The 1987 Coal Review WESTAR

Vancouver-based Westar Mining is Canada’s largest exporter of metallurgical coal although it also exports thermal coal. The company is 66.6% owned by British Columbia Resources Investment Corp. and 33.4% held by 10 Japanese corporations which are consumers of the company’s coal. Facilities include surface mines and coal-processing facilities; and

* the Balmer mine, near Sparwood in southeastern British Columbia.

* the Greenhills mine, about 35 km northeast of Sparwood at Elkford, B.C.

* The Greenhills mine is a joint venture between Westar (80%) and Pohang Iron & Steel of Korea (20%).

In 1987, in order to mitigate the effect of further declining prices and volumes, Westar continued to focus on cost effectiveness, productivity, product enhancement, reliability and diversification of market base.

Improvement programs included revision of mine plans to meet changing demands on a long-term basis and to shorten hauling distances, reduce stripping ratios and provide better access to additional coal seams; changes to mining and maintenance of business procedures to increase efficiency and reduce ongoing costs; major organizational changes including decentralization of the Balmer and Greenhills mines, relocation of administrative functions from Vancouver to the mine sites and significant staff reductions; development of new blends of coal to meet the changing needs of customers; and aggressive development of markets in the U.S., Asia, Europe and Central and South America.

The benefits of the foregoing are illustrated by the fact that, with 28% fewer employees, Westar produced more coal than it did five years ago and now exports coal to more than 20 countries.

Representative of the company’s progress in 1987 is the installation of a raw coal conveyor at the Balmer mine, not to mention the development of special blends. The conveyor hauls coal about 4 km to the breaker station from the mine, thereby replacing conventional truck hauling.

The company’s marketing and cost- reduction efforts have only partially offset the substantial impact of falling prices. While Westar shipped 5.4 million tonnes of metallurgical coal and one million tonnes of thermal coal in 1986, with revenues amounting to $370.7 million, the company reported a loss of $6.2 million from mining operations. In the first nine months of 1987, 4.4 million tonnes of metallurgical coal were shipped as well as 700,000 tonnes each of thermal coal and other blends.

Revenues amounted to $301.5 million and the reported loss from mining operations was $4.2 million. During the period the Balmer mine shut down for six weeks to control inventories because of volume reductions, while the Greenhills mine operated at full production with no shutdown.