The announcement last month that Walter Energy was shutting down Willow Creek coal mine has been a bit of a shock to the local mining industry. While there aren’t people running panicking through the streets, the mood has sobered, just a bit.
The news is still nearly overwhelmingly positive. Teck is still working to restart Quintette. HD Mining will find out in the next week or so what’s happening with their plans to bring temporary foreign workers into town. The Echo Hill Coal mine is still in the works (though that one is, admittedly, not a met coal mine and prices for thermal coal are not tied to the steel industry, like coking coal is.)
Colonial still continues to find new reserves in the Huguenot area. Anglo is still working on expanding onto Roman Mountain. Both Xstrata and Cardero are continuing on with their Environmental Assessment. And the Wolverine Mine continues to be Walter’s flagship mine. The news is good.
And yet. The closure of Willow Creek casts a bit of a pall over the optimism. A cloud across the sun. It’s still a beautiful day, but…
The first go around, the mines were rumoured to be closing almost from the day they were opened. Some people steadfastly refused to believe that they would close, and rode that pony to the ground. Others just nodded and muttered “told you so,” as they collected their last paycheque.
Just the other day, a story showed up on Mining.com saying that Iron Ore prices were expected to drop to $90 by the end of the year, down from $135.
While the price of iron ore and met coal are not joined at the hip, they are fairly closely related. Part of the reason for the drop in prices, says the article, is over supply.
With spot coal prices also dropping, down another $4 last month, perhaps Met coal is also over supplied. In which case, maybe having a half dozen new mines in the work is not the best thing for the industry. But that’s just the way things work. Someone starts making money doing something and everybody rushes to do the same until nobody is making any money.
Robert Craike, the head honcho over at Anglo’s Trend mine, says that if the mine had been running like it was a couple years ago, it probably would be going the way of Willow Creek. Fortunately, the spread between the cost of producing the coal and the amount of money made when the coal is sold is large enough, and enough coal is being produced, that the mine remains profitable.
And Wolverine? Well, Walter isn’t saying anything, but the scuttlebutt is that it is one of Walter’s best producing mines. The cost per tonne has gone down 45 percent over the last few years, and a drop in cost per tonne is nearly as good as an increase is price per tonne.
While most old timers will tell you that we’ll never go back to 2001, people need to remember that mines are cyclical, and that there’s a reason why it’s called a boom and bust cycle. Right now we’re booming, but to ignore the fact that we might bust would be willfully ignorant.
And Tumbler Ridge isn’t the same town as it was at the end of the 1990s. We aren’t just a coal mining town. Sure, one wind project does not a diverse economy make, but it’s a start. And bump into someone on the street and there’s a good chance that they may work in the oil and gas industry and not mining at all.
There’s even the new Community Forest that’s just waiting for a forestry sector to develop here in Tumbler Ridge. While forestry is also subject to the same booms and busts as mining, they do not move in lock step, and if one is down, there’s a good chance that the other one is not.
So, I guess what I’m trying to say here is something that has been said by someone much wiser than I: Don’t Panic. While a cloud passed across the sun, it is still a beautiful day (yes, I know, it’s still snowing; it’s a metaphor. Work with me, here.). But also, don’t be unprepared. Enjoy the weather while it lasts, but don’t forget to carry an umbrella.