As oil prices languish, Alberta sees its future in a 'coal rush'

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At least six new or expanded mines could be built as a new conservative provincial government aims to increase coal production for export

Dump trucks loaded with oil sands drive through a mine in Alberta, Canada on 4 June 2015. Canadian oil sands companies are hemorrhaging both workers and money.
Dump trucks loaded with oil sands drive through a mine in Alberta, Canada on 4 June 2015. Canadian oil sands companies are hemorrhaging both workers and money. Photograph: Bloomberg/Bloomberg via Getty Images
Dump trucks loaded with oil sands drive through a mine in Alberta, Canada on 4 June 2015. Canadian oil sands companies are hemorrhaging both workers and money. Photograph: Bloomberg/Bloomberg via Getty Images
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Jeff Gailus

Last modified on Thu 17 Dec 2020 07.59 EST

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With the price of Western Canadian oil languishing around $35 a barrel and Canadian oil sands companies hemorrhaging both workers and money, the province of Alberta sees its future in another fossil fuel: coal.

A “coal rush” in the province could see at least six new or expanded open-pit coal mines built up and down the eastern slopes of the Rocky Mountains, mostly by Australian companies. Together, these projects could industrialize as much as 1,000 sq km of forests, waterways and grasslands.

Alberta has eight operating coal mines and more than 91bn tonnes of mineable coal, but until recently, Alberta had a restrictive coal-mining policy that’s been in place for 44 years to protect drinking water for millions of people. In 2015 the previous Alberta government announced a plan to eliminate coal-fired electricity by 2030, a goal Canada’s federal government embraced three years later to help fulfill Canada’s greenhouse-gas-reduction commitments to the Paris Agreement.

Canada, along with the United Kingdom, also launched the Powering Past Coal Alliance at the 2017 UN Climate Change Conference to accelerate the phase-out of coal-fired power plants worldwide.

Yet despite the commitment to eliminate coal-fired electricity, the new conservative provincial government has pulled out all the stops to increase coal production for export.

It rescinded the 1976 coal mining policy without public consultation, after spending months wooing Australian coal companies. It also reduced the corporate tax rate from 10 to 8%, axed provincial parks in coal-rich areas, offered 1% royalties (Australia’s is a minimum of seven), and passed legislation to fast-track project approvals.

“Through this approach we are striking the balance of ensuring strong environmental protection with providing industry with incentive to increase investment” in export coal production, Alberta environment minister Jason Nixon said in a press release announcing the coal policy repeal.

The new mines are mostly meant to supply coking, or metallurgical, coal used to make steel. Steelmaking accounts for 4.8% of global industrial carbon emissions. Unlike the market for coal used in power plants, which is beginning to crumble, coking coal is in high demand, particularly in China, which produces almost half of the world’s steel. Coking coal is expected to remain profitable in the near future as the Chinese economy rebounds from the Covid pandemic.

“It’s all pretty shocking,” said Katie Morrison, conservation director of the southern Alberta chapter of the Canadian Parks and Wilderness Society. “The government is saying this is going to be the next economic boon for the province, but it’s just another boom-and-bust economy. And there’s a good chance [the mines] will go bust before they ever clean up their mess, and the public will be left with the clean-up costs.”

First in line is the Grassy Mountain mine, which is undergoing an impact assessment to determine if it can proceed. Australia’s Riversdale Resources hopes the open-pit mine will supercharge the state’s output and produce 93m tonnes of steelmaking coal over the 23-year life of the mine.

Located 7km from the historic mining town of Crowsnest Pass, the controversial project involves removing the top of Grassy Mountain and digging a pit near the sources of two major tributaries of the Crowsnest River. Even the local golf course would need to be reconstructed to accommodate a rail loop and coal-loading facility.

Most indigenous groups in southern Alberta and politicians from nearby communities have backed the mine proposal for its potential economic benefits. “Piikani Nation proudly supports the Grassy Mountain Coal Project,” wrote Chief Kiaayo Tamisoowo in a January 2019 letter. “We need economic development to bring further leadership, opportunities and prosperity to our people.”

Riversdale former CEO Steve Mallyon has said that the reason he was so keen on one of his firm’s new mines was low coal royalties and the withering of Alberta’s oil economy. “It is all about the timing, particularly with the downturn with the oil sands sector,” he told the Sydney Mining Club. “The longterm strategy for us is to really become a multi-mine producer in that region” of Alberta.

Yet there are significant environmental concerns. “The proposed mine will do far more damage than can be reasonably justified on any level,” wrote Dennis Lemly, a former US Forest Service research biologist and associate professor at Wake Forest University, in a recent peer-reviewed analysis of the environmental impacts.

While Canada’s federal government is generally deferential to provincial plans for industrial development, Alberta’s coal rush could pit the federal and provincial governments against each other. A coal mine that opened in 2019 – and which was Alberta’s first new coal mine in 30 years – recently applied to expand its operations and more than double its output.

Public pressure has forced the federal government to intervene and assess what damage the expansion could cause. The review panel will also decide Grassy Mountain’s fate by next summer – and perhaps the fate of Alberta’s coal push.

This article was amended on 16 December 2020 to remove an incorrect description of the size of Vancouver Island and to reflect that Steve Mallyon is the former CEO of Riversdale.