Trent Ernst, Editor
We’ve expressed cautious optimism here at the paper around the price of coal. “It can’t go any lower,” we’ve said, only to be proven wrong.
Case in point: last week the news broke that met coal prices had dropped another 15 percent, dropping to US$93/tonne, the lowest the price has been since 2004.
That’s according to the Wall Street Journal.
Mining companies and local miners can’t help but think back to the halcyon days of just four years ago, when coal prices were US$330/tonne.
But when coal prices get so high, companies get greedy, and the amount of coal being produced globally has skyrocketed as new mine after new mine has come on-stream, or as already established mines have ramped up production.
This has coupled with a decrease in demand from China, and whither China goes, the market surely follows.
And, while industry analysts have been cautiously optimistic that prices will start to rebound, the date that rebound will happen keeps getting pushed farther and farther out. Now word on the street is don’t expect to see any significant recovery until at least next year.
And that recovery is most likely going to come over the bodies of various mining companies.
According to a report from oil Giant BP Energy, the Chinese government has been working on reducing the amount of pollution the country is producing, and placing restrictions on heavy industry.
This has lead to a change in the Chinese economy, away from construction and towards consumption.
While other countries, like India, have started to pick up some of the manufacturing slack, it’s only a fraction of the Chinese production.
So, met coal producers rushed to meet a demand that never materialized, and glutted the market.
Because while the demand has not kept apace with the supply, it is still growing. If coal miners had simply kept manufacturing at the same rate as before, and slowly ramped up production, the amount of production wouldn’t have outpaced demand by quite so large a margin and the price wouldn’t have fallen through the basement.
But it has ever been thus. The trouble with the boom is that it eventually goes bust. Pick your commodity and you will rarely find any degree of stability. One person says “ooh, I need more X,” and, in this global economy, even if only one person from each country moves to meet that demand, there are still going to be 196 people trying to sell X to that one person. That puts the power firmly in the hands of the buyer who can force a bidding war with the seller until they’re selling X at below cost.
Back to Tumbler Ridge, and what does that mean for the town? Well, for the miners, it means more belt tightening. More waiting. More looking for work outside of town.
But slowly, ever so slowly, Tumbler Ridge is moving away from its black roots and towards a diversified future. This is happening deliberately, as the municipality works on diversification strategies, and it is happening quite by accident, as people, desperate for a way to provide for their families, suddenly come across a new way to make a living. As new people, drawn to Tumbler Ridge by the promise of cheaper rent move here and fall in love with the place.
The refrain I keep hearing is that this time around isn’t like last time around. There isn’t the same mass exodus. And that’s the thing. With each change, with each new person who moves here, with each old person who moves away, the town changes and becomes someplace new. And the future becomes harder to interpret through the lens of just a coal mining town. It’s scary and worrisome and, above all, it’s exciting.
So here’s to the future, impenetrable and unsure as it may be. Enjoy the ride.