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VANCOUVER — A devastating price slump is hammering British Columbia’s coal sector as a U.S.-based company halts mining in the province while other players face mounting pressure.
Walter Energy Inc. highlighted the troubles Tuesday when it announced its decision to stop B.C. mining until coal prices recover.
Last week Virginia-based James River Coal Co. filed for bankruptcy protection in the United States, underscoring tough times in the global industry.
The coal industry has traditionally been a key driver of B.C.’s economy, with companies generating billions of dollars in revenue every year and employing thousands of workers. Now producers are starting to question the viability of their projects as prices hit new lows.
In 2011, coal prices soared to $300 (U.S.) a tonne. Prices for metallurgical coal have since tumbled to roughly $120 a tonne, hurt by ample new supplies from Australia, slower-than-forecast economic growth in China and a shift away from long-term coal pricing contracts that had provided some stability.
The temporary shutdown of Birmingham, Ala.-based Walter Energy’s Wolverine mine near Tumbler Ridge in northeastern B.C. resulted in the layoffs Tuesday of 415 workers.
Another 280 employees are to be affected, largely due to suspending the nearby Brule operation by July.
Last year, the company temporarily closed its Willow Creek mine and laid off 250 B.C. staff. The miner – which has coal mines in Canada, the United States and Britain – produces metallurgical (or coking) coal, an ingredient used to make steel. The company expects to incur second-quarter severance charges of $7-million related to the B.C. operations.
Coal from northeastern British Columbia is transported by rail to the northwest part of the province, where the Ridley Terminals Inc. export facility in Prince Rupert serves as a gateway to Asian steel mills.
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