WCC ready for tougher times

WESTERN Canadian Coal expects to weather the global economic uncertainty despite production cuts at its Wolverine and Brule complexes in northeast British Columbia and a tougher coal market.
WCC ready for tougher times WCC ready for tougher times WCC ready for tougher times WCC ready for tougher times WCC ready for tougher times

Courtesy Western Coal

Donna Schmidt

In an operational update, WCC reported sales averaging $US280 a tonne late last year and anticipates prices to average $250/t in the current quarter.

The prices are averaged as Brule produces low-vol pulverised coal injection coal while Wolverine is primarily a hard coking coal operation.

Because of falling prices, WCC said it had already closed forward sales contracts totalling $US145 million with a realised gain of $C4.9 million.

That leaves the producer with a remaining $US97 million in forward sales deals with monthly maturity through April.

WCC said it was poised to overcome the economic downturn.

“With a net working capital position of approximately $US120 million, which includes $US75 million in cash in the bank, no bank debt, and the implementation of the cash preservation plan, the company is in a strong position to weather the short-term economic uncertainty,” WCC president and chief executive John Hogg said.

Earlier this month WCC said it would reduce operations at Wolverine and Brule, one by the end of the month, while the other could close completely.

The company said Brule would drop to an annual production rate of 750,000t by the end of January, from a prior run rate of 1.3 million tonnes per annum.

Meanwhile, WCC informed Wolverine crews that output could be curtailed May 18 of this year pending market conditions.

The 1.6Mtpa complex has already sent notice to terminate the mine’s operations contract, as any resumption of production will be done by WCC.

WCC blamed increases in inventory paired with deferred shipment plans by customers over the next few months.

“With the current production curtailments taken by some customers, along with the uncertainty of the coal markets beyond April 2009, the company has made these prudent decisions … [and] expects to operate at these rates until the current economic uncertainty improves and the demand for coal becomes clearer,” officials said at the time.

“When the markets do improve, the company has the flexibility to quickly increase operating rates and also pursue its growth plans.”

Cambrian loan closes

WCC also announced its $US36 million loan to Cambrian Mining division Cambrian Investment Holdings has closed.

The company said the money was used to pay off CIH’s indebtedness under a financing facility with UK group Investec Bank Limited.

Cambrian Mining, based in London, works in metallurgical coal, thermal coal, gold and antimony production within West Virginia, Western Canada, Wales and Victoria, Australia.