Resource World Magazine

mining COAL: an indispensible commodity Vancouver Coal Conference highlights challenges and future prospects for coal sector by Ellsworth Dickson The Coal Association of Canada recently hosted a conference at the Bayshore Hotel in Vancouver, British Columbia where industry experts discussed the state of the industry from both a global and Canadian perspective. The presentation kicked off with a talk by Milton Catelin, Chief Executive of the World Association. "Coal provides 30% of world energy and 41% of electricity and is an indispensible commodity in the developing world," said Catelin. He noted that in the developing world coal alleviates poverty by providing the affordable energy that is behind industrial growth in China and India. Catelin added that because coal is a cornerstone in the world's energy system, it is here to stay; making it important to develop clean coal technologies such as those being advanced in China. Globally, there are 1,199 coal plants proposed – 455 in India and 363 in China. With such growth in the coal sector, one might think the price of coal is high; how- ever, that is not the case. In his presentation, Joe Aldina, Analyst / Americas & Europe Coal Cost Research at Wood Mackenzie, said that the emergence of China and India have created much volatility in the coal market. Coupled with a slowdown in China and an oversupply, coal prices have retreated from their highs of over US $300/tonne to about US $145/tonne at present. Aldina said that in the past few years there has been a high level of capital spending to develop coal projects, although this is now slowing down. "We are at a point where the coal market could rebound," said Aldina. He remarked that the current slim profit margins have resulted in some coal companies closing high cost operations in order to survive, although some companies are still running money-losing operations, notably in Australia. Nevertheless, Aldina maintains a positive outlook for the coal industry while coal miners continue to implement various cost-cutting plans. Canada is well positioned for growth in its coal sector. "Western Canada produces mainly metallurgical coal for the steel industry and it's got a lot of things going for it," said Gerard McCloskey, an industry consultant from the UK. "I would think there will be, in my own forecast, a doubling of exports from Western Canada over the next ten years," he said. Aldina concurs. "We remain bullish on mid-term to long-term metallurgical coal demand, but growth relies heavily on China and India," said Aldina. Indeed, India and China represent about 85% of Pacific Basin growth. Aldina noted that around 240 million tonnes of imported metallurgical coal is competitive into Coastal China in 2013, representing 33% of Chinese total metallurgical coal demand. He also pointed out that European demand has been buoyant, but will be short-lived. With better times for the coal industry on the horizon, British Columbia coal miners have plans for expanding their operations. Teck Resources Ltd. [TCK.B-TSX; TCK- BRITISH COLUMBIA COAL FACTS • C coal production topped $5.7 billion B in 2011 • oal mining industry taxes to all C levels of government in 2011 was $715.2 million • C has 12.9 billion tonnes of potentially B mineable coal resources • C has 26,000 coal-related jobs B • C has nine operating coal mines in B the northeast (Peace River area) and the southeast (Kootenay area) and Vancouver Island • apan and South Korea consumed the largest J share of BC metallurgical coal exports, although Chinese demand is on the rise 28 www.resourceworld.com Paul Raj of Finning Canada instructs Mina Miyashita how to operate huge off-road mining trucks on the CAT simulator. Photo by Ellsworth Dickson november 2013

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