Quinsam mine closing marks ‘end of an era’ for Vancouver Island coal

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The closing of the Quinsam mine near Campbell River, the last operating coal mine on Vancouver Island, is a symptom of a sustained market downturn that is squeezing the mining industry across Western Canada.

Since B.C.'s Liberal government announced a jobs plan in 2011 that promised eight new mines in operation by 2015, the slide in commodity prices – particularly for coal and molybdenum – has precipitated a string of closings across the province. In the past 13 months, seven mines have shut down operations and there are now roughly 8,000 people working in the industry, down from the 9,300 that were employed in 2011.

But the Quinsam mine closing is also part of another story.

"That's the end of an era," said Karina Brino, president and chief executive officer of the Mining Association of British Columbia.

The first permanent settlement by Europeans in what is now B.C.'s capital began in 1843 as a fur-trading post, but British settlers were soon diverted by the island's rich coal seams.

"It's not an exaggeration to say coal built Vancouver Island," historian John Lutz said.

"In 1849, First Nations led the traders to coal and they thought they had hit the jackpot," the University of Victoria professor said. The first find turned out to be a bust, but other finds soon followed and the towns of Nanaimo, Cumberland, Union Bay, Ladysmith and others sprang up with populations of colliers and coal barons.

Unlike the short-lived gold rush in the Cariboo, coal would be a major economic driver for Vancouver Island for half a century before other commodities would take precedence.

But coal seemed to be poised for a comeback in 2011. The owners of the Quinsam mine, Hillsborough Resources, applied for an expansion permit. Around the province, mining executives were bullish and the industry's exploration arm posted a record-breaking year for investment in 2012.

Industry officials say much of the downturn is cyclical – a prolonged but not permanent downturn. Some new mines are still opening, and on the mainland, five coal mines operated by Teck Resources Ltd. remain in operation with a total of about 3,500 employees. But the rest of the coal mines are shuttered, eliminating about 1,600 jobs.

Teck is hanging in on the expectation that prices for its metallurgical coal – a key ingredient for making steel – will come back.

However, for Vancouver Island's thermal coal producers, the story is different. The challenge is not just low commodity prices, but the shift away from thermal coal-fired generation of electricity in favour of less polluting sources of energy. Most of their market was domestic and Alberta has committed to phasing out coal-fired power plants as part of its climate-change agenda.

Gavin Dirom, president and CEO of the Association for Mineral Exploration British Columbia, said the Quinsam shutdown is a notable page in the industry's history. "The province was built on rock and coal. … It was a really important industry."

But he said the rest of the sector remains relatively upbeat. His organization is hosting a conference this week in Vancouver, and amid the gloom, there are some things to celebrate.

"Our industry has been down now for well over three years. It's a protracted downturn, deeper and longer than almost anyone has experienced," he said. But he added that there remains an expectation that the markets will rebound at some point.

"We are explorers and developers. We are always looking decades ahead, we are not going away."

Neither industry nor government can change commodity prices, but the mining sector is leaning on the provincial government to make regulatory changes and provide electricity rate relief that will be more favourable to companies trying to weather the downturn. An official from the Ministry of Energy and Mines said "urgent" work is under way to address industry's needs.

Ms. Brino hopes those changes will come quickly. "Something needs to be done. In the first two weeks of 2016, two mining companies have made the difficult decision to go into care and maintenance, and the impact on the communities where they operate is significant."