A Teck Resources representative appeared as a delegation before Cranbrook city council on Monday evening, with a message that while times are tough in the mining industry, the company is taking steps to address those challenges.
Nic Milligan, Manager—Community and Aboriginal Affairs with the company, gave a brief presentation outlining the state of the company’s operations, both globally and locally in the Elk Valley, as the mining industry—especially for metallurgical coal—has been in flux.
According to Milligan’s report, commodity prices in key sectors such as copper, zinc, steelmaking coal and oil are falling due to a decline in demand from emerging markets and significant oversupply.
However, breaking down those sectors, the report also added that there is an improved outlook for steelmaking coal, while the oil market is set to rebalance.
For steelmaking coal, there are higher price assessments and demand is improving, while closures continue and supply curtailment announcements in China.
“Basically, he gave us an update on what’s happening in their business sector,” said Mayor Lee Pratt, “and how they’re coping with the downturn and the commodity prices and how they’ve trimmed back on their expenses.
“It seems like there’s an upswing, the price of coal has increased a little bit again. They’re feeling a little more optimistic moving forward, but they really have to be watching their expenses right now.”
The challenge, moving forward, according to the report, will be outlasting the competition; US exports have increased by 30 million tonnes over the last five years.
It also noted that Teck is the last Canadian steelmaking coal company standing, as four have shut down since 2013.
To combat some of the conditions in the market, Teck has undertaken a Cost Reduction Program (CRP) in regards to operating costs and capital project deferrals that began in 2013.
Those efforts continued into 2015, with actions such as further CRP of $650 million in spending cuts, 1,000 positions of workforce reduction, and the withdrawal of the Coal Mountain Phase Two expansion.
With annual grow mining revenues of 6.5 billion, the provincial government reaps $170 million in tax revenue. The report also noted that $1 billion annually is spent in B.C. communities—a fact that Pratt is all too familiar with—as the average employee is compensated $125,000 ever year.
“They have 382 employees that live in Cranbrook and 92 that live in Kimberley,” said Pratt. “Of course, that’s direct jobs and then there’s probably another, I would safely say 150-200 spinoff jobs related to the Elk Valley mining, so they’re definitely an integral and important part of our community.”