Alberta to review coal mines to guarantee there’s cash for cleanup

As Alberta moves far from coal-fired electricity, the provincial government is attempting to guarantee it won’t be on the hook to clean old coal mines once they quit working.

The Alberta Energy Regulator is wanting to review nine coal mines starting by mid-September to guarantee that every administrator has the security available to recover the property.

The AER said it is searching for a contractor to “validate that the approval holder’s security deposit is adequate for the requirements expenses of suspension, decommissioning, remediation, monitoring and surface reclamation,” according to a request for proposal posted for the current month.

In its climate change plan released last November, the provincial government said it will no longer be dependent on coal-fired power by 2030.

That means several plants will be shut down many years before their operators had planned. That has set off a series of disputes about power purchase agreements and whether electricity costs will rise, and if power generators deserve to be compensated for the early retirement of their assets.

It additionally implies large portions of Alberta’s coal plants have no future.

Specifically, thermal coal mines, which produce coal for power generation, don’t have numerous choices open to them. Indeed, even metallurgical coal, which is regularly delivered out of Canada for steelmaking, is seeing costs sufficiently low that a few mines have suspended operations in Alberta.

The AER said the audits are planned “due to current economic condition and government policy affecting the coal mine industry.”

Alberta has had issues with companies leaving their mines. In 2000, Smoky River Coal’s chapter 11 left Albertans with a $6 million bill to tidy up its coal mine in northwestern Alberta. That case prompted the making of the Mine Financial Security Program, which required mine administrators, both coal, and oil sands, to post a deposit against the possible cleanup costs.

In light of the unreliable fate of coal mining, the industry chose to post full security to cover cleanup. For instance, Grande Cache Coal has paid a deposit of just shy of $30 million in a blend of money and a letter of credit.

Altogether, there is more than $400 million on deposit from 19 coal mines. There are inquiries concerning whether that is sufficient. Notwithstanding, Alberta’s auditor general reported in 2015 that only three of those mines had been liable to a meticulous review of their security.

“Very little audit activity has been undertaken in the coal sector to ensure the amount of financial security provided by the operators is sufficient,” read the report. It suggested more audits need to be done.

The AER is searching for a specialist on coal mine reclamation to do the reviews and to distinguish any crevices between the expense of recovering the mines and the deposits held by the region.

In British Columbia, the liability estimate for its 20 coal mines is more than $1.1 billion. Those liabilities were observed to be underfunded by $600 million.