New Coal Producers Call the West Home

Just when we thought western Canada’s coal industry was the exclusive domain of huge merged companies, there are not one but two new metallurgical producers in British Columbia. Western Canadian Coal shipped its first clean coal from its Dillon pit at Tumbler Ridge this month (December 2004). Pine Valley Mining began shipping metallurgical coal from its Willow Creek property near Chetwynd last September. Both companies are in the business for the long term, staging development so as to take advantage of cash flow.

Pine Valley has held coal leases near Chetwynd since 1979, but the lands were never developed. The Willow Creek property is well-situated on the main Canadian National rail line and with power and water to the site. The contract for truck-and-shovel mining was awarded to Tercon Construction. The contractor supplies the equipment and hauls the coal to the railhead 6 km away. Pine Valley built a small rail spur for loading 20 rail cars at a time in 2002, and construction of a full 100-car unit train facility will be complete in December.

There is no wash plant yet at Willow Creek. The pit has about 1.0 million tonnes of high quality coal that meets customer specifications without washing. A heavy media plant is being readied for operation next year. The production target is 2.0 million tonnes of clean coal per year.

“Mining the high quality coal gives us a cash flow to help pay for the wash plant,” noted executive vice-president Mark Fields. “The capital costs were $18 million in the forecast, but it looks like by the end of construction they will be $24 million.”

After the first million tonnes is mined from Willow Creek, there will remain about 14 million tonnes of recoverable reserves. Add to that the reserves of the Pine Pass leases (about 9 million tonnes) and 102 million tonnes of reserves defined on two other leases by previous owners, and it quickly becomes apparent that Pine Valley anticipates being in the coal business for at least 15 years to come.

About 90 km southeast of Chetwynd is the town of Tumbler Ridge, built for coal miners and their families in the early 1980s. But the two original mines have closed, Quintette in 2000 and Bullmoose in 2003. Many of the coal miners stayed put, taking jobs with fly-in/fly-out operations such as the new diamond mines.

It was as if the major companies gave up on coal in northeast British Columbia, Western Canadian Coal president and CEO Gary Livingstone told CMJ. “But WCCC had faith in the future of metallurgical coal.”

That faith led to outlining over 250 million tonnes of open pit and underground coal in 12 separate deposits.

With underutilized infrastructure and a local core of labour expertise, Western obtained several outstanding leases and set about creating the Dillon pit that made its first commercial shipment on Dec. 6, 2004. The Dillon pit is the small centre of the deposit where very high quality coal is being mined, crushed and shipped. No wash plant has been built yet. Pelly Construction won the truck-and-shovel mining contract.

Permits for the Wolverine pit are expected by early next year. With a timely official go-head decision, coal could be coming from the deposit as early as the third quarter of 2005. A wash plant would then be built and readied in the second half of 2006.

Western’s objective is to produce 5.0 million tonnes of clean coal annually within five years. It looks do-able. The Wolverine pit will turn out 2.0 to 2.4 million tonnes initially, and then output will rise to 3.0 million tonnnes. The Brule pit, surrounding the Dillon pit, should be coming on-stream in early 2006 at a rate of 1.5 million tonnes/year. Bumping Brule output up to 2.0 million tonnes, plus 3.0 million tonnes from Wolverine, and Western could meet its objective ahead of schedule.

There is an even bigger coal project ahead. Western and NEMI Northern Energy & Mining have signed a letter of intent covering the Saxon and Belcourt coal properties south of Tumbler Ridge. Together they will spend up to $20 million to update feasibility reports and re-explore the area beginning at Saxon North. The leases have perhaps 500 million tonnes of coking coal in their seams. If the 50/50 joint venture takes the properties to production, there will be another 6.0 million to 10 million tonnes of coal shipped annually.

Western and Pine Valley have revitalized coal mining in northeastern British Columbia, and they are on the way to making names (and profits) for themselves. The BC Ministry of Energy & Mines estimates there may be 3.0 billion tonnes of coal reserves in the province. There is certainly lots of opportunity for success in British Columbia.

Alberta coalfield reactivated

Grande Cache Coal railed its first shipment to the west coast early in October. The company has leases covering over 15,000 ha in the Smoky River coalfield in west-central Alberta. The metallurgical coal produced is exported through the Westshore terminal at Roberts Bank, B.C.

Surface mining has begun in the No.12 South B2 pit. The work has been contracted to North American Enterprises of Acheson, Alta. NAE is using a 27-m3 Hitachi EX 5500 shovel and six 2677-t Euclid EH 4500 haulage trucks. In the wash plant, the run-of-mine coal is cleaned by heavy media cyclones and froth flotation; then it is filtered and dried. Grande Cache Coal has also leased the No.7 underground mine, where production began in November. It is a room-and-pillar development using continuous mining machines.

Projected coal sales for the year beginning April 1, 2005, are expected to be 1.9 million tonnes. The company’s leases contain an estimated recoverable reserve of 32.6 million tonnes.