2009 looks scary for Crowsnest Pass number one employer

Article reprinted from an Australian Newspaper dated Dec 22, 2008.

THE outlook for Australia's coal exporters has continued to weaken, with reports of further falls in contract thermal coal prices.
Japanese newsletter The Tex Report said first coal contracts for Japan's next financial year had been signed, with utilities getting coal at the export port at between $US70 and $US80 a tonne -- up to a 45 per cent discount from this year's price.
The report comes days after Xstrata Coal locked in $US80 a tonne prices for Australian coal for the 2009 calendar year, a nearly 50 per cent drop on recent contracts it signed at $US155 a tonne for the year starting October 2008.
Analysts said the outlook for thermal coal, which is used in electricity production, looked weak and Xstrata, the world's biggest thermal coal exporter, had moved to lock in prices to restrict further risk. NSW miner Gloucester Coal has also started to sign thermal coal contracts at well below this year's price. On Friday, Gloucester said it had locked in about 500,000 tonnes of sales for 2009-10 at an average above $US80 a tonne.
While better than the reported deals, it is well below last year's benchmark of $US125 a tonne.
Thermal coal prices are weakening as global energy prices slump and could drop further if oil prices continue to hold under $US40 a barrel. Credit Suisse analysts last week said oil at $US50 should correlate to a coal price of about $US80 a tonne.
A sudden drop in demand for coking coal, a better quality product used to make steel, is expected to have a flow-on effect as producers sell into thermal markets. "As a countermeasure to any softening in coking coal demand, the company will deliver into additional thermal coal contracts," Gloucester said.

Lets hope the upward movement in Teck's shares over the last week means a better outcome for our number one employer.

Jan 6 2009

This appeared in today's Globe and Mail

VANCOUVER — — — Western Canadian Coal Corp. [WTN-T] says it plans to reduce operations at its Brule and Wolverine mines in British Columbia, affecting hundreds of jobs, because of reduced demand from steel makers.
The company said Tuesday it will cut output at the Brule mine, which produces lower quality coal, to about 750,000 tonnes a year from its current rate of 1.3 million tonnes. The reduction is effective at the end of January.
Meanwhile, the Wolverine operation, which produces hard-coking coal, has informed employees it may cut operations effective May 18, subject to market conditions for the next coal year, the company said.
Western Canadian said 35 of its contractor's employees will be affected at Brule mine near Chetwynd, B.C.
Western Canadian Coal

It said the number of jobs affected at Wolverine, located just outside of Tumbler Ridge, B.C., is unclear at this stage, but that 300 of its contractor's employees and 100 of the company's own employees were given notice Tuesday.
The coal producer employed 530 people at the end of 2007.
Western Canadian also said it has given notice to the contractor at Wolverine to end the mining operation contract. The Wolverine operation has a current annual capacity of 1.6 million tonnes of coal.
The Vancouver-based company said the reduced operating rates reflect rising inventories as some customers defer shipments through the next few months. Western Canadian said it expects to operate at the lower rates until the current economic uncertainty improves and the demand for coal becomes clearer.
"I emphasize these plans are contingent on what the demand of metallurgical coal will be for the next coal year," said John Hogg, president and chief executive officer of Western Canadian.
"Whether we reduce operations and to what levels, will depend on the demand for our coal. We hope this will become clearer in the coming months. Until then, we continue to focus on working safely, increasing productivity and lowering costs to remain competitive through these difficult times."
Western Canadian produces metallurgical coal from mines in northeastern British Columbia. The company also has interests in various coal properties in northern and southern British Columbia and a 50-per-cent interest to explore and develop the Belcourt and Saxon group of properties in the north of the province.
The world's steel makers have been reducing demand for coal to fuel their blast furnaces because the slumping world economy has cut the prospects for growth in steel sales, especially in Asia.