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Anglo American expands B.C. coal mine with eye on Asia

Despite a 50-per-cent plunge in the price of coking coal, Anglo American is planning a $200-million multi-year expansion at its B.C. operation.

Anglo American

Anglo American PLC is expanding its northeastern B.C. mine, betting that the quality of the coal and the ease of transport to Asia will help the company win more contracts from steel makers in Japan, China and others in the region.

London-based Anglo American, one of the world's largest mining companies, will make the expansion announcement Thursday at its operations near Tumbler Ridge, B.C., about 700 kilometres northeast of Vancouver.

The company has budgeted $50-million for the first phase of a $200-million, multiyear project to boost output of coking (or metallurgical) coal, a key ingredient in the production of steel.

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Seamus French, head of Anglo American's metallurgical coal division, said in an interview that its Tumbler Ridge coal is high quality, and that the rail line transporting it to the port of Prince Rupert for export is underutilized.

"We see fantastic long-term potential," he said in an interview, adding that the mining expansion will provide employment security for the 420 Anglo American workers in B.C. as well as generate 100 construction jobs.

Mr. French and Mark Cutifani, an Australian who was appointed Anglo American's chief executive officer in April, will be at the Roman mine site to unveil details of their company's decision to ramp up production.

The expansion is occurring even though coking coal prices have plunged more than 50 per cent over the past two years, to $147 (U.S.) a tonne.

Current output of 1.5 million tonnes a year of metallurgical coal at the B.C. venture is expected to rise after the initial expansion is completed in the first quarter of 2014, clearing the way for a production rate of 2.5 million tonnes annually, Mr. French said. Total output may rise to as much as four million tonnes a year in subsequent phases.

Mr. Cutifani's move to expand the company's lone Canadian coal mine follows a series of setbacks over the past year in the global mining sector, which has been hard hit by sharp falls in prices for commodities, such as gold, silver and coal. Vancouver-based Teck Resources Ltd. decided three weeks ago to delay restarting its Quintette coal project, also located near Tumbler Ridge. Teck, which closed its Quintette operation in 2000, received provincial permit approval in June to revive the project. But Teck said on July 25 that it wants to see a recovery in the metallurgical coal market before proceeding with Quintette.

Anglo American has taken steps to avoid environmental and other hurdles that have stalled other large mining projects. In British Columbia, the company has committed to building a water management system to treat a metal-like element known as selenium. As well, it has pledged to set aside 1,852 hectares of its tenures to protect caribou habitat and contribute almost $2.6-million (Canadian) toward the Peace Northern caribou plan.

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Anglo American also plans to award construction of the first phase of mine expansion to a firm owned by First Nations, and expects to sign economic benefit agreements with West Moberly First Nations and other native groups.

Steel manufacturers in Japan, South Korea, China, Taiwan and India are among the customers that have been ordering metallurgical coal from Anglo American's B.C. mine.

Anglo American, which wholly owns the B.C. project through its Peace River Coal Inc. subsidiary, also operates six coal mines in Australia.

Bill Bennett, B.C.'s minister of energy and mines, will be on hand for Thursday's announcement at Anglo American's Roman property site, which is near the company's existing Trend mine. The Roman project will effectively be a 499-hectare expansion of the Trend mine, and help extend the life of the company's coal mining operations in the region by 16 years.

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About the Author

Brent Jang is a business reporter in The Globe and Mail’s Vancouver bureau. He joined the Globe in 1995. His former positions include transportation reporter in Toronto, energy correspondent in Calgary and Western columnist for Report on Business. He holds a Bachelor of Commerce degree from the University of Alberta, where he served as Editor-in-Chief of The Gateway student newspaper. Mr. More

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