By Gordon Hamilton, Vancouver Sun, June 5, 2012
Companies see opportunities in Asia, and are continuing exploring for deposits and developing mines
Despite a drop in prices in China, Canadian coal companies are not slowing down exploration programs or development of new mines.
"There's volatility in the market but we think the coal market will continue to grow and there will be opportunities for Canadian companies," Janice Plumstead, director of consulting and deals at PwC said Monday.
"What we see is companies are investing in mine development, they are doing exploration and they are looking for new deposits. There is the expectation that there will be new opportunities to export to Asia," she said in an interview after making a presentation at the Coal Association of Canada's national conference in Vancouver.
Canada produced 67.3 million of tonnes of coal in 2011 according to the preliminary results of a PwC report on the industry, generating revenues of $6.5 billion. About 40 per cent of that is exported. The industry had a $5.2-billion effect on the Canadian GDP.
Plumstead said it will take new mines to increase production. Speakers at the conference explained that demand in Asia for metallurgical coal remains strong but that inventory management in China has resulted in lower prices.
Plumstead said that despite the drop in prices, coal remains profitable. Producers, she said, "are pleased."
In British Columbia, most coal production is metallurgical, a high-quality coal that is used for steelmaking.
Exports of coal for energy production - thermal coal - are expected to grow in the future largely because of port improvements in B.C. Thermal coal exports from Canada now total six million tonnes.
Eugene Wasaty, chief executive officer at Coalspur Mines, told The Vancouver Sun that his company remains "very bullish," on coal, specifically thermal coal, which Coalspur produces from its operations at Hinton, Alta.
Coalspur is investing in that continued growth. It has an agreement with the Port of Prince Rupert, which is under-going a $90-million port expansion that will allow Hotspur to send coal to Asia. Hotspur is spending $1.2 million in its Alberta operations as a result of the export opportunity.
"Our project will come online in 2015," Wasaty said. "First coal delivery will be in 2015 at 2.5 million tonnes increasing to 12 million tonnes by 2018."