- Key Descriptors
- What is Coal?
- Industry Structure
- Exports and Imports
- Domestic Consumption
- Canada has an abundant coal resource. The largest known reserves are located in the western provinces, which are also Canada’s principal producers. Coal is also mined in Atlantic Canada.
- Globally, Canada is a mid-size coal producer. Over half of its production is used domestically for electricity generation and various industrial applications. The remaining production is exported.
- Canada also imports coal, primarily for electricity generation, as well as for metallurgical applications.
- Coal consumption may eventually decline in Canada as a result of environmental policies. It could also continue to thrive with the development of new technologies aimed at reducing air emissions.
What is Coal?
Coal is a black or brownish rock-like organic material found in subsurface deposits. It is formed from the remains of decayed vegetation compacted into a solid through millions of years of chemical changes under pressure and heat. It is composed primarily of carbon and an assortment of other elements such as oxygen, hydrogen and sulphur. It is readily combustible and is used around the world as a source of energy, especially for the generation of electricity, in which case it is referred to as thermal coal. High-carbon coal can also be transformed into coke and fed with iron ore into a blast furnace for iron and steel production, in which case it is referred to as metallurgical or coking coal.
Coal can be found in different regions across Canada and in different forms, from those with the most carbon to those with the least carbon. Anthracite and bituminous coals are high-rank coals and have higher carbon content. Both can be consumed for metallurgical and thermal purposes. Subbituminous and light coals are low-rank coals and have lower carbon content and are used only to generate electricity.
The coal industry is composed of firms that mine coal. Large private-sector firms include Sherritt International, Fording Canadian Coal Trust and Teck Cominco Limited.
A number of firms provide services to coal producers in fields such as exploration, equipment supply, engineering services and transportation (e.g., the rail carriers Canadian National and Canadian Pacific).
Some power-generating companies not only use coal for electricity generation but also own coal mines or are involved in coal production (e.g., TransAlta Corporation, NB Power). Other power companies (e.g., Ontario Power Generation) generate electricity from purchased coal.
The Coal Association of Canada represents the interests of coal producers, service companies and major users.
In Canada, the provinces regulate the mining of publicly owned coal. Provincial departments and agencies, such as British Columbia’s Ministry of Energy, Mines and Petroleum Resources, therefore play an important role in the regulation of coal production in Canada.
Canada has a large coal endowment. British Columbia, Alberta and Saskatchewan have the largest known reserves and resources in Canada that are actively mined. Coal is also mined in Nova Scotia and New Brunswick. Coal reserves and resources have been identified in Yukon, Ontario, Newfoundland and Labrador, Northwest Territories and Nunavut, but these resources are not currently mined.
Canada currently holds 8.7 billion tonnes of proved resources of coal-in-place, which are the resources in known deposits that have been carefully measured and assessed. Of that amount, 6.6 billion tonnes are deemed recoverable using existing technology under current and expected local economic conditions. At today’s production rate, these recoverable resources will last about 100 years.
The geological resource in Canada is far larger, however. In addition to the proved resources, there are 190 billion tonnes of estimated resources of coal-in-place, which is the indicated and inferred tonnage with foreseeable economic interest. This estimate includes amounts that could exist in unexplored extensions of known deposits or in undiscovered deposits in known coal-bearing areas, as well as amounts inferred from favourable geological conditions. Speculative amounts are not included.
Annual coal production has remained relatively steady since 1990, hovering between 65 and 75 million tonnes. Canada produces both thermal and coking coals. Thermal coal production has been steady, but coking coal production has been fluctuating due to demand changes on the global coking coal market. In 2007, 70 million tonnes of coal were produced.
There were 22 coal mines operating in Canada at the end of 2007. British Columbia and Alberta hosted 17 of these mines and were the two highest producing provinces, together accounting for more than 80% of Canada’s coal production.
Generally speaking, all of Canada’s metallurgical coal — that is all the coal produced in British Columbia and some of the coal produced in Alberta — is exported. Almost all of its thermal coal (all of Saskatchewan’s, New Brunswick’s and Nova Scotia’s coal and most of Alberta’s coal) is consumed domestically for coal-fired power generation.
Canadian Coal Production
Annual coal production in Canada has remained relatively steady since 1990, hovering between 65 and 75 million tonnes. Canada produces both thermal and metallurgical coals. This graph illustrates in millions of tons the amount of thermal and metallurgical coals produced between 1990 and 2007. In 2007, 70 million tonnes of coal were produced.
Exports and Imports
Coal exports are vital to the Canadian coal industry, with more than 40 per cent of production being exported. In 2007, Canada exported 31 million tonnes of coal valued at $2.9 billion. While Canada is a mid-size coal producer, it is a significant exporter of metallurgical coal, which accounts for about 90% of Canada’s coal exports.
Canada exports coal to many countries. Asia is Canada’s primary export area, accounting for more than half of its exports, and Japan is the country that imports the most coal. Canada also exports significant volumes of coal to a number of European countries, the United States, Mexico and Latin American countries.
Canadian coal exports are mainly from Elk Valley Coal’s five coal mines in British Columbia, with smaller volumes from mines in Alberta. About 90% of exports were shipped by sea through coal terminals in Vancouver while the rest was shipped through terminals in Prince Rupert in northern British Columbia.
While Canada is an exporter of coal, it also imports coal into central and eastern Canada. This is mainly due to geography since it is cheaper to obtain coal from the east and central regions of the United States than from the western provinces. Canada imported 19 million tonnes of coal in 2007, of which about 80 per cent was thermal coal for electricity generation in Ontario, Nova Scotia and New Brunswick. The largest imports were from the United States, with smaller volumes from Colombia, Venezuela and Russia.
This graph illustrates, in millions of tons, the amount of coal that Canada exports and imports. Canada exports coal to many countries. Asia is Canada’s primary export area, accounting for more than half of its exports. Canada also imports coal into central and eastern Canada. This is mainly due to geography since it is cheaper to obtain coal from the east and central regions of the United States than from the western provinces. Canada imported 19 million tonnes of coal and exported approximately 30 million tons in 2007.
Canada consumed 58 million tonnes of coal in 2006. Most of this coal (51 million tonnes) was used to generate electricity. Coal’s availability and low cost make it the main fuel for electricity production in many provinces. Coal is used to produce about 74 per cent of the electricity used in Alberta, 63 per cent in Saskatchewan, 60 per cent in Nova Scotia, and 18 per cent in Ontario. The coal not used to generate electricity is consumed by Canada’s steel, cement and other industries.
Canadian Coal Consumption
This graph illustrates Canada's coal consumption between 1990 and 2006. Canada consumed 58 million tonnes of coal in 2006. Most of this coal (51 million tonnes) was used to generate electricity.
On the export market, Canadian coking-coal exporters have benefited from strong price increases in recent years. These increases were the result of continuing demand increases and tight supply on global coal markets. In 2007, Canadian producers were paid about $100 per tonne for metallurgical coal.
About 70 per cent of domestic coal production is consumed by electricity-generation plants adjacent to coal mines, commonly referred to as “mine mouth” operations. Where production and consumption operations are integrated, coal is not priced as if on the market. Its price is merely the cost of mining the coal.
The remaining volumes of coal consumed in Canada are imported and purchased at the prevailing global market price. It is estimated that the global coking-coal market price was around $100 per tonne and the thermal-coal price was around $60 in 2007.
Canada is the world’s second largest metallurgical coal supplier. Canada’s metallurgical coal production and exports will benefit from the growing global demand for metallurgical coal in the short to medium term, as global demand is forecasted to exceed supply. Long-term growth will depend on the global economy and steel-industry development because Canada’s metallurgical coal is export oriented. Thermal coal production is expected to be stable.
Canada’s coal consumption could eventually decline as a result of measures to reduce greenhouse gas emissions, such as the closure or retrofitting of existing coal-fired generation facilities. The development and implementation of new technologies such as carbon capture and storage and clean coal could, however, help sustain the use of coal for electricity generation in a carbon-constrained future.