Increased coal production at Alberta's Coalspur mine leads to export boost

Houston — As production ramps up at Coalspur Mines' new Vista thermal coal mine in Alberta, Canada, exports off the West Coast have also seen sharp increases.

Production at the Hinton-based mine, which is operated by Bighorn Mining and owned by the Cline Group, have tripled from year-ago levels. The mine, which first started producing coal in February 2019, has produced 2.84 million mt of coal through the first five months of 2020, tripling the 913,922 mt produced a year earlier, according to data from the Alberta Energy Regulator (AER) released July 15.

Vista was the first new coal mine to begin operations in over 30 years in Alberta and is one of two active bituminous thermal coal mines in Alberta, according to a June report from the Government of Alberta's Energy Operations Division.

Coalspur has applied for approval with the AER to expand operations, and if successful, construction would start in the beginning of 2022. The expansion would nearly double the current allowed production by 4.2 million mt/year to over 10 million mt/year, making it the largest coal exporter in Alberta.

An official with Bighorn Mining declined to comment on Coalspur operations.

Coal Valley mine suspended

Despite the boost in Coalspur's production, Alberta's other bituminous thermal mine, Coal Valley, which is owned by Westmoreland Mining Holdings, suspended operations on June 22, "due to significant constraints and challenges imposed by the COVID-19 pandemic," according to a company statement.

Coal Valley did not produce any coal in May but was still shipping coal from inventories. Through the first five months of 2020, production fell 68.9% from year-ago levels at 609,272 mt, according to AER data.

Westmoreland spokeswoman Elenor Siebring said the increase in Coalspur's production had no impact on the company's decision to suspend operations.

"We will maintain the mine in a state of operational readiness and we will assess the feasibility of re-opening on a continual basis," Siebring said in an email.

Both Coal Valley and Coalspur, which are mined from the same seam, ship all of their coal by rail to ports on the west coast of British Columbia for deliveries to power plants overseas.

According to AER data, over 2.2 million mt of bituminous thermal was exported from Alberta in the first five months of 2020, doubling the 1.12 million mt exported in the same period a year ago.

South Korea and Japan have imported 633,022 mt and 436,819 mt of thermal coal from Alberta, compared with zero and 520,159 mt, respectively, in the same period a year earlier. Alberta has also exported 351,497 mt to Singapore and 326,753 mt to Egypt, compared with 250,986 mt and zero, respectively, last year.

Exports at Ridley Terminals highest in over nine years

Thermal coal exports from the Ridley Terminal in Prince Rupert, British Columbia, were at 1.87 million mt through the first five months of 2020, doubling the 935,942 mt exported in the same period a year earlier, according to data from the Prince Rupert Port Authority. It was the most in the first five months of a year in over nine years.

In May, thermal coal exports were at 515,337 mt, which was the third-highest monthly total in the last nine years, only behind 537,493 mt in March and 524,067 mt in June 2012.

Dennis Blake, senior manager at Ridley Terminals, said Coalspur has made up the majority of the thermal coal shipped out of the terminal because "the Asian market seems to like that coal seam" where it is mined.

Blake said the terminal was shipping coal from Coal Valley as well, but due to the mine suspension, "Coalspur will take up the slack."

"Right now we're positive for the future, but we know that could change at any time," Blake said.

The terminal, which is the closest major North American coal export terminal to Asia, is served by Canadian National railroad. In January, Ridley Terminals signed a seven-year deal with Teck Resources to increase its contracted capacity from 3 million mt to 6 million mt, starting in 2021, with an option for Teck to extend up to 9 million mt.

Blake said the terminal is expecting greater throughput in Q2 2021, but it won't impact Coalspur shipments at all. "We have lots of space available," Blake added.

Vancouver thermal exports also up

Thermal coal exports out of the Port of Vancouver were also up from year-ago levels, due to an increase in shipments of US coal.

The port, which includes Westshore Terminals and Neptune Bulk Terminals, shipped out 4.75 million mt of thermal coal in the first five months of 2020, up 35.4% from the same period a year ago, according to Port of Vancouver data. In contrast, metallurgical exports through May were down 12% on the year at 8.82 million mt.

Westshore takes coal from the Powder River Basin and Montana through Seattle as a port and rail transfer point.

According to US Census Bureau data, thermal coal exports out of Seattle through May rose 85.6% on the year to 2.51 million mt. During the first five months of 2020, South Korea imported 2.36 million mt of US coal through Seattle, while Japan imported 151,682 mt, up from 1.32 million mt and zero, respectively, a year earlier.

Platts assessed FOB Vancouver 5,000 kcal/kg coal, for 15-60 day delivery, at $45.93/mt on July 16, unchanged on the day. Since early March, prompt FOB Vancouver prices have dipped by $2.65, while freight rates for a capesize ship traveling from Roberts Bank in Vancouver to Kashima, Japan, have increased by $1.45 to $11.65/mt.

On May 13, the freight rate dropped to $6/mt, which was the lowest level since $5.95/mt on September 1, 2016.