Walter Energy recently decided to curtail production at its Willow Creek mine in Canada. A surface mine, located near Chetwynd, B.C., it produces metallurgical coal with production plans of one-third hard coking coal and two-thirds low-volatile PCI coal over the mine’s expected 20-year life. The operation has approximately 19 million metric tons of recoverable coal reserves.
“The current price environment for met coal dictated that we curtail production at Willow Creek to ensure we generate a sufficient economic return in mining the high quality met coal reserves at the site,” said Walter J. Scheller, CEO, Walter Energy. “Given the tremendous progress that has been made in the cost structure at the mine, when we see signs of sustainable market pricing conditions we would expect to ramp up production. The mine, which will be curtailed in April, currently employs approximately 350 employees, of which approximately 250 will be affected by the decision to curtail production. The Willow Creek mine will continue with limited operations to support Walter Energy’s Brule mine.”
Willow Creek is the fifth mine Walter Energy has announced plans to curtail or idle as part of its initiatives to address underperforming assets. The company is also accelerating the closure of its North River underground mine in Alabama. In addition, the company has also idled the Aberpergwm mine in South Wales and the Gauley Eagle underground and surface mines in West Virginia, and has curtailed production at its Maple underground mine, also in West Virginia.
The company expects to record a one-time cash charge of approximately $7.5 million in severance costs in connection with its curtailing production of the Willow Creek operations. Walter Energy currently expects that full year 2013 metallurgical coal production will be in line with production levels in 2012.
