Coal and Uranium POOR COUSINS

That latter price offers some basis for optimism, and Noel O’Brien, Denison’s vice-president of minerals and marketing, points to another. “The actual consumption of uranium by reactors exceeds production by uranium producers,” O’Brien told The Northern Miner Magazine. “The difference is being made up by inventory from utilities (operators of nuclear power stations with excess uranium stocks). This is the third year in a row. This, of course, means inventories are being drawn down.”

Coal, too, has had a rough run too in the recessionary and post-recessionary periods. Metallurgical coal currently fetches about $46 (us) per tonne. That’s a considerable increase over the $30 price producers were negotiating back in the recessionary trough. But this is just adequate for many Canadian producers. (Prices quoted here are a rough average. Contract prices run as high as $100 (Canadian) per tonne.)

“We’re looking for a price increase — there’s no doubt about that,” said Richard Marshall, president of The Coal Association of Canada, a nation- wide group of coal mining companies. “The early 1980s were not good. There was an oversupply (of metallurgical coal) in the international market, but we survived. We haven’t lost any mines because of low coal prices.” The Japanese steel market, which last year imported 19.9 million tonnes, or better than half of Canada’s total sales of 35.6 million tonnes, is the key to a healthy C anadian metallurgical coal industry. While the Japanese steel firms are prospering today, many economists are predicting a recession next year. The Coal Association seems to be playing it cautiously.

“We’re still looking at that (short- and medium-term market) as being fairly flat as far as growth is concerned. It’ll be something less than 1% per year in total seaborne trade over the next four or five years.”

And the price? “We’re not expecting a big run-up, but we’re expecting a good increase.” The posturing between suppliers and buyers over next year’s shipments will begin late this year, but only by late spring will prices and deliveries be nailed down.

In this decade, the domestic metallurgical coal market was hammered by the recession and by Canadian overproduction. The opening up of the northeast coalfields, namely Tumbler Ridge, contributed to the oversupply.

Thermal coal for electrical generation is another matter entirely. Most Canadian thermal coal production is consumed by domestic energy generators. The thermal coal outlook, both nationally and internationally, is far brighter, Marshall said. In Canada, the current price is roughly $34 (us) per tonne. But international demand, forecast to double by the turn of the century, will affect the domestic market. International trade in thermal coal last year ran between 137 and 141 million tonnes. The Coal Association is predicting growth rates of 3% to 5% per year to the end of the 1990s.

So the producers of coal and uranium are optimistic. But that’s no surprise. They’re miners after all.

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