Metallurgical Coal
Feature Articles
Canada Key Beneficiary from China’s War on Australian Coal
August 2021
The Canadian metallurgical coal market has significantly benefited since China slapped an unofficial ban on Australian coal exports in October 2020. Exports from Canada could partly fill Australian coal gap in Chinese demand as around 90% of Canadian exports have traditionally been sent to non-Chinese markets.

Canada's largest metallurgical coal miner, Teck Resources, is exporting about one-third of its output to China. Shipments totalled around 2Mt during the June quarter. Canada’s export coking coal supply is likely to drop from an estimated 32Mt in 2021 to 28.3Mt by 2023 amid current political tensions regarding mine approvals in the main producing provinces. However, AME forecasts Canadian met coal output to reach 41.6Mt by 2040 considering the country has above 30Mt in upside potential for new projects.

Conuma Coal Resources announced that it will exploit the Hermann Pit, a new mining area at its Wolverine hard coking coal mine in British Columbia province of Canada as reserves at the current working pit, Perry Peak, will be depleted by 2023 with production capacity of 1.5Mtpa of saleable coal. Conuma Coal Resources already obtained an environmental assessment certificate for the project in February this year.

 

 

Moreover, the company is applying for the Mines Act Permit Amendment (MAPA) for Wolverine-Hermann Amendment Project, which is forecast to be approved in the September Quarter of 2021. The company expects to begin the operations at the Hermann Pit from 2024 with a mine life of nearly 10 years. Conuma Coal produced 1.4Mt of HCC from the Wolverine Coal Mine in 2020, up by 0.2Mt from 1.2Mt in 2019. The coking coal produced at the mine is mainly exported to Japan but aims to reach Chinese markets.

 

The Evanescence of Alberta’s Met Coal

Coal production in the Great White North decreased approximately 11.3Mt during 2020. The 21.8% reduction in production volume was principally due to multiple metallurgical coal mines closing as a result of the plummeting coal export market. Cardinal River and CST coal mines faced shutdowns in June and May 2020 respectively and together accounted for about 3Mt of saleable coal. Cardinal River produced low sulphur, medium-to-high volatile bituminous coking coal for international steel making customers. However, its significant operation cost, considered the highest among Teck’s coal mines, discourage the proposed extension of the mine to 2027 giving the market conditions.

As Canada’s environment minister announced all metallurgical coal mine exploration and development projects in southwest Alberta will undergo federal impact assessments in a try to prevent effects of selenium pollution in surrounding aquifers, Alberta Energy Regulator reported metallurgical coal production has not been registered in the last 10 months in the province.

Coking coal has become a major concern in the area after the provincial government came under fire for silently removing the land-protection policy in mining. Now, the policy has been reinstated and the public will be invited for consultation, but the damage has been done. The permanent closure of Teck’s Cardinal River mine and the ongoing closure of the CST mine are determining when considering whether metallurgical coal mining in Alberta can have a profitable future.

 

Benga Mining Appeals in Court Grassy Mountain’s Rejection

Benga Mining filed a request to appeal the Canadian review panel decision which rejected the Grassy Mountain coal project in Alberta, Canada. In June, the joint federal-provincial review panel decided the project was not in the public interest due to significant environmental effects on surface water quality and adverse impact on physical and cultural heritage of First Nations. However, the company claims this decision contains legal errors and lacks procedural fairness. The application for the appeal is to be heard on the 9th of September. The project is the first of several coal mines proposed for the mountains and foothills of Alberta’s western boundary, where exploration activities took off last year after the government revoked the policy that protected the area against open-pit coal developments. The provided restored the policy because of the strong indignation in the general public.

Benga Mining, Riversdale Resources’ subsidiary, is trying to develop the Grassy Mountain Coal Project near the Crowsnest Pass in south-west Alberta, Canada. The project is a proposed open-pit metallurgical coal mine with a 4.5Mtpa production capacity over a mine-life of 25 years. High quality metallurgical coal from the Grassy Mountain will be railed to marine terminal facilities on British Columbia’s west coast and shipped to customers in the Asian market. Production is intended to be developed in two stages. First stage to produce 2Mt for the first year, and second stage to add another 2Mt to the production capacity.

 

Delays in Tent Mountain First Coal Production

Similarly, Tent Mountain metallurgical coal project has newly become a target for the Environmental Impact Assessment (EIS) by designation of the Federal Government of Canada. As a result, acquisition of permits and licenses required for the start of mining operations at Montem Resources’ project in Alberta would be more likely to be postponed. Tent Mountain coal mine is an open-cut mine that exported metallurgical coal primarily to Japan during 1970s. In 1983, the mine was closed due to reduced demand. Montem Resources is working in the development of the mine and trying to obtain permits to produce an average of 1.1Mtpa of metallurgical over a period of 14 years.

 

 

Uncertainty Prevails at Elan Coking Coal Project 

Atrum’s flagship asset is the 100%-owned Elan Hard Coking Coal Project located in the Crowsnest Pass area of southern Alberta, Canada. The project was expected to produce up to 6Mt of medium volatile hard coking coal for the export market taking advantage of its proximity to the existing Canadian Pacific rail line, which has significant excess capacity and provides direct rail access to export terminals in Vancouver and Prince Rupert.

However, Atrum has stopped the development of Elan amid Alberta government backflip on coal policy. The reinstatement classifies Elan’s mining area as land not normally considered for open-pit coal mining. Elan was approved as a coal project under a 2020 coal exploration permit, and Atrum Coal noted an exemption was granted to allow open-cut mining in Category Two land in 2016.

The company had spent C$40m (US$31.97m) on exploration and development while the total estimated cost was around C$973m (US$778m). The pre-feasibility study was scheduled for completion mid-year. Elan South shares its southern boundary with Riversdale Resources’ Grassy Mountain Project, which was rejected at its final permitting stage.