Positive trends for Canadian coal

As president of the Coal Association of Canada (CAC) and representing the broad spectrum of companies engaged in the exploration, development and transportation of coal, Ann Marie Hann has a unique window on the trends occurring in...

As president of the Coal Association of Canada (CAC) and representing the broad spectrum of companies engaged in the exploration, development and transportation of coal, Ann Marie Hann has a unique window on the trends occurring in Canada’s coal industry.

When asked by Canadian Mining Journal about those trends, here’s what she said.

“I’m really encouraged by what I’m seeing. Production and exports are on the rise, we’re seeing increased foreign invest­ment, new coal mines are in development, and recent investments in rail and port infrastructure will make it easier for Canadian coal to reach foreign markets,” says Hann.

“Coal is an important contributor to the Canadian economy. It is a direct and indirect employer of 30,000 people and a contributor of more than $1 billion to Canada’s gross domestic product. It pays over $300 million annually in royalties to governments to support delivery of social programs such as health care, education and public infrastructure.”

To further support the value of the coal industry to Canada, in 2010, Canada pro­duced 68 million tonnes of coal, an 8% increase, and exports grew over 22%. Almost all of the increase was attributed to the global demand for steel making coal.

Canada’s high quality and rich abun­dance of coal (almost 9 billion tonnes in proven reserves) is attracting foreign investment, particularly from Asia.

For example, in March, Xstrata sold a stake in its burgeoning Canadian steel mak­ing coal operations to Japan’s JX Nippon, forming a joint venture with the Japanese oil refiner to build the business and market the coal in Japan.

In northern Alberta, two other Asian companies from Hong Kong and Japan also finalized the purchase of Grande Cache Coal, a metallurgical coal producer in Alberta.

To meet world demand, there are several new coal mines in various stages of devel­opment, including the Raven underground coal project located on Vancouver Island and the Donkin coal project located in Nova Scotia.

Sherritt Coal also re-opened its mine in Obed, AB, and Hillsborough Resources just received government approval to expand its Quinsam mine operations on Vancouver Island. Coalspur, a new entrant on the export thermal scene, also plans to develop a new prop­erty, the Vista coal project, in Alberta.

Over 90% of Canada’s coal deposits are located in western Canadian provinces, which provide a strategic advantage because of the closer proximity to Asian markets, and thankfully, governments and industry are stepping up to improve the efficiency and capacity of Canada’s west­ern transportation network.

Last month, the BC government announced a planned investment of $700 million for transportation projects to help increase BC trade with Asia. Westshore, Neptune and Ridley terminals, located in Vancouver and Prince Rupert respective­ly, together will add an additional 20 mil­lion tonnes in handling capacity through $1 billion in investments.

On Canada’s east coast, Provincial Energy Venture announced plans to expand the bulk coal terminal in Sydney, NS, by 3 million to 5 million tonnes. Thunder Bay Terminals, which handles mostly western Canadian steel­making coal for Great Lakes producers, is also developing as an alternate interna­tional shipping route.

Canada’s two major rail operators, Canadian National and Canadian Pacific, are also making major efforts, including co-operation and track sharing, to keep Canada’s supply chain moving.

Combined, the two railways planned to spend almost $3 billion on infrastruc­ture and fleet upgrades in 2011, a signifi­cant amount supporting coal shipments.

“The future of Canada’s export based coal industry looks very positive. Domestically, however, the thermal coal industry is under serious threat,” says Hann.

“Environment Canada’s draft regula­tions designed to reduce carbon dioxide emissions from coal-fired power plants will set strict performance standards for new coal-fired units and those that have reached the end of their useful life; and although the CAC supports the goal of reducing GHG emissions from power generation, we believe the regulations fall far short of striking the right balance between environmental, social and eco­nomic interests.

“The regulations as they stand will kill Canadian coal production for domestic thermal use, undermine Canada’s competi­tive power advantage and have a significant negative impact on many rural communi­ties where thermal coal is mined.”

And, like many industries, another chal­lenge in Canada is the increasing shortage of skilled people in the coal industry.

“The Mining Industry Human Resources Council estimates that the Canadian mining industry will need 100,000 new workers by 2020. Global demographic trends are hitting Canada and other countries hard and we’re going to have to focus on a mix of solutions to address our industry’s workforce needs,” says Hann.

Despite these challenges, evidence shows that the world is taking notice of the advantages of Canadian coal. Canada’s untapped coal resources, innovative com­panies and skilled workforce are part of a new value proposition for the coal indus­try in Canada. As the emerging econo­mies of Asia increase their demand for all forms of coal, Canada is positioning itself to take advantage.

“The coal industry takes its social license to operate very seriously. We will continue


Your email address will not be published.