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Walter Energy to idle Canadian coal operations

World Coal,

Walter Energy has announced that it will begin idling its Canadian operations in April 2014, including the Wolverine and Brazion coal mines in British Columbia.

The company will place its Wolverine mine on idle status effective immediately. Brazion, which includes the operations of Brule and Willow Creek, will continue to operate the Brule mine but expects to idle the mine by July 2014. The company will continue to operate its preparation plants at these mines to complete processing of coal that already has been mined and is in inventory.

Coking coal production

In 2013, hard coking coal production from Wolverine was 1.6 million t, while the Brazion mines produced approximately 1.9 million t of low-vol PCI and 0.1 million t of hard coking coal. As of 31 December 2013, Walter Energy had approximately 1.1 million t of coal in inventory in Canada.

Employment impacts include temporary layoffs of approximately 415 employees at the Wolverine mine, approximately 280 employees at Brazion, and other administrative support staff. A limited number of employees will remain at each site to operate the preparation plants and, once coal processing is complete, to perform ongoing equipment maintenance and provide ongoing security for the sites during the idle period.

Coal market conditions

Walter Energy CEO, Walter J. Scheller III, commented: "These layoffs are particularly unfortunate because our employees have worked very hard to keep these mines competitive in the face of daunting market conditions. Equally important, they've worked safely." Scheller also noted that the Brule mine completed 2013 without a reportable safety incident.

"These coal reserves remain valuable assets. However, given the current met coal pricing environment, our best course of action at this time is to idle these operations until we can achieve reasonable value from these reserves," he added.

Severance costs

The company expects to incur severance charges of approximately US$ 7 million in Q2 2014 in connection with the idling of the mines.

Adapted from press release by Katie Woodward

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