Losses in 1990 push B.C.’s coal producers to the brink

British Columbia’s coal producers reported a record loss of $88 million in 1990, marking the worst yearly performance since the Coal Association began its compilation of results in 1982.

The primary cause of the deterioration of the industry is a progressive weakening in the price of coal. On an inflation adjusted basis, the price of coal is 50% that of 1982 levels.

As a result of the losses, the association believes the survival of British Columbia’s coal industry is in jeopardy.

Peter Dolezal, chairman of the Coal Association, stressed the need for government initiatives if the industry is to survive.

He said repeated submissions to governments to address key issues have gone unheeded, and he outlined a restrictive monetary policy, inequitable taxation as well as barriers to both interprovincial and international coal trade as problems the government should address.

But he also stressed that the industry was not looking for incentives, just a level playing field. Figures in the 1990 review completed by Coopers and Lybrand show the total tax burden has remained little changed since 1982 despite the deterioration in financial results.

With coal priced in U.S. dollars, the Bank of Canada’s policy of maintaining what Dolezal referred to as “an artificially high Canadian dollar” is aggravating low prices. The industry report estimates a total of $220 million in revenue has been lost by British Columbia coal producers since 1988 due to the inflated level of the Canadian dollar.

Another policy attacked by the association is provincial taxes levied against railways and the fuel they consume. Dolezal said the tax adds about $1 per ton to coal transported to the west coast, and about $2 per ton to coal travelling to Ontario.

Municipal taxes were also targeted. The association is calling for decreases to bring property taxes in line with those levied by other western provinces.

Peter Dolezal is also the president of Westar Mining (TSE).