Vancouver — The economic boom in China has driven up prices for coal, much to the benefit of British Columbia.
Canadian companies are fetching hefty prices for their metallurgical and pulverized coal injection (PCI) coal. The province’s coal is primarily exported for use in steel-making in Asia and Europe.
British Columbia’s major coalfields are concentrated in the northeast and the southeast, along a northwest-trending belt of Jurassic-Cretaceous rocks in the Rocky Mountain foothills.
The resurgence in coal mining is reviving towns such as Chetwynd and Tumbler Ridge, which were hit hard when the Quintette and Bullmoose mines shut down in 2000. And the British Columbia government, which faces an election next month, is estimated to take in $186 million in royalties from coal revenue in fiscal 2005-06, up a whopping 600% from the $26 million provided in 2004-05.
Leading the charge in the province’s northeastern coal fields is
Since then, the Vancouver-based junior has been able to negotiate double the price for its Asian-bound PCI coal, that is, more than US$100 per tonne. The company also nailed down a 6-year contract with South Korean steel-maker POSCO to process 2.8 million tonnes of PCI coal for delivery through Ridley Terminals in Prince Rupert following successful trial shipments.
Gary Livingstone, WCC’s president, says his company’s low-volatile PCI coal is well-received because of its high quality.
To cash in on the higher coal prices, the company has decided to apply for a permit that would allow it to increase annual production at Dillon to 960,000 tonnes, thereby shortening Dillon’s life to two years from six.
The company is also seeking permission to mine its adjacent Brule PCI coal deposit, which could enter production after Dillon is mined out, provided it clears environmental reviews. WCC aims to submit an application for Brule to the province’s Environmental Assessment Office by the third quarter.
WCC raised $100 milion earlier this year to cover permitting at Brule, the expansion of Dillon, and construction and development at the Wolverine project, near Tumbler Ridge.
The company received its final mine permit for Wolverine, which will cost about $180 million to build and operate. The mine will produce 1.6 million tonnes of coking coal per year. Construction and operation are expected to create more than 200 full-time jobs.
“Receipt of the Wolverine mine permit is another step in achieving our goal of producing five million tonnes per year by 2008,” says Livingstone. Three million of those tonnes will be hard coking coal from the Wolverine group; the remainder will be low-volatile PCI material.
In September 2004, the Willow Creek mine of
Situated 45 km west Chetwynd, the mine is producing at the annual rate of 900,000 tonnes, and Pine Valley is seeking permission to accelerate that to 2.2 million tonnes.
The company recently commissioned new equipment and began installing infrastructure to accommodate the first two mining phases. Construction of a coal wash plant will enable the higher capacity and allow production of coking coal. A third phase of work will begin this autumn.
A preliminary feasibility study of the Pine Pass Block included a reserve estimate of 9.5 million recoverable tonnes and 8.9 million salable tonnes of coal. Two-thirds of the reserves consist of high-quality, low-sulphur, low-ash PCI coal, and less than a third is higher-value coking coal.
Pine Valley is negotiating sales contracts for the coming year. Marubeni of Japan provided the debt-financing for the project and agreed to buy at least 600,000 tonnes of coal over two years.
The company transports the coal via rail to North Vancouver, and from there it is shipped to steel mills in Asia and Europe.
High coal prices prompted Sudbury-based
Lossan contains near-surface oxidized PCI coal and unoxidized coking coal at depth. The British Columbia Ministry of Energy and Mines estimates that 100 million tonnes of coal occur in the Lossan-axis syncline.
Cline has defined an initial resource of 20 million tonnes of low stripping (6:1) coal in accordance with National Instrument 43-101. Although the company’s ultimate goal is to produce 1 million tonnes per year, it is considering an initial annual rate of 250,000 tonnes. A feasibility study by the independent firm Norwest is expected this fall.
The company recently mined a 10-tonne bulk sample from new underground adits and drilled 4,281 metres in 28 holes. The sample, which includes PCI and coking coal, is being processed in Calgary for plant design and marketing purposes.
In the 1990s, on behalf of then-owner Gulf Resources, Norwest conducted feasibility studies of Lossan that considered 1-million- and 3-million-tonne-per-year operations.
The company expects Lossan to enter production by the first quarter of 2006 provided environmental permits are granted.
In an effort to get mining under way this fall, Vancouver-based
Capital expenditures for Trend are estimated at $37.7 million with an internal rate of return of 25% after tax.
The proposed project includes 2 million tonnes of recoverable reserves, which would allow for seven years of mining. These reserves represent a small portion of the resource in the “south block,” which comprises 16.8 million tonnes of medium volatile bituminous metallurgical coal. The company also plans to explore and develop four other blocks on the property.
Thermal coal producer
Initial work is focused on the Five Cabin syncline, which was explored by Denison in the 1970s and is 15 km southwest of Quintette.
Denison estimated a coal resource of 450 million tonnes in the Gates formation and 160 million tonnes in the Gething formation. Hillsborough is drilling the property in an effort to upgrade the historic resources for mine-planning purposes and hopes to define an open-pit resource by June.
The company, which doubled its profit last year, produces thermal coal at its Quinsam mine near Campbell River, B.C., and recently bought a barge-loading facility near the mine.
Southeastern coalfields
In British Columbia’s southeastern coalfields,
Elk Valley’s production capacity is projected to climb by 3 million tonnes to 28 million tonnes per year by the end of 2005.
Elk Valley arranged a 10-year sales agreement with
Elk Valley’s metallurgical and other coal will fetch an average of US$122 per tonne after April 1, with sales for the 2005 coal year expecte
d to exceed U$100 per tonne. That’s nearly double the average price of US$52 per tonne in 2004.
Elk Valley Coal also just reached a 5-year deal with Canadian Pacific Railway (CPR) for transportation of metallurgical coal from its mines in southeastern British Columbia to Vancouver ports. The deal will see an end to the legal wrangling over a previous contract dispute concerning coal transport.
Says James Popowich, CEO of Elk Valley Coal: “CPR’s commitment to increase coal movements during the term of the contract makes us confident Elk Valley Coal will have sufficient rail capacity for its current expansion plans, and will have the flexibility to consider further production increases.”
Transportation and other costs are expected to average $37-38 per tonne, compared with $29 in 2004.
In the same vicinity is the Lodgepole project, where Cline Mining has confirmed a resource of 82.5 million tonnes of surface-minable, low-volatile PCI coal and coking coal. That includes 49.6 million tonnes in the measured category, 22.5 million tonnes indicated, and 10.4 million tonnes inferred. The figures are based on a cutoff stripping ratio of 6:1.
An independent study calls for a 51-hole drilling program and adit to determine the quality of the coal. However, Cline’s exploration and development plans are facing stiff opposition from Montana, south of the border. Battles between the state and the province have been brewing since the 1970s, when coal development projects were initially planned in the headwaters of the North Fork Flathead River.
The update followed a visit in early March, by Montana Senator Max Baucus, who opposes development because of concerns about the quality of downstream water.
The current protestors, mostly Montana residents led by Sen. Baucus, say they were not notified of Cline Mining’s plans before the company secured a permit from the British Columbia government in November 2004. The permit allows Cline to build roads and remove 90 tons of coal for testing.
Undeterred, Cline recently applied for another three coal licences covering the Crown Mountain deposit, in the same coalfield, 57 km north of Lodgepole. The deposit contains some 4.5 million tonnes of medium volatile metallurgical coal.
Cline plans to expand resources through exploration.
Also in the Elk Valley, Hillsborough has applied for a mining permit for the Bingay surface project, which it optioned last June. Exploration by Utah Mines in the early 1980s identified a historic resource exceeding 40 million tonnes of metallurgical coal contained in 21 seams.
Other areas
In the northwestern part of the province,
Situated on the 150-sq.-km Mount Klappan coal property, Lost Fox comprises numerous coal seams, 12 of which are potentially minable. The coal seams consist of anthracite and reach up to 11 metres in thickness.
Several feasibility studies have been completed, though they don’t conform to current standards. A feasibility study is due for completion this summer.
Meanwhile,
With the mining fleet commissioned, the company is focusing on waste removal and construction of a 600-metre haulage road from the open pit to the wash plant.
Compliance has also applied for permission to do trenching and drilling at the Bear metallurgical coal deposit on Vancouver Island. The property comprises 12 sq. km in the Comox coal basin.
The drilled in situ resource, based on assessment work in the 1980s, estimates 28.6 million tonnes of coking coal contained in two blocks, of which 8.6 million tonnes are minable by open-pit methods.
Be the first to comment on "BC cheers coal mining boom"