for the mining industry in B.C.," said Michael Cinnamond, the report's author and a partner in PwC's B.C. mining practice.

The decline in net earnings was mainly attributed to a 26-per-cent drop in the average coal price to US$80 per tonne and a 10-per-cent reduction in total coal shipments. Coal prices are expected to be much stronger this year.

B.C. gross mining revenues descended 15 per cent to $6.9 billion from $8.1 billion in 2006, while cashflow from operations decreased 31 per cent to $1.9 billion. Cinnamond noted the provincial government estimates a 57-per-cent increase in total exploration expenditures to $416 million from $265 million in 2006.

"I think the industry has a very bright future, and because of that, British Columbia has a much brighter future than it would otherwise with the current downturn in the forest industry," said Kevin Krueger, B.C.'s minister of state for mining.

"It's a very deep trough that they (foresters) are in," said Krueger.

But mining-operation payments to government dropped 42 per cent to $463 million last year, and direct tax payments nosedived 55.2 per cent to $290 million from $648 million.

Meanwhile, the Ontario Ministry of Northern Development and Mines is forecasting $629 million worth of exploration activity in the province this year. Last year, production activity generated $10.7 billion.

"Right now, I would say we're probably expecting something in that ballpark again," says ministry spokesman Brock Greenwell. He adds nickel will be the most-produced mineral, followed by copper, which in 2007 overtook gold for the first time in 25 years.

"I think (activity) will be strong all over (Ontario)," says Patrick Donnelly, a Toronto-based analyst with Salman Partners. "The only thing that could hold anything back would be (Aboriginal) land claims."

The NRC figures show exploration expenditures in Ontario have more than doubled from $306.9 million spent in 2004.

Last year, across Canada, nickel generated the largest production-related revenue total - $9.9 billion, which was a 9.2 per cent jump from 2007.

Despite coal's heavy influence, the PwC report shows copper continued to generate the most net revenues in B.C. - $1.66 billion. Metallurgical coal ranked second at $1.37 billion, while zinc ($1.23 billion) and molybdenum ($433 million) round out the top four.

Gold production and shipments produced a modest $205 million in net revenues, even though the precious metal's average price neared a record US$1,000 per ounce.

PwC based its findings on financial information provided by 19 operating metal and coal mines, one smelter, eight projects in the permitted or active permitting stages, six mines that are undergoing reclamation and six advanced-exploration-stage properties.

(Monte Stewart can be reached at monte@businessedge.ca)