The Economic Importance of the Coal Industry in B.C. and Canada

Michelle Mondeville Director of Communications and Stakeholder Relations, Coal Association of Canada

Canadian Coal Mines

2

Coal Production (2011)

• Almost 68 million tonnes of coal produced

• 27 million tonnes (40%) mined in B.C.

• 89% of Canadian MET coal production in B.C.

3

Province Met. Coal Thermal Coal Total

BC 9 1 10

AB 2 7 9

Sask - 3 3

NS - 2 2

TOTALS 11 13 24

Production Volumes and Coal Prices

• 2011 was a historical milestone total value of Cdn. coal production reached $7.0 billion

a three-fold increase from $1.6 billion in 2001

represented 22% of total B.C. exports

$1 billion in capital investment

• Prices for thermal and metallurgical coal increased at a strong pace between 2008-2011 annual average growth rate of 15% over past 10 years

depressed prices since

Longer term prospects promising again

4

5

Coal Prices

Impact of Coal Production on Our Economy

• Coal industry contributed an estimated $5.2 billion to Canada’s GDP and $3.2 billion in B.C.

• Total Cdn. coal export sales reported at $8.0 billion over $7.0 billion in B.C.

• Coal exports grew over 300% over the last decade 16% average annual growth rate

6

Impact of Coal Production on Our Economy

7

• Canada the third largest exporter of MET coal after Australia and the U.S.

• Major buyers of Canadian coal: Japan (27%)

South Korea (24%)

Europe (16%)

China (10%)

Employment

• Coal employment (direct and in-direct) 42,000 people across Canada

26,000 people in B.C.

• Many are highly skilled workers

• Average coal industry salaries over double the average national wage and amongst the highest in the mining sector

• Salary rates increased 37% over the past 10 years.

8

Government/Community Contributions

• Government Revenues 2011 tax payments made by the coal mining industry to all levels of

government were $715.2 million

$399 million in tax revenue generated by economic activity

$316.2 million in mineral taxes paid to the B.C. Government

Payments to governments support public infrastructure, such as roads, hospitals, schools and programs, which contribute to our well being and quality of life

• Coal companies and employees also actively involved in contributing to local communities

9

PwC Reports…..Bottom Line

Canada and B.C. would be disadvantaged financially and socially without the coal industry - all facets of the economy benefit from a thriving coal industry

10

What does the future hold for met coal?

• Global steel production has grown strongly since 2000

• WCA predicts 3% growth in steel markets in 2013/4

• A significant amount of steel is needed for the future.

• Emerging urbanizing economies will need steel for infrastructure, housing and transportation

11

What does the future hold for coal?

12

2010 2015 2020 2025 2030 2035

China 150-300Mt

India >400-600Mt

Indonesia >100-150Mt

Other Asia >80-150Mt

Africa >>400Mt

Other >100Mt

“The path expected for emerging economies as they urbanise is likely to lead to a intensity per capita of around 350-

450kg as limitations on land require further increases in building height. Don’t forget China is not finished yet and

India and others have not really started!” – Neil Bristow

Canadian Coal’s Strategic Advantage

• Canada outperforms peers on met coal margins

• Growing port capacities

• Proximity to fast growing Asian economies

• Reliable alternative to large Australian and Indonesian thermal coal suppliers

13

Canadian Coal’s Strategic Advantage (Ports)

14

Canadian port capacity and throughput (Mt)

0

10

20

30

40

50

60

70

80

0

2

4

6

8

10

12

2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034

Mil

lio

n t

on

nes

(ex

po

rts

)

Mil

lio

n t

on

nes

(ch

an

ge in

ca

pac

ity)

Westshore Ridley Island

Neptune Canada East

Texada Island Total exports*

Historic Shipped Tons Metallurgical coal export demand

15

Canadian Coal Challenges

Criticisms of coal

• Myth: Coal isn’t safe Fact: Thousands of people (mine workers to train operators to

terminal operators) work at coal sites without issue

• Myth: Coal is toxic Fact: Coal is not classed as a dangerous or hazardous material by

Transport Canada. It’ s not on the International Agency for Research on Cancer’s list of carcinogenic agents. Nor is coal carcinogenic to humans

• Myth: Coal exacerbates climate change (and industry should be shut down) Fact: Coal is critical for developing nations to rise out of poverty; to

support economic development and growth

16

Coal is essential for developing nations

• 1.3 billion without electricity

• Coal – reliable energy where it is most needed

• India – 70% of electricity comes from coal

• 300 million in India have no electricity

17

Setting the Record Straight

• Coal Alliance Member coordinated public and media outreach

web and social media

Website: coalalliance.ca

• Vote Mining: Raised the profile and importance of mining during the recent BC election candidate outreach

Public education

web and social media

18

Conclusion

• Canada would be disadvantaged if we didn’t produce and sell our coal - from the contribution to GDP, trade balance, jobs and communities….coal positively impacts all facets of our economy and society

• Share your knowledge of the coal industry and the important contributions it makes locally and globally

• For more information: Download our PwC Reports at www.coal.ca (see Resources)

Follow us on Twitter

Attend our conference (Sept, 2014 in Vancouver)

19

Thank you!

Michelle Mondeville

Director of Communications and Stakeholder Relations

Coal Association of Canada

mondeville@coal.ca

780.993.6651 (cell)

www.coal.ca

20