Industry Says, Do Not Fear Over Drop in Coal Prices
A subject at the coal forum which was only briefly touched on was the recent drop in coal prices.
Though prices have started to slowly rise, and certain mines in the area that were not selling coal are again starting to, most presenting companies such as Walter Energy did not discuss this topic. However, there were a few comments made by Industry leaders pointing out that we should not live in fear of coal prices.
This idea may be hard for long standing members of the Tumbler Ridge community to accept, after the town itself was nearly shuttered after last market crash. The atmosphere of the Coal Forum was about long-term planning, remaining strong in harder times, and waiting for the price to rise again.
The big question, which has been on everyone’s mind over the last few months, is job security with the price of coal having dropped. “We are in a rollercoaster of price fluctuations but I think the theme of this particular conference is so timely. It’s about taking the long view and a long-term course in where we’re going,” said Stewart Guy, Executive Director, Policy, Legislation and Issues for the Ministry of Energy, Mines & Natural Gas. In a similar mode of thought Frederico Velasquez, representative from Anglo American (who owns the Peace River Coal (PRC) mining operations) made some comments about the race between Australia and Canada to get coal to Asia as well as how we should be reacting to the current coal price.
Anglo American has operations in both Australia and Canada. He says, “Coal prices are a difficult conversation for all of us. There has been a number of amazing people working for PRC operations which have been disappointed with the current prices of coal. We are here for the long run. We have demonstrated that by deciding in 2011 to fully acquire Peace River Coal operations. We have projects here that we will pursue regardless of the fact that there are some millionaire projects in Australia that have been shut down. That is not the case with the Roman project and our regional goal for the future. Canada has a great advantage. The coal product is unique and not only that but the geographical location allows for a closer transportation to the Asian market. There is one more component which is of surprise, and that is the labour cost. The Canadian labour cost is significantly reduced in comparison to the ones in other markets,” he continues, drawing chuckles from the crowd, “I’m not sure how long we are going to be able to keep that up.”
Ann Marie Hann, representative from the Coal Association of Canada, raised a valid question saying, “We heard a number of industry presentations today talking about projects need for housing, new employees, etcetera. We’ve heard how the companies are talking to various Aboriginal groups, governments and so on. I’m wondering what if any dialogue is happening amongst the companies themselves to see if there’s any kind of collaboration where companies working collectively can address some of the issues. Recognizing there is a competitive element, will there be opportunities to work on some of these issues together?”
In response Velasques said, “There used to be a Coal Consortium, which represented industry members in dialogue with community members, Aboriginal communities and governments. For one reason or another, the Coal Consortium was disposed. It is time now to re-asses that and see how the co-ordination between industry members in the area can facilitate that. We can certainly rely on The Coal Association of Canada and the Mining Association of B.C. to participate and assist our industries and stakeholders to make that happen.”
Though the topic of coal prices was not the focal point of the Forum, this seemed to be a positive. This shows the mining companies in the area are staying focused on their long—term goals and not giving into the fear that the market will crash.