Coal - Other Information

What is Coal?

Coal is an organically derived material. It is formed from the remains of decayed plant material compacted into a solid through millions of years of chemical changes under pressure and heat. As the organic maturity process continues, the buried plant material is transformed into different types of coal. In general, the longer the organic material is subjected to heat and pressure, the higher its rank and the more carbon content will be contained per unit of weight. The degree of change undergone by an organic material as it matures from peat to anthracite is known as coalification. Coalification has an important bearing on coal's physical and chemical properties and is referred to as the “rank” of the coal. Ranking is determined by the degree of transformation of the original plant material to carbon. The ranks of coals, from those with the least carbon to those with the most carbon, are lignite, subbituminous, bituminous, and anthracite.

Lignite and subbituminous coal are low-ranked coals, also known as brown coals, consumed only for the generation of electricity. Bituminous coal and anthracite are high-ranked coals, also known as hard coals. Bituminous coal is consumed for both metallurgical and thermal purposes. Premium-grade bituminous coal, often referred to as metallurgical coal, coking coal, or steelmaking coal, is used to produce coke, which is a key ingredient in iron and steelmaking. Anthracite, the highest-ranked coal, is often called “smokeless” and can be consumed for metallurgical purposes, by various industries, and even by households as a fuel for heating and cooking.

Coal is the world's most abundant and widely distributed fossil fuel. According to Coal Information, the annual publication of the International Energy Agency, the world's total proven recoverable coal reserves are 1,000 billion tonnes (t) spread over more than 70 countries. At its current production rate, coal offers approximately 150 years of supply, which is significantly longer than known reserves of oil and gas. Coal is also an economical energy source when compared to oil and gas.

Coal has been consumed as an energy source for hundreds of years. It provided the energy that boosted the industrial revolution of the 19th century and launched the electric era in the following century. It was the world's most important source of primary energy until the late 1960s when it was overtaken by oil. Today, close to 90% of the world's total coal production is consumed as thermal coal. The majority of thermal coal is used to generate electricity and a small portion is used as a fuel for heat or steam, such as for residential building heating; for the cement, pulp and paper, and other industries; and for the agriculture and transportation sectors. Coal-fired power generation currently provides more than 40% of the world's total electricity. About 10% of global coal production is transformed into coke and used in iron and steelmaking. Almost all primary steel production worldwide is based on pig iron from blast furnaces fed with iron ore and coke made from coking coal. About 70% of today's world steel production uses coal.

Industry Structure

The Canadian coal industry is composed of coal producers, consumers, rail and port (transportation and handling) service providers, explorers and developers, equipment suppliers, and engineering and design service providers.

Canada currently has seven coal-producing companies operating 19 coal mines in British Columbia, Alberta, and Saskatchewan. The largest coking coal producer is Teck Resources Limited which operates six coal mines. The largest thermal coal producer is Westmoreland Coal Company, which also operates six coal mines.

At the present time, Canada has 15 coal-fired electricity generation plants with 37 units in operation. Some power-generating companies not only use coal for electricity generation, but also own coal mines, such as TransAlta Corporation. Other power companies generate electricity from purchased coal. Cement producers, nonferrous metals manufacturers, and other industries also use coal.

Canadian National and Canadian Pacific are the two rail carriers for coal. Vancouver and Prince Rupert in British Columbia. Thunder Bay in Ontario. and some of the ports in Quebec, New Brunswick, and Nova Scotia all handle coal. The majority of Canada's coal exports are handled by Metro Port Vancouver.

A number of firms provide services to the coal sector in areas such as equipment supply, engineering and design, field exploration work, etc.

The Coal Association of Canada represents the interests of coal producers, coal users, and service companies.

In Canada, the provinces and territories regulate the mining of publicly owned coal. Provincial and territorial departments and agencies, such as British Columbia's Ministry of Energy and Mines, and Alberta Energy, play an important role in the regulation of coal production in Canada.

Resources

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, the Northwest Territories, and Nunavut, but these resources are not currently mined.

Canada currently holds 8.7 billion t 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 t 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.

However, the geological resource in Canada is far larger. In addition to the proved resources, there are 190 billion t 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.

Production

Canada is a mid-size coal producer. About half of Canada's production is metallurgical or coking coal, a key ingredient in steel manufacturing. The vast majority of metallurgical coal is exported. The other half of Canada's production is thermal coal, the majority of which is used domestically for electricity generation.

Canada has an annual production capacity of approximately 76 million tonnes (Mt), a 50-50 split between coking and thermal coal. Coking coal production has been fluctuating due to demand changes on the global coking coal market while thermal coal production remains relatively steady.

Coking coal is produced from 11 mines in British Columbia and Alberta. Thermal coal for export is also produced from 2 mines in British Columbia and Alberta. The remaining 7 mines produce thermal coal exclusively for domestic coal-fired generation of electricity.

Nearly all of Canada's metallurgical coal — produced in British Columbia and Alberta — is exported. The majority of its thermal coal (all of Saskatchewan's and most of Alberta's coal) is consumed domestically for coal-fired power generation.

Figure 1
Canadian Coal Production, 1980-2013

 

Source: Natural Resources Canada.

Text version

Figure 1
Canadian Coal Production, 1980-2013

This graph illustrates the volume of Canada's coal production in millions of tonnes, by type of coal (coking and thermal), between 1980 and 2013. In 1980, coking coal output was 14.2 million tonnes and thermal coal output was 22.5 million tonnes, and the combined total production was 36.7 million tonnes. Over the years, both coking and thermal coal production increased. In 2013, coking coal production was 34.1 million tonnes and thermal coal production was 34.8 million tonnes, for a total production of 68.9 million tonnes.

 

Trade

Coal exports are vital to the Canadian coal industry, with more than 50% of production being exported. In 2013, Canada exported 39 Mt of coal valued at $5.5 billion. While Canada is a mid-size coal producer, it is a significant exporter of coking coal, which accounts for about 90% of Canada's coal exports.

Canada exports coal to many countries. Asia is its primary export area, accounting for more than three quarters of Canadian exports. Canada also exports coal to a number of European countries, the United States, Mexico, and Latin America.

Canadian coal exports are mainly from coal mines in British Columbia with smaller volumes from mines in Alberta. About 90% of the 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 a net exporter of coal, it also imports coal into central and eastern Canada. Its coal imports have declined as Ontario no longer uses coal for electricity generation. More than half of the coal imported is used for metallurgical and industrial purposes while the remainder is used in coal-fired electricity generation in Nova Scotia and New Brunswick. Most imports are from the United States with smaller volumes from Colombia and other countries.

Figure 2
Canadian Coal Trade, 1980-2013

 

Source: Natural Resources Canada.

Text version

Figure 2
Canadian Coal Trade, 1980-2013

This bar chart illustrates the amount of coal that Canada exported and imported in millions of tonnes between 1980 and 2013. In 1980, Canada exported 15.3 million tonnes of coal. Over the years, coal exports fluctuated due to market demand. In 2013, Canada exported 39.1 million tonnes. Canada imported 15.8 million tonnes of coal in 1980. Imports also fluctuated due to domestic demand. The highest coal import volume was 22.7 million tonnes in 2003. In 2013, coal imports had declined to 8.6 million tonnes.

 

Consumption

Coal is used in Canada for electricity generation, steelmaking, and various industrial applications such as cement manufacturing. Canada's coal consumption is declining due to environmental policies to reduce greenhouse gas emissions and the substitutability of cheap natural gas to generate electricity. Ontario was the largest consumer of coal in Canada but, by April 2014, had completely stopped using coal for power generation. Still, most of the coal consumed in Canada is used for electricity generation. Its availability and low cost make coal the main fuel for electricity production in Alberta, Saskatchewan, and Nova Scotia.

Figure 3
Canadian Coal Consumption, 1980-2012

 

Source: Natural Resources Canada.

Text version

Figure 3
Canadian Coal Consumption, 1980-2012

This combination bar and line chart illustrates Canada's coal consumption in millions of tonnes between 1980 and 2012. Canada's coal consumption was 37.3 million tonnes in 1980. It reached the highest point in 2000 when 62.7 million tonnes of coal were consumed. In 2012, consumption had declined to 41.4 million tonnes. The majority of coal was consumed by coal-fired generation plants to produce electricity. In 1980, the amount of coal consumed for coal-fired electricity generation was 27.8 million tonnes. It reached the highest point in 2000 with 55.8 million tonnes of coal consumed. In 2012, consumption for coal-fired electricity generation had declined to 33.7 million tonnes.

 

Outlook

Canada is the world's third leading coking coal supplier. Its coking coal production and exports are dependent upon global demand, particularly for steel and steel products.

Canada's coal consumption is declining 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 help sustain the use of coal for electricity generation in a carbon-constrained future.

Further Information

This document is based on information available in the summer of 2014. For further information, you may wish to obtain the latest commodity review on coal published by Natural Resources Canada's Minerals and Metals Sector or contact the author. Statistics on reserves are from the Survey of Energy Resources published by the World Energy Council. Other statistics either originated from Statistics Canada or Natural Resources Canada.

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© Her Majesty the Queen in Right of Canada, as represented by the Minister of Natural Resources, 2014.