The U.S. Geological Survey ranked California as the number one sand-and-gravel-producing state in 2002. The state came in ninth in crushed stone production for the year. Yet demand still outpaces production.

California aggregate producers have known for years the problems that can dog a company trying to pry open a new rock or sand and gravel resource. Some producers report the permit-to-production process taking more than 10 years for a California greenfield site.

In high-demand, low-availability areas such as San Francisco and Los Angles, U.S. aggregate companies have brokered deals with their neighbors to the north. British Columbia, Canada plays host to high-quality aggregate and seaports capable of loading U.S.-bound barges.

And British Columbia's importance to aggregate producers south of the border is evident by the number of U.S. companies nosing about there recently. “One of the largest U.S. aggregate groups said a few months ago that every major California aggregate producer has been to Vancouver in the last 12 months,” says Herb Wilson, COO of Polaris Minerals of Vancouver, B.C. This interest comes from the low Canadian dollar, which makes production costs cheaper, and high California demand. In early June one U.S. dollar was worth $1.35 in Canada.

But there's also the prospect of getting through a far less arduous permitting process. This is something Wilson's competitor Dan Chapman, sales and distribution manager for Construction Aggregates of Vancouver, agrees is a problem in the States. “I think their biggest stumbling block is the length of time and cost to bring in any operation to the point of being in business,” Chapman says. “It takes a long time in the U.S. It's amazing.”

British Columbia Aggregates Association President Brian Weeks says it takes between 12 to 18 months to get through the permitting process in British Columbia. Costs can range anywhere from CAN$10,000 to CAN$1 million. But that's a far cry from the seven years and many millions spent by Associated Sand and Gravel before it gave up trying to exploit a resource on the Hood Canal, south of Seattle, he says.

Polaris Minerals expects to ship 6 million tons of crushed granite each year from a massive 700-million-ton reserve sitting on deep tidal water on Vancouver Island. Still, the company has had to run a gauntlet of permitting applications, environmental assessments and fee agreements with the local native band, Wilson says.

“We launched the environmental assessment, had our first meeting with the regulators in March 2002, so we're talking about 18 months,” Wilson says. “The second one is the mine permit from the B.C. Ministry of Energy and Mines. We submitted the application on Feb. 4 of this year and that should be done (by early July).”

So California can simply import as much aggregate as it needs from Canada — problem solved, right? It may not be quite that easy.

The flip side to doing business anywhere in Canada is the punitive tax regime. “There's tougher regulations in the U.S. than in Canada,” says Drew Jared, regional sales manager for Ash Grove Cement of Bellevue, Wash. “But you're taxed more on a variety of things in Canada than we are in the States.”

Construction Aggregates' Chapman agrees. In Canada, he says, eventually “every arm of government” will be reaching in up to its elbows “to get some revenue from the gravel operation. If you're on Crown (federal government) land then Crown wants a percentage for every ton that you take out.

“If you're on band or reserve (Native American) land, the band of course wants a share of everything that goes out. If you're in a municipality they put a soil removal tax on the product going out. By the time you pay off all of the people who feel they should be profiting from your venture, your cost per ton goes up considerably.”

Another cautionary is that not all sectors of the California economy are crying out for materials. Steve Dimond remains circumspect about why a deal between Polaris and Arthon Construction to mine 30 million tons of rock near Bella Coola on Vancouver Island fell through.

According to Arthon's special projects manager, a drop in travel by California airline customers since the Sept. 11 terrorist attacks and, more recently, Severe Acute Respiratory Syndrome effectively halted plans to pour as much as 60 million tons of rock into San Francisco International Airport's runway expansion. With limited demand from that quarter, Arthon and Dimond's company Bella Coola Rock have had to downscale their plans for California significantly.

“The mega projects have to have very defined markets now because the demand curve isn't quite as strong as it was even two years ago,” Dimond says.

Like Arthon, Construction Aggregates hasn't been shipping as much material from its pit on Texada Island to the United States as originally anticipated because not all of California berthing facilities are equipped to handle the large draft demands of Canadian Steamship Line's 70,000-ton Panamax carriers. Unlike Arthon, it is insulated from the limping U.S. economy by continued demand for concrete sand in California's housing, office building and highway construction sectors. Simply put, says Chapman, a product's usefulness helps ensure company health.

“You often have one part of the economy strong, like the housing market and then maybe your construction end is down a bit or the reverse,” Chapman says. “But because the product crosses both industries it remains fairly stable.”

Another caveat to sourcing aggregate in B.C., says Chapman, is the growing appetite for unnecessary delay and red tape among municipal bureaucrats. It's not just that municipalities such as Langley, B.C. have banned aggregate mining entirely within its boundaries, he says, it's the degree of inconsistency, “different rules for different areas,” that has become troubling. Soil removal permits, restricted hours of operations, limits on the amount of material that can be mined in a particular zone are hazards of the trade. But it's that lack of uniform rules and more ominously the provincial government's introducing something called the New Community Charter that is getting everyone's attention.

“We have concerns about some provisions (in the New Community Charter), which allow municipal regulations to trump provincial requirements, particularly in regards to permit conditions,” Weeks says. “There is an odd clause in the community charter, for example, that allows municipalities to expropriate property for their own gravel needs, even outside the municipal boundaries. We can see potential for a lot of mischief from that one.”

Under the new charter a municipality that chooses not to use its reserves could turn to a neighboring municipality and expropriate an ongoing operation to satisfy the first municipality's gravel needs. That's not what provincial politicians intended, Weeks says, and he wants this cleared up.

“We are adamantly and strenuously supporting the position that natural resources such as aggregate, mining, forestry, fishery, agriculture should all be managed at the provincial level, because there are wider benefits to society than a local government may take into consideration,” he says. “And the expertise to manage these types of resources typically does not exist at the municipal level.”

Every company contemplating a new aggregate resource considers the time and cost required to leap the permitting and regulatory barriers that various levels of government place in front of it, Weeks says. But another telling estimate is the amount of aggregate each North American consumes every year — 12,000 to 15,000 metric tons per capita. As populations in B.C. and California grow that demand will only increase, he says.

“And if as in several areas of B.C. reserves are being consumed faster than new reserves are being permitted then the old supply and demand curve is going to kick in and the prices are going to go up.” Trouble is, Weeks adds, B.C. taxpayers and politicians don't seem to understand that when aggregate prices go up the cost is passed on to the consumer.

More significantly, he says, is their failure to recognize the potential that export markets pose for British Columbia's rich aggregate resource. For every protest that successfully blocks a new mine in B.C., he says, the ability to satisfy people's appetite for new infrastructure is diminished, as are the export markets. Any competitive advantages that B.C. may have are not unassailable. Taxpayers everywhere want new roads, bridges and office buildings, Weeks says — regardless of the cost.

“Those communities that need it will get it from somewhere and if it's not coming from B.C. as it well could then maybe it's coming from Mexico or from Nevada by truck,” he says. “Who knows? But the growth in California will not stop because aggregates cost more.”

And the question remains, will Canadian producers be in a position to meet that demand?

David Kosub is a freelance writer based in British Columbia, Canada.