Feb 11 (Reuters) - Grande Cache Coal Corp GCE.TO said it would cut coal production by 25 percent and reduce about 100 jobs to save cash amid a weak steel production outlook and delay in shipments.
The Calgary-based company, which produces metallurgical coal for the steel industry, said the uncertainty in the market is also hurting its contract negotiations for the upcoming coal year beginning April 1.
The global slowdown is expected to reduce the amount of coal its customers will require under new contracts at least in the initial months of fiscal 2010, Grande Cache said.
The company would cut its coal production for the next six months from its current annual rate of about 1.3 million tons.
This will result in a reduction of jobs and contractors at its mining site at Smoky River Coalfield located in West-Central Alberta effective immediately, it said.
The company added that it has received further indications from its customers that additional shipments originally scheduled for delivery by March 31, will be deferred into fiscal 2010.
Grande Cache will focus on mining existing operations where production costs may be cut, but will continue to seek regulatory approval for the two extra surface mines, it said.
It will also ask equipment suppliers to defer the delivery of new mining equipment worth C$48 million, originally slated for delivery in March-April.
Grande Cache Coal said it had a cash balance of C$88 million and no debt at the quarter ended Dec. 31, 2008.
In morning trade, Grande Cache shares were down 5 Canadian cents at 80 Canadian cents on the Toronto Stock Exchange. (Reporting by Richa Dubey in Bangalore; Editing by Gopakumar Warrier)