Canadian coal producers are preparing for thenext up cycle with new exploration, the expansion of existing mines and the development of greenfield projects.
While Canada’s production is less than 1% of world output, coal is a significant contributor to the country’s economy. The sector directly employs 5000 people and generates over C$ 5 billion/year in revenues. According to the Natural Resources Canada (NRC), it has 8.7 billion t of proven coal reserves, 6.6 billion t of which are recoverable. Another 190 billion t of coal resources have been identified. There are 23 active coal mines, most of which are located in western Canada.
Thermal coal makes up the majority of coal mined in Canada (approximately 42 million t in 2009, or 65%). About 90% of this is consumed domestically by electricity generation in Alberta, Saskatchewan and Ontario.
One major concern in the thermal coal sector is that no new coal-fired plants are currently being built, and Ontario is looking to phase out ageing plants. However, although thermal coal’s domestic market may appear lackluster at present, Canadian producers are looking to build upon the more lucrative export market.
In a bid to position itself for the export market, Sherritt International Corp. re-opened the Obed mine, near Hinton, Alberta, in August. Elsewhere, Xstrata has submitted a proposal to rejuvenate the Donkin mine in Nova Scotia; Vitol Anker has a thermal coal project for export under development at Wapiti in northeast British Columbia; and many companies are looking to increase their reserves.
Canada also produces significant amounts of met coal. In 2009, the NRC estimated that production fell by almost 15%, from 27 million t in 2008 to 23 million t in 2009.
Asian steel production was hit hard by the global recession. However, it began to rebound in latter 2009, and industry participants now see met coal’s price strengthening above US$ 130/t.
Canada has set a target to reduce GHG emissions by 17% below 2005 levels by 2020, in conjunction with US targets. In order to achieve such significant reductions, large-scale technologies such as CCS need to be implemented.
Alberta, which possesses 70% of Canada’s coal reserves, emits 235,000 tpa of CO2, about one-third of Canada’s GHG emissions. Coal-fired power plants account for 51% of that. In 2008, the Alberta Government established a C$ 2 billion CCS initiative fund that looks to kick-start up to five full-scale commercial CCS facilities capable of removing up to 5 million tpa of CO2 by 2015.
Other avenues are also being explored. One such technology is supercritical combustion, in which sub-bituminous coal is burned at high temperature and steam conditions. The system has a much higher efficiency than coal-fired plants, thus reducing the amount of GHG emissions/unit of electricity.
Transportation is also an important consideration, especially when it comes to exports, and there are plans in place to improve it using federal infrastructure money.
The slowdown in the world economy has also given the Canadian coal sector a chance to lower overhead costs. The coal sector competes with the oilsands for mechanics and heavy equipment operators. During 2008, over C$ 100 billion in new and expansion projects in the oilsands were cancelled, laying off thousands of workers and thus easing labour pressure in the coal sector. Other inputs have also come down: lower fuel costs and greater equipment availability allowed Sherritt to reduce unit operating costs/t by 6%.
Various issues remain to be resolved. Over the last several years, the time it takes to have a mine approved has been creeping up. The CAC has been lobbying on behalf of its members to streamline legislation. But the prime focus over the immediate future is on expanding capacity and positioning Canada’s coal sector to take advantage of the inevitable return to domestic and international demand for energy.
Author: Gordon Cope, contributing author, World Coal
Read the article online at: https://www.worldcoal.com/coal/26052010/fanning_the_embers_into_flames/