The 1987 Coal Review QUINTETTE

Quintette Coal is located near Tumbler Ridge in northeastern British Columbia. It has long-term contracts for the supply of five million tonnes per year (plus or minus 5%) of high-quality metallurgical coal to the Japanese steel industry buying group. At the end of 1987, the Japanese buyers of Quintette coal decided to refer the ongoing sales price negotiations to arbitration in British Columbia, requesting that the long- term contracts be cancelled. Nevertheless, Quintette is confident that such a request is without merit and that the pricing dispute will be settled in accordance with the intent of the long-term agreements.

In 1987, Quintette produced a total of 4.4 million tonnes of metallurgical coal product. This level was kept down from the previous year in order to reduce product inventory levels at the Prince Rupert port facility. Productivity and efficiency improvements in both mine and plant were such that, on a volume-adjusted basis, unit costs of producing a clean tonne of coal were at the 1986 level. This fully offset the costs of an increased stripping ratio.

Sales of metallurgical coal for the 1987 coal year will be 4.75 million tonnes, which is a 5% reduction from the full contract tonnage, as permitted under the sales agreements. Sales for 1988 will remain at the same level.

The Mesa and Wolverine pits continued to supply the bulk of the coal production through 1987. Pre-stripping work continued on the Mesa Extension reserve in accordance with the long-term development plan. This expansion of the original Mesa reserve will add some 23 million tonnes of product coal. Its initial development is under way.

The processing plant operations successfully implemented a new operating schedule which has resulted in a 4% improvement in productivity in spite of the significant reduction in plant throughput.

The major new development for Quintette during 1987 was the official opening of the Shikano Pit. The first full year of development in this reserve has been very successful. New operating techniques have been developed which will result in higher coal recovery and minimal out-of-seam dilution. All primary areas of the pit were active by year-end with one Demag shovel, two Demag backhoes, and one ph 2300 in opertion. Shikano will contribute 20% of Quintette’s coal producton during 1988.

At year-end, Quintette’s primary mining fleet included two diesel Demag backhoes, five electric Demag H241 shovels, four ph 2800 shovels, two ph 2300 shovels, and five L1000 frontend loaders. The haulage fleet includes 52 Wabco 170 D Haulpak trucks and three Caterpillar 776 belly- dump coal trucks. Blast-hole drilling is carried out with four ir-dmh drills, four gd 120 drills, and one gd 70 drill.

With the establishment of full production in Shikano, coupled with existing production capacities of Mesa and Wolverine, Quintette has now developed sufficient capacity to sustain the existing contracted annual production through the 10 1/4 years remaining under the present long- term contracts.

The total Quintette workforce at the end of 1987 was 1,374 employees compared with 1,405 at the end of 1986. A 3-year trend of safety achievement was continued with an accident frequency of 1.9 in 1987. This level is half the 1986 level and one-third that for 1985.