A colossal company has big plans for B.C.

Doug Smith is general manager for Xstrata Coal Canada. — Photo courtesy Xstrata Coal Canada

The general manager of Xstrata Coal Canada said his company expects to have two new coal mines in northeastern British Columbia operational within three to four years.

Doug Smith made the comment about Xstrata Coal Canada's Sukunka and Suska projects while speaking at the 10th annual BC Natural Resource Forum on January 10 in Prince George, British Columbia. The Sukunka project is located about 55 kilometres south of Chetwynd, British Columbia, while the Suska project is located just northwest of the Sukunka project.

"We are proceeding with the project descriptions on both of these to enter the environmental assessment process," Smith said. "In fact (January 10), the project description for the Sukunka project was submitted to the BCEAO (British Columbia Environmental Assessment Office) and the Canadian Environmental Assessment Agency (CEAA)."

Xstrata Coal Canada is part of Xstrata PLC, one of the world's largest diversified mining companies. Xstrata Coal is currently the world's largest exporter of seaborne thermal coal, used to generate electricity, and is one of the world's largest producers of metallurgical coal used to make steel.

JX Nippon Oil & Energy Corporation is in a 25 per cent partnership with Xstrata Coal Canada to develop the Sukunka and Suska projects.

Smith said Xstrata Coal Canada has completed concept studies for both the Sukunka and Suska projects, and that Xstrata Coal Canada was awarded an exploration permit for the Sukunka project in November. The company expected to begin drilling there by the end of January 2013.

He also said Xstrata Coal Canada has already completed the first phase of Suska's three-phase drilling program. The company expects to get its “notice of work” approval for the second phase shortly.

Smith said if both projects became operational, they would supply significant benefits to British Columbia, including 700 full-time, high-paying jobs and millions of dollars in annual local spending by the company.

"The Sukunka project alone is a $1.3-billion investment over its lifetime—$690 million over the initial core years," Smith said. "Suska is expected to be a $1-billion project, with similar figures. We see more than $900 million in tax revenues for public services—$300 million estimated to go to the federal government and $600 million to the Province."

Smith said that each of the Sukunka and Suska projects had the potential to produce over five million tonnes of metallurgical coal per year. The Sukunka project would produce 100 per cent prime coking coal, while the Suska project would produce 60 per cent hard coking coal and 40 per cent pulverized coal injection (PCI).

According to the Sukunka project's project description—prepared by Stantec Consulting Ltd. and dated January 10, 2013, on behalf of Xstrata Coal Canada for both the BCEAO and the CEAA—a potential coal mine on the property would include an integrated surface and underground mining operation. It would consist of two open pits, an underground longwall mine, a coal-handling and processing plant, and a rail load-out facility for washed coal. Coal would be shipped by rail to Prince Rupert or another suitable West Coast Canadian port.

Initially, the project would produce 1.5 to 2.5 million tonnes of washed coal per year, increasing to six million tonnes per year when underground mining began. The mine's life would be expected to last 22 years.

Smith said there are things that could affect the two projects' development. One is competition within Xstrata Coal for development of projects around the world.

In 2012, Xstrata Coal had 130 million tonnes of potential coal production in its "project pipeline" that was moving from concept studies through feasibility studies and then into implementation. And those 130 million tonnes didn't include the potential production from the Sukunka and Suska projects.

Although Smith said both projects have already received funding for their pre-feasibility stages, Xstrata Coal Canada has to apply for funding each time it reaches a new “approval gate” and compete for funding with other Xstrata PLC projects. Factors that could influence project development include supply and demand for a product, cost structures/competitiveness, and approval and permitting delays.

Smith also said the Sukunka and Suska projects are in the traditional territory of four First Nations. He said Xstrata Coal Canada has already signed memorandums of understanding with two of them and was discussing memorandums of understanding with the other two, and is moving into impact and benefit agreements with them.

He also said his company had employed up to 25 area First Nations people on site this past summer and planned to employ as many as possible in the future.