The $18 million paid by a provincial crown corporation to buy out a joint venture’s coal licences in the Klappan area in northwestern B.C. was reasonable, says an official from one of the companies in the joint venture.
The purchase of the 61 licences from the Arctos Anthracite Joint Venture owned by Fortune Minerals of Ontario and POSCO Canada, a Korean subsidiary, by BC Rail ends for now what has been more than a decade of controversy over development in the region.
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Also known as the Sacred Headwaters, the Klappan is within Tahltan traditional territory and the Tahltan have objected to attempts at industrial development in the area used for an array of cultural practices.
Although Fortune had been working for years at getting environmental approval to develop a large-scale open-pit anthracite coal mine in the Klappan, company official Troy Nazarewicz called the $18 million pay out “a reasonable solution for all parties.”
Nazarewicz says his company’s interest in the Klappan was on the wane anyway because of the stalling market for anthracite coal and because the environmental process was dragging on longer than the company wanted.
The company in the past has also been prevented from gaining access to its licences by blockading Tahltan and that resulted in arrests and court appearances.
“Obviously with respect to a development schedule, we’re wishing to move forward more quickly,” Nazarewicz said.
The area had also at one time been placed under a development moratorium by the provincial government.
Fortune and POSCO will divide equally the $18 million being paid by BC Rail.
Fortune entered the Klappan mining picture in 2002 when it purchased the licenses from another company called ConcoPhillips for $3.3 million.
As of the end of 2014, Nazarewicz said Fortune had been carrying a cost of just over $32.3 million on its books.
He estimated that total expenditures from all the companies involved over the years amounted to more than $110 million.
Fortune will use its $9 million from the sale to pay down debt and to provide working capital for other projects.
This is the second time the province has become financially involved in the Klappan.
In late December 2012 it provided Shell Canada with $20 million in royalty credits in return for giving up its rights to coalbed methane gas in the region.
The prospective development of a coalbed methane industry was also protested by the Tahltan.