In the weeks since Conuma Coal Resources Ltd. bought Walter Energy Canada Holding Inc.’s northeast B.C. mines out of bankruptcy in September, the fledgling miner has reopened one mine and shipped its first trainload of coal.
It wasn’t what the company was expecting to do, but it jumped into action as prices rose, then surged, for coal used in steel making. Prices recently hit US$200 a tonne for fourth-quarter delivery, up from US$92 in the third quarter and just US$81 in the first quarter of 2016.
“We just feel so fortunate,” said Ken McCoy, the CEO of Conuma’s parent company, ERP Compliant Fuels of West Virginia. It wasn’t what the company had planned when it bought the mines. “Our intention was to buy these properties and sit on them, because the market just wasn’t there,” McCoy said.
The jump in prices pushed ERP Compliant into action and has helped improve the profit outlook for those low-cost producers still operating mines, such as B.C.’s Teck Resources Ltd. However, it has happened too suddenly for other mothballed mines to be reopened.
Teck, for instance, has been able to increase production from its mines in the East Kootenays. But Teck CEO Don Lindsay is cautious about reopening the dormant Quintette coal mine in B.C.’s northeast.
In notes to its third-quarter financial report, Teck said production cuts since 2014 in other countries helped tighten the global supply, changing it from a market surplus to a market shortfall, helping boost prices.
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