Cardero starts permitting process for new Canadian coal mine

Cardero Coal Ltd. started the pre-application process May 9 at the British Columbia Environmental Assessment Office for a new surface and underground metallurgical coal mine with an average annual production rate of 2.9 million tonnes of clean coal.

A project report provided to provincial regulators said that Cardero Resource Corp. is a publicly-traded mineral exploration company based in Vancouver. In June 2011, Cardero acquired the balance of Coalhunter Mining Corp., now renamed Cardero Coal, which holds a 75% interest in the Carbon Creek mine project.

The project is located in northeastern BC approximately 40 kilometers west of Hudson’s Hope, south of Williston Lake, and 50 kilometers north-northwest of Highway 97 through Pine Pass. The Canadian National rail line connecting the Fort St. John and Tumbler Ridge areas with Prince George passes 30 kilometers south of the property. Proximity to rail is an important cost metric when it comes to this coal, which would be bound by rail to coal export terminals on British Columbia’s West Coast.

Utah Mines Ltd., now BHP Billiton, was responsible for the bulk of the historical coal exploration of the Carbon Creek coal deposit. In the fourth quarter of 2011, consultant Norwest Corp. conducted a Preliminary Economic Assessment (PEA) and subsequently prepared a technical report on the project on behalf of Cardero.

The property is located within the Peace River Coalfield and forms part of the Rocky Mountain Foothills structural belt which lies to the east of the Canadian Rocky Mountain Trend. The two main coal-bearing units occurring throughout the Foothills region are the Gates Formation and Gething Formation, the coal seams occurring within the property being contained within the latter. According to Norwest, the property has an estimated measured and indicated resource of 166.7 million tonnes and an inferred resource of 167.1 million tonnes (combined surface and underground).

In the project area, coals of the Gething Formation are primarily ranked as mid-vol bituminous. Gething coals have produced satisfactory metallurgical products, particularly after beneficiation. A full program of sizing, washability, and metallurgical testing will occur in conjunction with more advanced engineering and economic analyses.

The project will require surface mining followed by combined surface and underground mining. Approximately three-quarters of the current defined resource could be mined underground. The mine will be designed to achieve an annual average production rate of 2.9 million tonnes of clean coal. The wash plant will have a 15,000 tonne per day capacity. The life-of-mine has been financially modeled to 30 years, based on comparable operations in North America.

Raw coal will be upgraded in the wash plant and the clean coal trucked from the on-site processing facility to a coal loadout facility along the CN Railway in Pine Pass, for export through ports in Prince Rupert. Mine site power will be serviced by connection to the G.W. Shrum generating station, located about 35 kilometers east of the project.

Due to its size, the Carbon Creek project is anticipated to require assessment under the BC Environmental Assessment Act to obtain a Project Certificate approving the project by the BC government prior to construction.

Cardero Coal proposes to complete a comprehensive feasibility study on the project in the fourth quarter of 2012. Cardero Coal’s preliminary schedule for the project has first coal being produced in 2014. The schedule includes completion of environmental baseline studies, which have already commenced, by the fourth quarter of 2012, with a planned submission date in the second quarter of 2013 for the Environmental Assessment Certificate (EAC) Application. Commencement of construction activities will depend on timelines for the review and issuance of an EAC and mine permit but are tentatively planned to begin in 2014.

British Columbia has become a hotbed for development of new met coal mines in the last few years, due to its high-quality met coals and a booming Pacific Rim market. The top met coal producer in the region is Teck Resources, with U.S.-based Walter Energy also a significant producer through its 2011 buy of Western Coal. International commodities producer Xstrata is also working on a mine project in British Columbia based on multiple buys it has made lately of neighboring properties. The fact that Cardero wants to go deep mining, at some point, at Carbon Creek is notable, since deep mines are rare in British Columbia.

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.