COCHRANE— The Alberta Wilderness Association in partnership with the Coal Policy Working Group and other environmental non-governmental organizations hosted a virtual town hall on Tuesday (March 23) to explore the economic impacts of coal mining in the Eastern Slopes.
This was the second event in a series of virtual town halls the Alberta Wilderness Association has planned, the first of which covered the topic on the impacts of coal mining on public health.
Speakers for the event included Chris Severson-Baker, the Alberta regional director of the Pembina Institute, Cornelis Kolijn, a retired technical marketing manager for Teck Coal Ltd., Willem Langenberg from the University of Alberta’s Faculty of Sciences Earth and Atmospheric Sciences and Ian Urquhart, the conservation director and professor emeritus of Political Science at the University of Alberta.
Langenberg gave a fairly technical breakdown of the coal seams Benga Mining is exploring the Eastern Slopes and ultimately concluded that the Grassi Mountain area, one of the areas that is scheduled to be mined, may not have as much coal present as some of Benga’s exploratory materials would indicate.
“These are tectonic forces that make these folded structures, and also the thickening of the coal in places. It makes it difficult to exactly determine the tonnage that’s available from just putting a drill hole here or there,” he said.
Urquhart also took issue with some of the claims that Benga has made during the application process, and public hearing on Oct. 30, 2020.
According the Alberta Wilderness Association, the royalty rates for coking coal mining in Alberta are at one per cent of the mine mouth revenue. Post-payout, when a mine’s cumulative gross revenues exceed its cumulative costs, the rate is one per cent of mine mouth revenue plus 13 per cent of net revenue.
Because coking coal is a major export, the royalty payments will vary heavily, depending on the price of coal.
In Benga’s application package, the company offered three benchmark prices to demonstrate the value of coking coal: $100 USD per tonne, $140 USD per tonne and $200 USD per tonne.
At those prices, royalties would be roughly $6 million, $30 million and $65 million respectively, paid to the Alberta government annually.
According to alberta.ca, In 2017, the Alberta government collected $15.7 million in royalties from coal.
In the 2019-20 fiscal year, coal represented 0.2 per cent, or $11.8 million, of the province’s $5.9 billion in non-renewable resource revenue, according to the Alberta Energy Annual Report.
Urquhart said Benga is claiming that they will be able to generate $30 million a year in royalties for the 23-year lifespan of the mine, paying a total of $690 million to the government over that time period.
At the same time, he said, Benga has indicated that their mine is designed to produce 4.5 million tonnes of coal per year.
“Let’s assume they got that $140 US a tonne, which is $175 Canadian. We do that math, we get $785 million from its revenue, and then they’re going to be charged one per cent royalty on that, so they’re going to pay $7.85 million to the government in that year,” Urquhart said.
Given that the math does not add up, and that $30 million per year figure is well above what all other companies have paid to the government in royalties combined, Urquhart said he has trouble arriving at the same figures that Benga has provided.
“It’s hard for me to get to $30 million a year in terms of an average annual amount that’s going to come from Benga,” he said. “It just becomes difficult for me to see the circumstances where we’re going to get well above $30 million a year in royalty payments to average out at $30 million a year.”
Near the end of his presentation, Urquhart posed some tough questions to the attendees of the virtual town hall.
“What are we willing to sell this for? Are we willing to sell this for $30 million a year over 23 years, assuming that Benga survives for 23 years?” Urquhart asked. “Are we looking at $6 million a year when coal prices are around $100 US a tonne? Or, alternatively, here’s a crazy idea for you, is it priceless? Is it a priceless setting, a priceless environment? It leads me to ask is anything less than a total prohibition, on coal mining in the Rockies and foothills, is anything less than that acceptable? I know what my answer is to that and it’s no.”
