West Australian mining billionaire Gina Rinehart is fighting to keep her North American expansion dreams alive as she launches legal action to overturn the rejection of her $800 million coal mine in the Rocky Mountains of Canada by a provincial environmental watchdog.
The Alberta Energy Regulator last month sent shockwaves through a contingent of speculative Australian coal miners, including two companies backed by another Perth billionaire in aviation mogul Tim Roberts, when it knocked back a proposal by a company owned by Ms Rinehart’s Hancock Prospecting.
Benga Mining – a subsidiary of Riversdale Resources which itself was taken over by Ms Rinehart in 2019 for more than $600 million – announced last week it would seek permission in Alberta’s courts to appeal the recommendation by the regulator that its Grassy Mountain project not go ahead.
A report presented to the Trudeau government by a joint review panel for the regulator concluded the project, which could produce about 93 million tonnes of coal over a 23-year mine life, would have negative impacts on the natural environment and negligible economic benefits.
“The project is likely to result in significant adverse environmental effects on surface water quality, westslope cutthroat trout and their habitat, whitebark pine, rough fescue grasslands, and vegetation species and community biodiversity,” it said.
A key environmental concern in Canada has been the potential release of the naturally occurring chemical selenium in the mining process, a major problem for Alberta’s coal-loving neighbour British Columbia that shares a border in the Rockies, which can get into mountain headwaters and deform sought after river trout.
Benga was taken aback by the regulator’s decision given none of the past 11 oil sands and coal mining projects to have gone through the watchdog’s public hearing process had been denied.
Canada’s environment minister was set to make a final decision on whether the mine went ahead by the end of the year before Benga decided to appeal.
Benga chief executive John Wallington said it believed the regulator’s conclusions and reasoning contained material errors of law.
Mr Wallington said the regulator ignored the support shown by First Nations traditional owners for the relevant mine lands and gave preference to laymen analysis over scientific evidence.
“The joint review panel could have addressed any valid concerns with the project by making an approval conditional on strict conditions,” he said.
One of the traditional owner groups, the Piikani Nation, has also launched an appeal of the decision.
Wood Mackenzie metallurgical coal research principal analyst Anthony Knutson told WAtoday an appeal for Benga would be challenging.
The analyst said at the end of the day it was hard to see the federal government going against the regulator’s decision and award a mine licence given it was a centre-left government moving towards no coal across the board.
Mr Knutson said despite the recent regulatory troubles for Riversdale, a stake had not been put through the heart of the industry in Alberta with global demand for metallurgical coal only expected to rise over the next 30 years.
In the meantime, Riversdale’s slated construction start date for the Grassy Mountain project of 2023, with first coal in 2024, is now uncertain.
Australia has one of the world’s largest metallurgical coal reserves and is the biggest exporter of the material which is a crucial ingredient when using a blast furnace to turn iron ore into the steel building global cities.
Green energy advocates like Andrew Forrest are trying to find more carbon-friendly ways to make steel but as of yet no one has found a more affordable option than metallurgical coal.
Alberta shares a border along the Rockies with the province of British Columbia but the two jurisdictions have very different approaches to coal mining, especially in the mountains.
British Columbia has embraced the so-called black gold as its most valued mined commodity and exports about 30 million tonnes of coal annually. About 95 per cent of exports is metallurgical coal which is crucial in the process of turning iron ore into steel.
Despite the barrier, Alberta – situated in a stable country with good rail and port access and lower coal royalties than Australian states like Queensland – became popular as a speculative play with the growing hunger for the commodity especially out of India.
In May last year in the thrusts of the pandemic and sinking oil prices Alberta’s conservative government rescinded the 1976 policy, opening the pathway for potential projects in the province’s South West near the small historical coal mining towns of Coleman and Blairmore in Crowsnest Pass not previously possible.
Several Australian-linked operations were ready to move forward when the policy lifted including Ms Rinehart’s Grassy Mountain project, located on a category of land already easier to get approved, which past executives at Riversdale had hoped would become central to development of a series of new mines.
Mr Roberts, the head of his family’s hedge fund Warburton Group, and the Sydney-based Regal Funds Management both had stakes in Riversdale before the Hancock takeover.
Both investors are still engaged in the region.
Mr Roberts has interests through the Warburton Group’s Cabin Ridge exploration project, 50 kilometres north of Blairmore, as well as a stake in the ASX-listed Atrum coal which has two prospective resource bodies.
Regal Funds Management has a minor stake in Atrum and a 16 per cent share of another listed company called Montem Resources which has several lease sites and is trying to get mining re-started at Tent Mountain which straddles the provincial border.
A new mine licence for the re-start is subject to a federal review, announced last month, which could take two years.
Alberta backtrack and federal crack-down threaten future of coal projects
Although several First Nations groups and depressed former coal towns in Crowsnest Pass were in favour of the projects, which could potentially bring in hundreds of jobs and millions of dollars in federal and provincial tax and royalties, a large number of Albertans are against them.
An outcry from ranchers, environmentalists, and other Albertan residents led to a backflip by the provincial government only a few months after the changes were made to the 1976 policy bringing a halt to some of the projects.
Alberta province coal mining land categories
Category 1 – The most sensitive areas of Alberta from a natural and environmental perspective where no development is permitted and includes national parks, present or proposed provincial parks, wilderness areas, designated recreation areas, and wildlife sanctuaries
Category 2 – Parts of the southern Rocky Mountains and Foothills where limited exploration is welcomed but open-pit mines are off-limits
Category 3 – Exploration is desirable and mining possible with the right protections, covers the Northern Forested Region and eastern portions of the Eastern Slopes
Category 4 – The easiest of the categories to get a mining licence for which covers areas of the province not included in the other three categories such as the plains and some previously mined sites like Grassy Mountain and Tent Mountain
Coal miners are now on a charm offensive to influence the new provincial policy and try and convince the broader public it has the ability to negate selenium concerns and protect water and wilderness values.
The message will be a tough sell with an April survey by the government finding 64 per cent of more than 24,000 Albertan respondents did not think the economic benefits of coal mining were important at all for the province.
Ranchers and environmentalist groups have both funded and presented several studies regarding the water catchment area in south west Alberta to the policy review committee with suggestions 9400 hectares of ranges could be disturbed.Canadian Parks and Wilderness Society conservation director Katie Morrison said the movement against new mines was unlike any environmental issue she had ever seen in Alberta.
“It’s incredibly inspiring and we hope that both our federal and provincial governments are listening,” she said.
Despite the Albertan backlash and new regulatory hurdles, Ms Rinehart is not giving up on Riversdale and her massive investment that would herald a new era of coal mining in the province.
Mr Knutson said with hundreds of millions of dollars invested Riversdale would explore every avenue available to it.
“I can’t see them just walk away,” he said.