As we discussed in the previous part of this series, Westmoreland Coal (WLB) acquired certain Canadian operations from Sherritt International. These operations include seven surface mines producing thermal coal and a 50% stake in an activated carbon plant as well as a char production facility. Out of the seven mines, six are operational. Among the operational mines, five serve customers in the vicinity using conveyer belts, while one focuses on the seaborne coal market.
The Canadian operations hold total reserves of 675 million tons, taking the total reserves with the company 1,225 million tons.
The Canadian mines are divided into two separate operations—Prairie and Mountain. Prairie operations include six mines:
- Estevan (Saskatchewan)
- Boundary Dam (Saskatchewan)
- Poplar River (Saskatchewan)
- Genesee (Alberta)
- Paintearth (Alberta)
- Sheerness (Alberta)
The Mountain operations include the Coal Valley Mine in Alberta, which focuses solely on producing coal for the seaborne coal market.
Westmoreland’s Canadian operations contain six operational surface mines. The company uses dragline excavators to extract coal from these mines.
A dragline excavator is a piece of heavy equipment used in surface mining. It’s manufactured by companies like Caterpillar (CAT). This method of mining is simple and cost-effective.
Moreover, Westmoreland transports much of the coal to power plants located near the mines using conveyer belts. Transportation through conveyer belts is the cheapest way to move coal. So, overall, the company’s operations are cost-competitive compared to peers (KOL) such as Alpha Natural Resources (ANR) and Arch Coal (ACI), which also mines coal from the high-cost Appalachian region.
The company also derives strength from its contract positions. We’ll discuss the company’s contract positions in detail in the next part of this series.