Annual Coal Review 1987 COAL REPORT CROWS NEST

Crows Nest Resources, a wholly-owned subsidiary of Shell Canada, operates the Line Creek mine in the Elk Valley area of southeastern British Columbia. T he company also holds extensive coal rights in Alberta and British Columbia whic h at year- end totalled some 162,000 ha.

At the Line Creek mine, production of both thermal and metallurgical coal continued throughout the year. Production in 1986 totalled 1.7 million tonnes of cle an thermal and met coal while sales totalled 1.9 million tonnes. The bulk of sal es was to long-term-contract customers in Japan and South Korea, with smaller qu antities supplied to other customers in the Pacific Rim, Brazil and Europe.

Markets continued to be oversupplied which, coupled with movements in the international exchange rates for the Australian and South African currencies, placed considerable pressure on Canadian producers. In addition the appreciation of the Japanese yen against the U.S. dollar has reduced expectations for steel produc tion in Japan. All these factors resulted in continuing under-utilization of cap acity at Line Creek; and some reductions in manpower were necessary at mid-year. The mine continued its efforts to improve productivity, and very positive results were obtained. These efforts will continue in 1987. It is expected that coal markets will continue to be difficult in the coming year.

At the Telkwa project, near Smithers, B.C., approval in principle for this thermal coal mine was received from the government of B.C. This approval was in res ponse to a Stage- Two application made in 1985. No further development is planne d until coal markets improve.