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CALGARY — Coal industry watchers say that while their sector is hurting, the picture isn’t as bleak as two reports this week have painted.
Canada’s coal export market, which is made up almost entirely of metallurgical coal used in steel making, has taken a major hit in recent years as prices have dropped from more than $300 (U.S.) a tonne in 2011 to less than $90 a tonne this quarter because of continued oversupply and slowing demand from China.
Grande Cache Coal cited the difficult market conditions when it announced plans this month to temporarily shut its coal mine in northwestern Alberta, starting Christmas Eve. The move means more than 220 people will be laid off, which is in addition to the 250 jobs the company cut earlier this year.
Teck Resources Ltd. also resorted to shutting its six coal mines earlier this year for three weeks to reduce oversupply.
Joe Aldina, a coal analyst at Wood Mackenzie, said that while there is no quick fix for the oversupply in the industry caused by China’s economic slowdown, India should start to pick up where China left off by the early 2020s.
“Met coal is a very cyclical business and demand for met coal will rebound,” said Aldina. “It’s going to turn a corner, but it does take some time.”
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