2014 Coal Forum: Prices will rebound, mines will reopen, says Minister

Mike Carter, Chetwynd Echo

 

CHETWYND – Mining in northeast BC is sometimes casually underrated, which is a statement that might seem odd at a time when, by the end of the year, not a single coal mine will be in operation in this part of the province.

But Bill Bennett, minister for energy and mines, when speaking in Chetwynd last week at the 2014 northeast BC coal and energy forum, preached patience and showed a confidence that the sector would turn around.

“Some questioned why we held a coal forum at a time when several of the coal mines in the northeast have either idled their operations or otherwise curtailed development,” Bennett said to an audience in the Chetwynd Recreation Centre. “The reason is: metallurgical coal isn’t going anywhere. BC is Canada’s largest exporter of coal, and the world’s third largest by volume, and the northeast is a large part of that.

“To ignore that, would be folly. To not hold a 2014 coal and energy forum to celebrate the tenth anniversary of the event, would be similarly stupid. I think this forum is exceedingly important and that’s why I had to fight a little bit to get the time off from the legislature to get here,” Bennett said. “It’s really easy today, to look around and say why worry about this industry, let’s just focus on oil and gas. [But] it would be a tragedy to forget about coal. Having this forum… I think it’s very important for us to do this.”

Bennett says the reasons for the downturn seem pretty transparent. “Some will theorize about China playing a big game with the market, because it is the biggest player and in the market that determines in large part where, and in what direction the coal markets swing.

“But the fact is, coal mines that opened to meet that country’s growing demand, are now closing because the demand is no longer there, for one reason or another.”

Bennett preached patience, with a confidence that the market for coal was set to rebound in the next few years.

“It will come back,” he said. “I am well aware, because of where I live, what it’s like to live in communities where a mine is operating and then it isn’t. [But] if you’re an investor, you should be confident in the long term.”

Long term, the confidence minister Bennett shows is reflected in the plans of companies like Anglo American, Teck Coal and HD Mining.

“I talked to the CEO of Anglo American,” Bennett said. “Long term, he has confidence in the northeast coal sector, I am quite sure of that and I know Teck does as well. But it’s a question of timing.”

Working towards a sustainable coal industry in the north has been a project for his government for many years and the southeast mining sector—in mines like Fording River, in Bennett’s riding, are a model for success.

“We have seen the booms and busts in the northeast, but in the south east—largely in part due to an economy of scale—these same companies have managed a sustainable market that is still operating, despite the cost of extracting a tonne of coal, hovering around about the same as what a company will get from the sale of it.

And that sustainability is something to strive towards in the northeast.

“The northeast coal sector is still in early stages,” Bennett noted.

“They haven’t developed their mining operations to the same level [as in the south], they are not as invested and they don’t have their cost per tonne to where it would be if they had 4, 5 or even 20 years to work on it.

As long as the companies that are here stay committed to the region, it will eventually bring stability to the northeast coal sector.

But tell that to the workers that have recently faced lay offs in Tumbler Ridge, and you might see that they aren’t quite convinced just yet.

The minister pointed to Anglo American as a sign of things to come.

“They have the Roman mine permitted, it is ready to go when prices come back, “ he said. “That means you have Trend going, Roman and I think Teck is going to open Quintette, so long term I think it’s going to be good.”

In terms of sustainability, Bennett hinted that larger, more heavily financed companies, swallowing up the smaller ones might be a good thing for the market.

But in the short term, the reality is families not being able to pay their mortgages, and looking to sell homes and move at a time when no one can afford to buy.

“We will do everything we can as a government to help, but part of my message is don’t give up on the coal sector because we are moving in the right direction.”