Atrum Coal freezes Elan project on Alberta coal policy uncertainty

Atrum Coal’s share price drops 70 per cent Friday after pausing work on its Elan project in Alberta
Alberta’s government reaffirms policy that restricts coal mining in certain areas including Elan’s
‘We fully accept the Alberta government’s reinstatement decision’ – Atrum Coal

An ASX coal company’s project in Canada’s western province of Alberta is in disarray after the province’s government reaffirmed its commitment to a 1976 Coal Development Policy.

Atrum Coal’s (ASX:ATU) Elan project for hard coking coal is located in an area designated as Category Two land under Alberta’s Coal Development Policy that was enacted in 1976.

Category Two land is not normally considered for open-cut coal mining and for Atrum Coal to employ this type of mining at Elan requires a specific exemption to be granted.

The company said Friday it has paused work on a pre-feasibility study for its Elan project, and halted all site based activities including any planned drilling for this year.

“The decision has been taken in order to preserve cash and allocate due focus and effort to the stakeholder consultation process,” said Atrum Coal.

Earlier precedent set for open-cut mining project

Elan was approved as a coal project under a 2020 coal exploration permit, and Atrum Coal notes an exemption was granted to allow open-cut mining in Category Two land in 2016.

“A precedent for such an exemption had been established in 2016 when Ram River Coal successfully obtained Alberta government approval to permit an open-cut coal mine project on Category Two land in central western Alberta,” said Atrum Coal.

The company has spent $C40m on exploration and development for its Elan project, mostly focused on its Crowsnest Pass area.

The pre-feasibility study for Atrum Coal’s Elan project was scheduled for completion mid-year, but may now experience some delay.

Alberta government backflips on Coal Policy

Alberta’s 1976 Coal Development Policy restricts mining activity in parts of the province delineated as Category Two lands that cover the eastern slopes of Alberta’s Rocky Mountains.

The Edmonton-based government of the province had signalled last year a relaxation of the Coal Development Policy, but has now backtracked after public outcry.

Alberta’s minister of energy has also issued a directive to the Alberta Energy Regulator stating that mountain top removal will not be allowed in Category Two lands.

The energy minister has additionally prohibited coal exploration in Category Two lands pending consultation on a new coal policy that is due to start in late March.

The objective of the new coal policy is to provide greater certainty and manage the development of coal resources in a responsible and sustainable way.

Alberta’s Energy Regulator has stated publicly that it is unaware of any proposed coal projects in Category Two lands that would involve mountain top removal.

Atrum Coal accepts Alberta’s Coal Policy reinstatement

“We fully accept the Alberta government’s reinstatement decision. We also welcome a consultation process that is rigorous, inclusive and transparent,” Atrum Coal managing director and chief executive, Andrew Caruso, said.

“We look forward to the opportunity to present how modern, sustainable mining and land use practices will enable Alberta to unlock the valuable hard coking coal resource it holds at Elan while protecting its environment and waterways,” he added.

Caruso went on to stress that its Elan project is for hard coking coal for which there is currently no viable substitute in the blast furnace steelmaking process to produce high strength hard carbon steel.

Montem Resources’ Alberta coal project unaffected

Another ASX coal company with a project in Alberta province is Montem Resources (ASX:MR1) with its Chinook project comprising two areas, Chinook Vicary and Chinook South.

The project lies within lands designated as Category Four under Alberta’s Coal Development Policy which has the least restrictions on coal mining activity.

“As the entire Chinook project lies within Alberta’s Coal Policy Category Four lands, we will continue exploration and mine planning,” managing director and chief executive, Peter Doyle, said.

Montem Resources is advancing its Chinook project with a resource of 149 million tonnes toward a scoping study mine plan and pre-feasibility study stage.

Recent test work indicates Chinook Vicary coal is similar in quality to hard coking coal produced at nearby Teck Resources mines and also mines in Queensland.

ASX coal companies with coking coal projects in Canada’s province of British Columbia are unaffected by developments in neighbouring Alberta.

It is business as usual for Jameson Resources (ASX:JAL) and its Crown Mountain coking coal project in British Columbia’s Elk Valley coal region.