500 jobs lost as Quintette Coal shuts down

Plagued by dropping coal prices and high production costs, Quintette Coal and Teck have decided to close the Quintette coal mine, near Tumbler Ridge, B.C.

The announcement comes less than three months after an unidentified financial institution purchased the mine’s $62.5-million debt from New York investment banks. Teck secured the new loan with $42 million in working capital. Yet despite this reorganization, the mine lost about $1 million per month over the past 10 months.

The high-cost mine is slated for closure Aug. 31 — two and half years earlier than planned. Five hundred people will lose their jobs.

Opened in 1984 with much fanfare by the provincial government, the mine supplied metallurgical coal to Japanese steelmakers. Over the past two years, coal prices on global markets have plunged 28%, and no recovery is in sight. Contributing to the mine’s downfall were: rising international competition; worldwide coal surpluses; and the strengthening Canadian dollar’s negative impact on export revenues.

“We have assessed all areas for possible costs reductions,” says Quintette President Michael Lipkewich, “The numbers simply do not add up to a viable business.”

The mine produced up to 4.6 million tonnes of coal in 1990 but was expected to produce only 2.5 million tonnes this year. Its current coal supply contracts with Japan expire in 2003, the year in which it was originally scheduled to close.

Teck bailed the fledgling mine out of court protection against creditors in 1991 and took over management. Following a financial restructuring in 1992, the major acquired a 45% stake in the operation. The remainder is held by Quintette.

Teck’s lower-cost Bullmoose coal mine, also near Tumbler Ridge, will continue to operate but has only about three years of reserves left. Survival is in doubt for Tumbler Ridge, a remote community with a population of 2,500 established to service the two coal operations.

The company did not release a cost estimate for closing the mine but said that all employees and suppliers will be paid in full and that all environmental obligations will be satisfied.