Prices leave WCC on high

HIGHER coal prices and favorable foreign exchange rates have resulted in a record quarter for Vancouver-based Western Canadian Coal in the December quarter, highlighted by $C62.5 million net income.
Prices leave WCC on high Prices leave WCC on high Prices leave WCC on high Prices leave WCC on high Prices leave WCC on high

Western canadian Coal's Wolverine coal stockpile and rail loadout August 2006.

Donna Schmidt

Income from mining operations was $94.2 million, compared to a loss of $7.9 million in the 2007 December quarter.

WCC attributed the gain to contract prices.

During the period, WCC shipped 513,000 tonnes – a drop of 26% period-over-period. It was also 15% lower than the second quarter of this year, but average realised prices were $344/t – some 330% higher than last year and 23% above the period just prior.

“All of the company’s coal sold in the third quarter of fiscal 2009 was sold at approximately US$300/t for hard coking coal and US$248/t for ultra low-volatile [pulverised coal injection] (ULV-PCI) coal,” officials said.

A drop in coal sales was blamed on deferred customer shipments during the quarter, but WCC said no customers had cancelled their current coal year contracts.

Looking ahead, WCC said it would keep a tight rein on non-discretionary spending and capital expenditures as it attempts to preserve cash in the current economic climate.

“To date, this has resulted in suspension of development at the Willow Creek mine, reducing production levels at the Brule mine to an annual run-rate of 750,000 tonnes per year, and providing notice at the Wolverine operations to employees of a possible curtailment of operations after May 18, 2009,” officials noted, adding that operating rates at the mines going forward will be made once future prices and sale commitments have been set.

Company president John Hogg added: “Given the tremendous uncertainty for the demand of metallurgical coal for the next coal year and the resultant price, to remain competitive we are working hard to reduce costs and increase productivity as fast as we can.

“Until then, we intend to preserve the strength of our balance sheet, ensure we remain flexible to meeting our customer's needs and opportunistically grow the company.”