The viability of the Quintette coal mine, 50% owned by Denison Mines (TSE), has been put into question by an arbitration panel’s ruling. The price received by Quintette for metallurgical coal will drop by more than $20 per tonne and the company has been hit with a $46- million bill for previous overcharges.
The Japanese steel industry, upset at contract prices of almost double open market prices, asked for a hearing in 1987 to adjust the contracts.
The arbitration hearing began in 1988 with closing arguments made in February of this year.
The 3-member panel, which included former British Columbia chief justice Nathan Nemetz, former Cominco chairman Norman Anderson and former British Columbia Hydro chairman Chester Johnson, set out a schedule of prices for Quintette’s customers.
The price for the second quarter of 1990 was set at $94.90 per tonne versus the $102.90 per tonne currently being charged.
During the third quarter, the price will drop to $84.40 per tonne followed by a drop of a further $1 per tonne in each of the next two quarters.
As a result of adjustments to the price that Quintette has been receiving since the review began on April 1, 1987, the ruling requires the company to reimburse the Japanese steel industry by about $46 million.
Quintette President Paul Kostuik said the ruling would require careful study to determine what effect it may have.
With a reported debt on the mine of more than $650 million, the further liability of $46 million and the price drop have led some to question the future viability of the operation.
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