Fluctuating economic conditions in the mining industry, spurred by increased steel exports from China and the U.S tariffs, have led Elk Valley Resources (EVR) to cut costs and jobs.
EVR stated in an email to The Free Press, that it's reducing staff by 140 positions in order "to improve efficiency and reduce costs across our business to ensure our company is globally competitive." The company indicated that in some cases, employees would be transferred into vacant positions rather than being let go.
EVR operates four steelmaking coal mines in the Elk Valley, including Elkview, Fording River, Greenhills and Line Creek.
An internal letter from CEO Mike Carrucan that was obtained by The Free Press, indicated changes were part of a Cost Reduction Program developed in response to "challenging market conditions." The letter noted EVR is slashing costs to achieve $400 million in savings, by "deferring non-critical capital projects, reducing operating supplies and consumables costs, and consultant and contractor usage."
In addition to reducing jobs, the company also put a freeze on staff hiring.
In an email, the company explained changes were largely driven by Chinese policy. It stated that, "Challenging market conditions, due to factors including general global economic conditions and increased steel exports from China, have resulted in a significant drop in steelmaking coal prices."
Sparwood mayor David Wilks said China's stockpile of steel has surged.
"[China] they have a surplus of steel, so they don't need to make as much steel. They don't need as much coal," Wilks said.
Elk Valley Resources' main export market is China rather than the U.S, but Wilks explained that U.S tariffs are the driver of the global economic conditions that led China to implement more competitive policy.
"The people we supply most to is China, and they're being affected drastically by the tariffs the United States are putting on them. It's always going to be a trickle down effect," Wilks added.
The impacts of foreign policy is not limited to steelmaking coal mines, as China stopped shipments of critical and rare earth minerals in response to tariffs in April.
"When Trump put the big tariffs on China, their response was to say 'we're not selling you rare earth minerals,'" said president of the Chamber of Mines in Eastern B.C., David Johnston.
"The price of graphite, it can fluctuate because of the Chinese saying 'yes' or 'no' to the availability of it on the world market," Johnston added.
Johnston said these conditions are creating volatility and uncertainty in the market, and the long-term impacts have not been determined yet.
"Everyone is pulling back on the reigns and holding still for a minute to see what happens," he said.
Johnston said there may be hope yet, as foreign policy could even encourage Canada to increase it's competitiveness in certain mining sectors.
"If China's not going to be selling graphite, then someone in Canada could be selling graphite. That could make their business more viable," said Johnston.
Wilks said Elk Valley mines have faced economic ups and downs for well over 120 years, most recently during the pandemic. He's confident that the mines will pull through yet again.
"They will adjust. They always do, whether they cut back or shift their markets somewhere else, whether it's Japan, India, South Korea," Wilks explained.
"They've just got to ride the wave," he added.
