Cheviot coal mine still in ‘limbo of procedural hearings’

The proposed Cheviot coal mine, near Hinton, Alta., is still on hold pending the findings of a panel report from a second set of environment-related hearings held this past spring. The report is expected sometime in September.

The Cheviot project has been trapped in a limbo of procedural hearings since a federal court overturned its operating permits early last year. The project’s main opponent, the Sierra Legal Defense Fund, was successful in using the courts to stop development on the grounds the operator had failed to consider underground mining as an alternative to the planned open pit. The opponents also asked that the cumulative effects of the project be assessed.

Operator Cardinal River Coals has gone back to the drawing board to commission a series of studies for the review panel. Cardinal River is 50%-owned by Edmonton-based Luscar.

“We don’t expect any surprises from [the report], because the evidence in the hearings really didn’t result in any new concerns about the potential Cheviot operation,” says Gordon Ulrich, president of Luscar.

Once Luscar receives the report, the federal government is required to respond. If the response is favourable, the company can reactivate permits that were previously rescinded.

“At that point, we would be faced with having to decide whether or not we want to build Cheviot,” says Ulrich. “That will require another review of the situation with our partner, Pittsburgh-based Consolidation Coal.”

Luscar, like other coal producers, is feeling the pinch of the downturn in international coal markets. Continued weak prices have prevented the Luscar Coal Income Fund from receiving dividends (from its investment in Luscar) during the first six months of this year — a trend that is expected to continue in the years ahead.

“If [market] conditions stay more or less the same, it would probably take about three years before we would be able to resume distributions,” Ulrich states.

For the six months ended last June 30, Luscar earned $56.2 million, compared with $70 million during the corresponding period of 1999. The latest results reflect losses and closure costs of the Gregg River mine, also near Hinton.

The closure this past August was due to unfavourable geological conditions encountered during mining, combined with disappointing drill results in both the Sphinx Creek and the West Extension areas.