A combination of falling coal prices and high production costs is forcing Teck Corp. to shut down its Quintette mine in northeastern British Columbia and lay off most of the site's 500 employees by the end of August.
Following talks with a number of stakeholders, including BC Rail Ltd. and Japanese steel makers, Teck has elected to close the mine rather than continue losses, which are about $1-million a month.
While production at Quintette will cease 2½ years earlier then planned, Teck will continue to operate the smaller Bullmoose mine nearby until the coal reserves there are exhausted in 2003.
"It is not as though this decision was made hastily," Teck president Mike Lipkewich told a Vancouver news conference, held shortly after Quintette employees were informed of the closure plan at midday yesterday.
The $1.25-billion Quintette coal mine and nearby town of Tumbler Ridge were built in 1984 to provide the Japanese steel industry with a secure source of metallurgical coal under 15-year contracts.
However, due to falling coal prices, the 2.5-million-tonne-a-year mine has been faced with financial difficulties almost from the beginning. Teck became the operator in 1991, after the megaproject's former developer, Denison Mines Ltd., sought court protection from creditors owed $750-million.
Yesterday, Mr. Lipkewich said Teck is closing the mine after seeing coal prices fall by 28 per cent in the past two years. On April 1, the price that Quintette receives for its output is expected to fall another $2 (U.S.) a tonne to $39.