Canadian Coal – Positive Outlooks Presented to: 2010 Minerals North Conference

Prince George, British Columbia

April 23, 2010

Presented by: Allen Wright, President & CEOThe Coal Association of Canada

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Overview

Global Overview

Canadian Impressions

BC Outlook

Formula For Success

Summary

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Global Overview

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The 2010 Global Overview

The world economies have moved from “Contraction”to Expansion

A Global recovery in manufacturing appears to beaccelerating

Metallurgical Markets Steel Market Recovery

• Demand dropped 75%-80% from 2008 highs. Production dropped to 50%-60% from 2008 highs.

• Recent production recovery to near 75%-80% of 2008 maximum.

New Pricing Formula – Quarterly Pricing

Iron Ore – Availability / Price

„BRIC‟ countries – Experiencing strong Recoveries

Australian Challenges - Transportation / Flooding / Ports

Thermal Markets Asia / India – growing Demand

• Demand / Price

• Price index – Mar. 09 @ $65.36 Mar. 10 @ $101.12

• North America – Coal vs. Natural Gas

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Coking Coal Demand

Prevailing coking coal and met coke

market conditions:• Low met coke inventories

• Current coking coal prices rising sharply

• Lack of international met coke supply

• Higher prices for imported met coke supply

The story of 2010 will be Asian steel

mills continuing to power the economy

and our industry out of recession

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China Driving Demand

Steel production forecast to reach 600 million tons

versus approximately 570 million in 2009

Apparent steel demand forecasted to reach 610-620

million tons in 2010

– This represents an increase of 8%-10% from 2009

Coking coal production in China cannot support this

increased demand. Rapidly soaring demand signals

sustainable market for imported hard coking coal

China imported 34.5 million metric tons of coking coal in

2009, up 403% (27.6) as compared to 2008. At the same

time, met coke exports dropped 95%

Increased domestic demand due to US $585B stimulus

plan

Policies committed to continuing growth – 8 to 9.5%

Canadian Impressions

Image: Port Metro Vancouver

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2009 Canadian Coal Production &

Consumption

62.6 MT in 2009 down from 68.1 MT in 2008

37% / 63% mix Metallurgical to Thermal

2009 Exports – 27.2 MT approx. 78% Met

56 MT consumed in Canada – 44.8 MT

sourced domestically & 11.2 MT imported

Significant Met Growth Potential beyond

2012

Modest growth for Thermal; Wapiti & Coal

Works in NEBC, expansion of Quinsam on

Vancouver Island and Coalspur in AB

Coal in Western Canada

SASK.

Saskatoon

Regina

Ridley

Edmonton

ALBERTA

Calgary

Westshore

BRITISH

COLUMBIA

PrinceGeorge

Coal Valley

Vancouver

Coal Prospects Coal Ports Major Cities Railway Lines

Neptune

Yukon

Northwest Territories

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BC Outlook

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Prospects Looking up for Met Coal

BC Coal Production– 2008 @ 26.1 MT / 2009 @ 21.5 MT

– Drop of 18% (steel demand)

BC Coal driven by export markets

China market demand– CDN Met imports = 3.6 MT in 2009

– 2010? Increased demand expected to

– remain steady

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Coal In BC

Current Producing Metallurgical MinesNEBC Western Coal

• Brule

• Wolverine

Peace River Coal • Trend

SEBCTeck Coal

• Greenhills

• Line Creek

• Fording River

• Elkview

• Coal mountain

Hillsborough Resources• Quinsam

Mine Prospects

Expansions and New Mines NEBC

• Teck Coal – Quintette (re-open)

• Western Coal – Willow Creek (re-open) / Belsax (new)

• Peace River Coal – Roman (new) / Horizon & Belsax (new)

• First Coal – Central South & South Cirque (new)

• Cline – Lossan (new)

• CDN Dehua – Gething: Hudson Hope (new UG)

• Unicorn Int‟l – Hasler (new UG)

• Colonial Coal – Huguenot (new)

WBC • Fortune Minerals – Mount Klappan (new Anthracite)

SEBC• Teck Coal – Expansion

• Centermount resources – Bengay Creek (new)

VCR Island• Compliance Energy – Bear & Raven (new)

Thermal• Hillsborough Resources – Wapiti (new) & Quinsam (expansion)

• Coal Works (new)

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It is possible to double the

current coal production level

from British Columbia if all the

proposed new mines and the

expansion of existing mines

happens.

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Current Environment Facing NEBC Coal

Moving Projects Forward Need Demand & Price

Canadian Dollar $

Skills – Surface & Underground

Government– Permitting

– Environmental constraints & politics

– First Nations

– Flathead Valley

Transportation / Infrastructure– Ridley terminals

Social License to operate– Health & safety

Communication & Education

Summary - Globally

Fundamentally, the global coking coal market

appears extremely tight

China‟s move to a significant importer

“structurally” changes the seaborne coking

coal market

Pricing for FY2010/11 seaborne coking coal

contracts will be a combination of fixed annual

prices and quarterly pricing

Fixed Annual Pricing is at a premium to the Q1

FY2010 Quarterly Price

The Asian Pacific market will set the coking

coal pricing benchmarks for the global steel

industry

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Summary - BC

2010 – strong potential

Taking Advantage of Up-cycle

Canada positioned well with high quality coal resources & reserves

To capture these opportunities need:

Solid, efficient infrastructure

Government resolve to remove roadblocks to development

Reasonable and Practical Solutions

Thank You and don’t forget…

48th Canadian Conference on Coal

September 11-14, 2010

Whistler, British Columbia