Teck-Cominco deal says coal is the future

VANCOUVER, BRITISH COLUMBIA - Teck-Cominco's eye-popping, $14-billion purchase of Fording Canadian Coal sends a clear signal that coal will play an important role in the future of British Columbia. The deal makes Teck-Cominco the world's second-largest producer of metallurgical coal - the kind used in steelmaking - and solidifies its status as Canada's largest diversified mining company.

Oil and gas grab all the headlines, but coal is B.C.'s - and the world's - most abundant hydrocarbon resource, with estimated B.C. reserves of 20 billion tonnes, and proven global reserves of more than 892 billion tonnes, or enough to meet demand at current consumption rates for two centuries.

It is also the most secure. More than 26 per cent of the world's coal reserves are in North America, compared with just five per cent of oil and six per cent of gas. Forget ethanol. Coal is the obvious answer to energy security for the United States and its neighbours.

While much of the coal B.C. exports is used to make steel (70 per cent of global steel production depends on coal), B.C. also digs up more than a million tonnes of thermal coal, used to generate power, with much of it sold to Japan and Korea.

Coal meets 50 per cent of U.S. electricity needs, 20 per cent of Canada's and 40 per cent of the world's. If energy demand grows as predicted, by as much as 60 per cent over the next 30 years, the world will increasingly depend on coal to satisfy it.

Coal gets a bad rap from environmentalists who don't like the fact that, like most everything else on earth, it emits carbon dioxide. But the industry has taken giant steps towards making the production and use of the mineral more environmentally benign. All manner of technologies are being actively pursued, including carbon capture and storage, hydrogen from coal, gasification and coal liquefaction.

The first coal-to-liquids plant in the U.S. has been greenlighted in West Virginia by Consul Energy and Synthesis Energy Systems. With the help of ExxonMobil, they hope to produce up to 100 million gallons of gasoline a year and sequester the carbon emissions, making it a "clean-coal" gasification plant.

Making gasoline from coal isn't a new idea. It fuelled the Luftwaffe in the Second World War.

Perhaps its hard for politicians to grasp that the battery of environmental and social tests mining projects are required to meet have doubled the length of time it takes to bring a greenfield mine into production to 10 years from five - and that this delay drives up the cost of development as well as the price of the commodity, while exacerbating a demand-supply imbalance.

Environmentalists may not like it but our political leaders should recognize the value of coal, not only as a key export, but as a plentiful and accessible source of energy that can serve as a substitute for expensive oil and gas. To rule it out on the basis of a Dickensian view of a coal-fired world is wrong-headed and short-sighted.

Teck-Cominco, a company that knows a thing or two about minerals, believes coal is the future. Those responsible for ensuring we have sufficient energy to fuel economic growth should pay heed.


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