How mining—coal mining at that—revived a B.C. district

by Greg Klein

Expertise, acumen and timing had a lot to do with it, but September 21 marks the second anniversary of a success story that strongly demonstrates mining’s intangible benefits. Two years ago Conuma Coal Resources re-opened its newly acquired Brule mine in northeastern British Columbia, then re-started two more open pits in the same district. While the advantages of resource industries often extend well beyond jobs and the economy, this company clearly holds a mission besides profits.

But profitable Conuma is. It’s also the Peace River region’s only miner, following a 2014 downturn that closed the last of the district’s metallurgical coal operations run by Walter Energy, Anglo American and Teck Resources TSX:TECK.A and TSX:TECK.B.

After Walter entered bankruptcy proceedings the following year, something like 80 firms looked over the company’s Peace assets, with a proposal coming from a liquidator that would have dismantled the projects, says Conuma president Mark Bartkoski. He and a highly experienced group put together their privately-held company in summer 2016.

“Our team saw an opportunity to run Brule differently, to work with the community and First Nations a little more progressively and, from a technical standpoint, we felt there were a number of mining changes that would add value.

“One thing we tied to our offer was a commitment to hire 200 people in the first few months. That probably swung the deal, but we ended up hiring 400 in that first four-month period. We purchased the company on September 9 and had the first coal come out on the 21st.”

That was Brule, which Walter suspended in 2014. Less than three months after resuscitating that mine, Conuma re-started Wolverine, idled by Walter in 2014. Last June Conuma re-opened Willow Creek, shuttered by Walter in 2013. Conuma now employs over 750 people, a number that’s expected to reach 900 by year-end.

“We mined 3.5 million tonnes last year, we’ll mine approximately five million tonnes this year, next year we’re projected to do six million tonnes and, by the time we get to 2021, we should be at about 7.5 million tonnes.”

Processing takes place at Willow Creek. From there, rail transports coal about 965 kilometres to Ridley Terminals near Prince Rupert, North America’s closest deep water port to Asia.

Conuma got early backing from the AMCI Group, a large American coal brokerage that brought experience and connections, gaining a majority share of Conuma.

But workers’ input also plays a vital role, Bartkoski emphasizes. The region’s coal “had the problem of being high-cost, so every time the market got tough, this was the first coal field to get cut.” There was a problem with consistency too.

“The quality of the coal, as far as low-sulphur, low-phosphorous metallurgical coal, is very good,” he explains. “But there was always a very high variation in the ash, which is how much rock was in the coal. Steel producers have a real problem when that ash varies a lot. So we worked with the employees, we came up with a couple of pro-active systems to be creative. We used to have an ash variation of about 1.5% ash, and currently we’re running 0.18%, which is fantastic. We’ve had three of the world’s largest steel companies come to look at our quality control program and the question is, ‘How in the world did you guys go from one of the worst ash variations internationally to one of the best?’

“It’s not enough to do well only when the market’s good,” he points out. “You have to get costs down, keep debt low and maintain a high-quality reputation so when the market gets tough and tight—and it’s probably not going to stay like this forever—we’ll remain the preferred supplier.”

Employee engagement doesn’t stop there. “We hold monthly meetings to talk to every crew about costs, about pro-active things we can do, whether it’s environmental ideas or whether it’s delays or accidents. When you involve people and truly listen to them, you get good results. We’ve been able to reduce our operating costs by 40% compared to the previous company—that’s awesome. Our injury rate right now is one-seventh of the North American average, which is phenomenal. We were the safest mining company in B.C. last year, and right now we’re on track to repeat that this year.”

Stressing both cost reduction and safety, employee feedback has contributed to an efficiency incentive program that currently averages workers over $1,000 a month each.

Longevity strengthens commitment to both the company and the community, he adds. Previously, Brule and Willow provided camp housing, where employee turnover averaged six and a half months, Bartkoski says. “We wanted to build a company that would support a healthy home life. Our goal was to train the local workforce to fulfill the needs. We have a training budget that’s about three times the size of most companies because we want to train people to be here for the long term. Right now over 80% of our people are local. They live in either Tumbler Ridge, Chetwynd or Mackenzie, and we’re really proud of that. That was a commitment I made to the mayors and the First Nations.

“As a matter of fact, a large amount of our truck drivers are single moms. That workforce hadn’t been encouraged in the past and in a lot of cases they’re people who want to remain part of the community. I hate to break the bubble of us macho guys but a lot of our best truck drivers are women.”

Although Bartkoski doesn’t make the comparison, Conuma’s training policy contrasts starkly with that of HD Mining International. The Chinese company planned to staff underground operations at Murray River, another proposed coal mine in the Peace, exclusively with Mandarin-speaking workers imported from China. An HD spokesperson later claimed the policy had been misunderstood, although the company made Mandarin a requirement for underground jobs.

Looking ahead, Conuma projects 15-year lifespans for each of its three mines. A fourth, Willow South, should begin operations in about two years, Bartkoski says. Meanwhile the company and its staff participate in a number of extra-curricular projects, including their support for a children’s home in Vancouver and an orphanage in Bolivia.

Tumbler Ridge Mayor Don McPherson recalls his first meeting with Conuma management in summer 2016. “I remember walking out of their office thinking ‘I’m not even going to say this to anyone’ because I didn’t think any of it would happen. But everything they told me did come to pass and in most cases sooner than they said they were going to do it. So it’s really been a shot in the arm for Tumbler Ridge.”

McPherson arrived in the region before the town even existed, working as a mechanic on construction vehicles used to build the district’s first coal mine, Quintette, which Denison Mines TSX:DML opened in 1982. Since then he’s experienced a number of mining cycles.

“Two years ago, before Conuma, you could walk downtown and probably never see children,” he recalls. “Now you’ve got all these young people who’ve come to work at the mine. They brought their families. Our schools are full right now.” He estimates the town’s population at about 2,200, up from about 1,800 at one point.

Although the oilpatch, a windfarm, forestry and tourism have diversified the economy, mining’s still vital to the town built for mining.

Meanwhile Bartkoski’s enthusiasm seems irrepressible. “We’re very excited not only that we have a very good future in front of us here, but we’ve also proven that northeast B.C. coal, mined in a very aggressive, creative and engaging way, with not only the employees but also the community, can be a win-win for everybody—and a long-term win.”