New British Columbia Coal Mine Highlights Need for More North American Capacity as Global Steel Manufacturers Expand

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Western Canadian Coal Corporation (TSX:WTN) (Vancouver, British Columbia) has begun site clearing for construction of a new coal mine, preparation plant, and rail loadout facilities in Northeast British Columbia, near Tumbler Ridge. The preparation plant will receive 3.6 million tons per year from open pit mining operations for processing. Western Canadian Coal and expects a 65% yield, resulting in about 2.4 million tons of clean, hard coking coal, which will be railed via a BC Rail line to Ridley Terminals in the Port of Prince Rupert, where it will be shipped to steel mills in South Korea, China, and Japan.

Western Canadian Coal has hired Westmar Engineering Consultants Incorporated (North Vancouver, British Columbia) to provide construction management responsibilities for the $145 million project. Major earthwork on the project is scheduled to begin in May 2005. The project team hopes to have the processing building steel and skin up before winter freeze late this year, so that equipment installation can begin during the winter months. An 18-month construction period is projected.

Coal from this project will not provide any relief to coal hungry steel makers in North America, as all of the coal is bound for Asian export markets. Due to recent favorable market conditions, many integrated steel makers are looking to increase production, which requires metallurgical coke made from coking coal. Integrated steel producers, such as Mitall Steel USA (formerly International Steel Group) is constructing new plants or increasing capacity of metallurgical coke making capabilities. Coking coal has become a hot commodity, and prices have risen as demand has outstripped production. The situation has been exacerbated by the continued closure of Consul Energy's Buchanan mine in Virginia, a major U.S. coking coal mine. Production was halted in February 2005, following an underground methane fire. Safety concerns keep the mine shut and a reopening of the mine has yet to be announced.

Increasing global steel prices and demand have intensified the need for raw material supply to global steel makers. The recent advancement of projects for Western Canadian Coal in British Columbia are a good example of the resultant increased interest in raw material demand for steelmaking raw materials, such as coking coal and iron ore.

Western Canadian Coal is also looking at developing a series of coal mines in an area that it refers to as its Brazion Group, with a central preparation plant planned near Hasler, British Columbia. Last year, the company spent $10 million opening the Dillon mine in the area.

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