Mining coal - Challenges and opportunities

Canada’s abundance of coal resources and the use of coal as a plentiful, affordable fuel source in electricity generation and industrial markets have made coal an important part of our energy sector and encouraged the growth of the coal mining industry. Looking to the future, the industry’s growth and environmental performance will be shaped by different challenges and opportunities:

• coal — essential part of Canada’s electricity generation mix
  The main domestic use of coal in Canada continues to be for generating electricity, with coal accounting for nearly a fifth of Canada’s electricity generation mix. In 2002, about 90 per cent of Canadian coal consumption — about 60 million tonnes — went to fuelling thermal power plants across Canada. Of this total, Alberta, the largest coal-consuming province, used about 25 million tonnes to generate electricity, while Ontario, the second largest coal-consuming province, used about 21 million tonnes. Saskatchewan, Nova Scotia and New Brunswick also used smaller amounts of coal for electricity generation. Except in Ontario (where large amounts of coal are imported from the U.S), most of this coal came from Canadian mines. Canada’s Prairie and Atlantic regions are endowed with rich reserves of coal. In these areas especially, where geography is not conducive to large-scale hydro projects, coal continues to provide an essential fuel source for electricity.
  
  
• clean coal technologies offer lower environmental impacts
  Environmental challenges, such as greenhouse gases and other air emissions, are the main issues facing continued coal use in electricity generation. But emerging “clean coal” technologies are available, at a nominal cost premium, to reduce these emissions. New technologies such as fluidized bed combustion, integrated gasification combined cycle, advanced pulverized coal combustion and super-critical and ultra super-critical burners are designed to increase the efficiency of coal use and lower emissions. The Canadian Clean Power Coalition (CCPC), an association of coal and coal-fired electricity producers, is working with the federal government to develop these technologies. Natural Resources Canada has invested $1.6 million in a CCPC-led project to retrofit an existing coal-burning plant by 2007 to remove greenhouse gases and other air emissions.
  
  
• coal mines in wilderness areas face increased environmental activism
  Although coal mining has long been a part of the mountain and foothill areas of Alberta and British Columbia, mining plans in sensitive wilderness areas face increased environmental scrutiny from interest groups. This occurred, for example, in the case of the proposed Cheviot open pit coal mine near Jasper National Park. After Cardinal River Coals announced plans in 1996 to develop the mine, environmental groups, alleging that the project would have potential impacts on grizzly bears and other wildlife, launched a widely publicized campaign to block the development. After environmental review by provincial and federal governments, it was agreed that the mining plan surpassed the environmental requirements of both levels of government and the project received regulatory approval from the federal government in 2001. But plans for the mine were put on hold due to changing market conditions. In 2004, increasing prices on the world metallurgical coal market and the impending closure of the Cardinal River pit encouraged Elk Valley Coal to proceed with developing the Cheviot pit.
  
  
• export markets expected to stay flat
  With about half of Canada’s coal production exported to the world steel industry, coal exports are an essential economic driver for the coal mining industry. This is especially so in British Columbia, which produces mostly metallurgical coal. Reduced demand from Japanese steelmakers, the largest customer for Canadian metallurgical coal, and an oversupply of metallurgical coal in world markets saw prices and demand for Canadian export coal fall in 2002. That year, Canada exported about 25 million tonnes of metallurgical coal, down 26 per cent from 1998 levels. Until 2004, slow market conditions caused lowered expectations for Canadian coal exports.
  
  In 2004, however, increasing demand for both metallurgical and thermal coal from China and India caused rapid price increases and a resurgence of the Canadian coal industry. This resurgence is causing Canadian mining companies to bump up production at existing mines and to open mines, which had previously been put on hold due to slow market conditions. Economic and market forecasts indicate that burgeoning Chinese and Indian economies will continue to demand Canadian export coal well into the future.