Coal Is Still King

Coal | BCBusiness

The industrial-age commodity accounts for more than half the province’s mining revenue

With protests over carbon fuels in general and shipping-terminal expansions in the Lower Mainland in particular, coal is a controversial commodity. But it’s hard to deny the economic impact it has on B.C.’s economic fortune.

Not only is B.C. Canada’s largest exporter of metallurgical coal, but the steelmaking ingredient also remains the dominant resource in the province’s mining sector, representing 44 per cent of the $7.8 billion in mining revenue in 2012. B.C. has nine coal mines producing steelmaking coal, operated by three main companies, employing more than 5,000 workers.

Even though coal prices have recently fallen by more than half from a record US$330 a tonne in 2011, plans are underway to expand operations to help feed continued demand in export destinations including Japan and South Korea.

Tumbler Ridge offers a stark illustration of B.C.’s reliance on coal mining. The northeastern B.C. district was built in the early 1980s to support the coal industry, following a purchasing agreement with a group of Japanese steel mills to buy product from two key mines in the area.

A few years later the price of coal began to slide and production levels dropped, as did the Tumbler Ridge economy. The Quintette mine closed in 2000, followed by the Bullmoose mine in 2003, and the town’s population fell by more than half, to about 1,900 people.

Tumbler Ridge has been recovering since, thanks to a comeback in coal prices and exports over the past decade. While the district has been trying to diversify, “coal is still the engine that drives Tumbler Ridge,” says Mayor Darwin Wren. The community received some good news in August when London, England-based Anglo American PLC announced plans to invest $200 million in expanding its coal operations in the area. While Teck Resources Ltd. has delayed restarting its Quintette mine, Wren and others in the area remain hopeful.

Teck’s Quintette mine apprehension has more to do with conserving costs during a period of austerity in the mining industry, than contrarian outlooks. BMO Capital Markets coal analyst Meredith Bandy explains that Teck is focusing on maximizing output at its larger coal mines in the Elk Valley region of southern B.C. before looking to restart operations at Quintette.

While it may be at a slower pace than a couple of years back, production, development and exploration activity continue across the province’s coal belt. The B.C. government is heavily promoting natural gas as the next big export, but coal will have its place for the long haul.