PRC “winding down” by end of the year

Trent Ernst, Editor

 

The last mine standing in Tumbler Ridge has announced it is winding down operations, and will be going into care and maintenance mode in December.

“We announced to our staff yesterday at 3 pm that, from here forward to December, we are going to be winding down operations,” said Federico Velasquez, Director of Corporate and External Affairs for Canadian Operations for Anglo American.

Like Walter Energy, the mine is not going to be closed, but put into care and maintenance. Velasquez says that a small care and maintenance team will remain on site, making sure that everything is ready when market conditions improve. “We’re going to be working on our growth plan,” he says.

The mine will also keep an exploration team on-site to work on preparing for future expansions to the mine and other Anglo American properties in the area. “This is not a withdrawal from our growth plan in Canada,” says Velasquez. “This is a response to market conditions. The price of coal has fallen down to $120, and it came to a point where we can no longer hold on to the losses that we’re taking.”

Over the next four months, says Velasquez, the mine will be offering counseling to its employees, and working with the community to see what it can do to assist its workforce. “We are committed to all our employees,” he says. “We are talking to all our partners to see if there are places where people can be employed for now.”

Velasquez says that one of the biggest things he’s been hearing from the employees is that they are grateful for the four month lead time, something that Walter did not do when they went into care and maintenance mode in April.

Employees showing up to work at Walter were sent home that same day, and told they would no longer be working. The abruptness lead to hard feelings among employees and a Labour Relations Board Challenge, saying that Walter failed to give employees proper notice. The Labour Relations Board agreed, and awarded 60 days back-pay to all USW employees at the mine.

Velasquez says that the mine closures are hitting the north because the cost of operation is higher. “It makes sense,” he says. “When you have a large operation with massive production, your operating costs are reduced. The idea is that if you have production of 4 million tonnes, you’ll be able to hold on a bit more as the cost per tonne is less.”

This is one of the reasons why the recent spate of mine closures are hitting northern BC harder than southern BC, where the cost per tonne is closer to $80/tonne, rather than the $120+ it is up here. Even the smallest of the southern mines, Teck’s Coal Mountain, was expected to produce 2.5 Million Tonnes (Mt) in 2013.

The southern mines are also all owned by Teck, which allows them to purchase in bulk, as well as reduce the cost of shipping.

While Anglo worked hard to up the volume and reduce operating costs at Peace River Coal, it wasn’t enough. Velasquez says that, when the mine re-opens and Roman Northwest comes into production, the mine will be up to about 4 Mt, which should mean that the cost per tonne should drop substantially. “We do see a significant long-term growth potential,” says Velasquez. “And Peace River Coal does remain an attractive asset. It’s just a pause in our operations. We will retain all our assets in the area.”

To that end, Anglo will complete all preparation works for Roman prior to the care and maintenance period.

An anonymous employee says the announcement caught him off guard. “We had just got into Roman, and the last time this had been discussed they were saying that with a six to one strip ratio we could even make money at today’s prices (six month ago prices) there. I guess prices just dropped enough to change that. I can tell you that some people who knew the financials were surprised that we lasted this long.”

Seamus French, Anglo American Coal’s CEO, said: “Significant reductions in operating costs and reduced mining activity have failed to offset the impact of a weakening metallurgical coal price. As a result, we have been forced to take further action in response to the weak market conditions, so that we can preserve the long-term future of the operations.

“We will ensure that the operations can be re-started as quickly, efficiently and safely as possible when the market improves. Our immediate priorities are to provide the support to our employees that they need at this difficult time and to stay focused on a safe transition to care and maintenance by year end.”

We Ain’t dead yet

That’s the message coming out of the District of Tumbler Ridge, who sent out a press release after receiving the news regarding Anglo American’s decision to move their project into care and maintenance. “We would like to express our condolences to all of those affected by the announcement,” says the release. “We are deeply concerned about the impact of this announcement on workers and families. We will be working with all of our community, provincial, and federal partners to help support our residents over the coming months.”

However, the release goes on to say that the District has worked to diversify its economy. “Where none had existed, we now have a major wind farm in operation, one in construction, as well as others in exploration. Oil and gas operations have grown, a community forest has been created and expansion plans suggested, a UNESCO GeoPark application, the second in North America, has been submitted, and all season tourism and outdoor recreation opportunities continue to grow. Over the past 18 months we have been developing a community sustainability plan to further diversify and strengthen the economy and the community.”

While Tumbler Ridge is once again dealing with the closure of both its mines, the town is no longer in the same place. “We are in a much stronger position today to deal with the impact of this announcement than when a similar situation occurred 15 years ago. We will continue to work closely with our partners: the provincial government, Anglo American, industry generally, the local business sector, UNBC, and others. The District will make every effort to keep our citizens and partners informed about what is happening as we move forward.”