October 9, 2019 - Coal workers in British Columbia are bracing for leaner times.

The price of metallurgical coal, which is used to make steel, has fallen by about 40 percent since the summer and Teck Resources, which operates four mines in the province's Elk Valley region, is warning employees there will be layoffs.

A road sign to one of Teck's mines. Teck is a huge economic force in the Elk Valley.

Photo by Josh Pagé, CBC

In a letter dated Sept. 26 from Robin Sheremeta, Teck's senior vice president of coal, to all employees at the four operations, the company noted the price of coal had dropped from approximately $210 per tonne to about $130 per tonne in a few weeks.

The letter outlined Teck's plans to save money, which include an immediate salary and hiring freeze, reduced and deferred training and job losses.

Dean McKerracher, the mayor of Elkford, B.C., a community in the Elk Valley, worked at Teck for 32 years and said the cuts are certainly going to hurt Elkford residents, many of whom depend on the company for a paycheck.

"They'll do whatever they have to do to trim the fat, so to speak, for their operations," said McKerracher Tuesday in a phone interview on CBC's Daybreak South. "They'll lay off as many employees as they can."

Oversupply and Market Uncertainty

Warren Mabee, director of the Institute for Energy and Environmental Policy at Queen's University, said the price for all kinds of coal, including thermal coal which is burned for electricity, has gone down in the last eight to 10 months. He said this drop is due to oversupply and market uncertainty stemming from Brexit and ongoing trade disputes between the United States and various trading partners.

Mabee called Teck's letter "not surprising" given current conditions but suggested the market could stabilize "in the next month or so" if things become clearer concerning Brexit.

The last time the Vancouver-based mining company experienced a similar downturn that impacted Elk Valley was in 2015 when Teck cut nine percent of its workforce in response to low commodity prices.

"We've been through it before and we'll weather the storm again" said McKerracher.

The mayor said while some Elkford residents will stay put and try to "live day-to-day," others will likely leave the community to find other work.

According to Teck's letter, the company has already lost an "unprecedented" 80 percent of its profit margins in four months.