Xstrata terminates review of First Coal mine project

The British Columbia Environmental Assessment Office said March 21 that, at the request of Xstrata Coal Canada Ltd., it has terminated an environmental review process begun in September 2010 for the Central South coal strip mine of First Coal.

Last year, Xstrata Coal, a unit of international mining giant Xstrata plc, bought First Coal. It later bought the nearby Lossan and Sukunka coal reserves in two other transactions, which opens up the need for Xstrata to rework the mine plan based on the combined reserves.

“We are writing to advise you of the status of the Central South project,” said a Jan. 31 letter to the office from Xstrata. “As you are aware, Xstrata Coal Canada acquired First Coal Corporation in August 2011. Since that time, we have been engaged in an internal review of the Central South project proposed by First Coal Corporation. As a result of our review, we have determined not to proceed with the Central South project, as submitted, at this time.”

In the event that Xstrata Coal Canada decides to revisit the Central South project at a future date, a new application will be filed. Xstrata Coal Canada told the office it intends to pursue another project within its other coal tenures in northeastern British Columbia. Recently an application for an exploration permit over the Lossan area was submitted. “As part of our planning process, we would like the opportunity to meet with you to continue forming our working relationship and share information about the proposed project,” Xstrata wrote about the Lossan project.

Central South had been designed to use a specially-made highwall miner, procured from U.S. coal producer International Coal Group, to work a steeply pitching coal seam through a technique called trench mining.

A 2010 project description the company submitted to the environmental office said the plan was to produce 1.5 million tonnes per year of clean coal. Over the life of the 12-year mine plan a total resource of 26 million tonnes of run-of-mine coal will be developed, resulting in the export of 18 million tonnes of clean metallurgical coal between 2014 and 2026. The property is located within the Peace River Coalfield in the Peace River District, about 60 kilometers west of the town of Chetwynd, British Columbia.

Xstrata Coal and JX Nippon Oil & Energy Corp. announced on March 13 the creation of a joint venture covering these properties. JX Nippon Oil & Energy (Australia) Pty Ltd., a subsidiary of JX, has paid US$435m in cash to acquire a 25% interest in Xstrata Coal British Columbia (XCBC). XCBC controls the First Coal tenements, the Lossan coal deposit acquired by Xstrata Coal in October 2011, and the Sukunka coal deposit, the acquisition of which was recently completed.

Xstrata Coal has retained a 75% interest in XCBC and will develop, operate and manage the assets on behalf of the joint venture. Together with its 25% interest in XCBC through JX Australia, JX will be the exclusive marketing agent for First Coal and Sukunka coal sold into Japan. 

Technical studies indicate that the two most advanced XCBC projects, Sukunka and Suska, have the potential to produce up to about 9.5 million tonnes per year, said the partners in the March 13 announcement. The majority of this production is expected to be hard coking coal with the balance expected to be pulverized coal injection product.

Xstrata Coal has combined the project formerly known as Lossan with neighboring First Coal tenements to create an expanded open-cut coal project, now known as the Suska project.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.