It's been a little more than a month since the Westmoreland Coal Company's acquisition of Sherritt Coal's Saskatchewan and Alberta mines was finalized.
And so far, the arrangement has worked out well, according to Westmoreland Coal Company CEO Keith Alessi.
Alessi was in Estevan on May 29 to speak to a Mining Week luncheon hosted by the Estevan Chamber of Commerce. He discussed Westmoreland's operations in the Estevan area, the appeal of the mines they acquired in western Canada, Westmoreland's operations and the differences between mining in Canada and the U.S.
The acquisition presented few challenges, he said. The biggest hurdle was closing the deal. Westmoreland announced on December 24, 2013, that they were purchasing Sherritt's six coal mines in western Canada. The deal closed on April 29.
It represented Westmoreland's first foray into Canada.
They also secured 50 per cent of the activated carbon plant and char plant near Bienfait. Activated carbon is gaining importance, he said.
“That plant probably employs 14 or 15 people now, and we're going to double that up,” said Alessi. “We haven't made any formal announcements, but by mid 2016, we could be looking at a second facility there, based on demand.”
The future of the local mines, though, will be in the hands of SaskPower. As long as the power plants are burning coal, Westmoreland will be in mining locally.
“These are generational contracts we generally sign with our customers,” said Alessi.
Westmoreland likes long-term contracts with big utilities, and Sherritt's Alberta and Saskatchewan properties offered that advantage.
“We don't play the commodity game,” said Alessi. “If coal prices in the international coal market double tomorrow, it doesn't affect us at all, because our contracts are based on our costs to our customers. It's a more stable, conservative business model.”
The carbon capture and storage project at the Boundary Dam Power Station is a great project, he said, and he believes its science is sound.
“Clearly what they're doing there could be a game-changer for the whole industry,” said Alessi.
Westmoreland is the oldest coal company in the U.S., Alessi said. It was founded in western Pennsylvania, and its history dates back to before the U.S. Civil War.
The company operated largely in the eastern U.S. until 2000, when it started to acquire mines in the west. Prior to purchasing Sherritt's coal ventures, Westmoreland had six mines in the U.S., including operations in North Dakota and Montana, and about 1,500 employees.
“As we were looking to grow our business, we looked north,” said Alessi. “The assets that Sherritt had here … as well as in Alberta looked exactly liked the mines we worked.”
The regulatory environment for power plants is more stable in Canada than the U.S., he said. Reclamation standards in the U.S. are also more stringent.
“In the States, if you disturb the ground, you have to recontour it exactly the way it was,” said Alessi. “You have to put a GPS on your dozer to make sure that if there was a little dip (previously), there's a little dip again.”
Safety is their biggest core value, he said. He noted that Westmoreland has one of the best safety records in the U.S., while Sherritt's coal mines had the best safety record in Canada. And they have won awards for their environmental practices.
Alessi said the mines will continue to support community projects. Estevan is the largest community that they operate in – their mines are in mostly small, remote towns and villages in the U.S. – and Westmoreland will back hockey teams and other projects.