Northback CEO Mike Young, left, and Hancock Prospecting CEO Projects Sanjiv Manchanda at the Northback headquarters in Calgary on Tuesday.Gavin John/The Globe and Mail
The proponent of a controversial southern Alberta coal mine, which was rejected by a federal-provincial panel four years ago, is trying again.
Northback Holdings Corp., a subsidiary of Australian mining giant Hancock Prospecting Pty Ltd., is submitting a revised proposal for the Grassy Mountain mine to the Alberta Energy Regulator. Northback chief executive officer Mike Young told The Globe and Mail on Tuesday that the new plan aims to address a ream of issues that led to the panel’s rejection of the original plan.
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The plan includes a new, multitier water management strategy to try and avoid potential selenium contamination, reduced water consumption and putting waste material back into the mine pit rather than Gold Creek – a huge point of contention in the original plan.
It also shrinks the mine’s footprint by around 40 per cent and reduces the likely output of steel-making coal to 2.5 million tonnes each year, from 4.5 million tonnes.
“A lot of companies, after the original decision, may have just walked away,” Mr. Young said. “From the day of that decision, the company turned their mind to, ‘Well, what would it take to actually get this approved?’”
Grassy Mountain, in the Crowsnest Pass, was for decades dug out and tunnelled to get to steel-making coal before it was abandoned in the 1960s, and remnants of the region’s coal industry still litter the mountain.
Northback Coal employees at the former coal mine on Grassy Mountain north of Blairmore, Alta., in June, 2024.Gavin John/The Globe and Mail
For the past few years, it has been a battleground, pitting neighbours and communities against each other. On one side are those concerned about the environmental effects of a mine and its significant water consumption in a parched corner of Alberta. On the other are folks who espouse the development’s economic and employment potential.
Voices against the project include local ranchers, Alberta country music star Corb Lund and the Municipality of Ranchland, where the mine would be located.
But there are plenty of supporters, too. Access to the project site is off Highway 3 in the municipality of Crownest Pass. In a 2024 non-binding referendum in that community, close to 72 per cent of voters supported the mine.
In May, after days of hearings filled with passionate supporters and critics of the Grassy Mountain mine, the regulator approved applications for coal exploration, drilling and water diversion. Mr. Young said that work will begin soon, and the results will inform the revised plan.
The company isn’t kidding itself on the likelihood of opposition. Hancock’s CEO of Projects, Sanjiv Manchanda, said it would be “naive to expect” there will be no pushback.
“All we can do is be confident about what we do,” he said.
Alberta announced a host of proposed new rules in December governing coal mining, but they won’t apply to what the province deems “advanced” projects, such as Grassy Mountain.
The government also wants to significantly boost royalty rates that companies pay the province as part of the coal policy modernization process. The current royalty rate for coal mined in the mountains or foothills is just 1 per cent. Once the project reaches payout, it rises to 1 per cent of mine mouth revenue – the revenue at the point of extraction minus costs – plus 13 per cent of net revenue. (Similar to Alberta’s oil sands, a coal mine reaches payout once its cumulative revenues equal or exceed its cumulative eligible costs.)
Mr. Manchanda said Tuesday that royalties comprise only a small part of the potential economic benefits of Grassy Mountain; the company will also pay taxes, employees, staff and contractors if the project goes ahead.
“We don’t even have a project built, and we’ve spent between $155- and $170-million on local contractors, vendors, staff, payroll and everything else.”
A former mining pit, now full of water, at the base of Grassy Mountain. The mountain was dug out and tunnelled for steel-making coal for decades before it was abandoned in the 1960s.Gavin John/The Globe and Mail
The proposal comes in the shadow of various forecasts that paint a gloomy picture for metallurgical coal prices.
S&P Global said in a recent analysis that low steel demand, exacerbated by recent uncertainty around global trade policy, has weighed heavily on the companies that dig up the commodity. As a result, the U.S. East Coast benchmark price was US$172 per million tonnes on May 14, down 42.7 per cent from the two-year high of US$300 per million tonnes in October, 2023.
To that, Mr. Manchanda said that Hancock’s philosophy is to control what it can, and not stress about the rest.
“We don’t control foreign exchange. We don’t control iron ore price. We control unit cost. We control impact on environment. We focus on that. We do the right thing. Everything else looks after itself,” he said.
Mr. Young added that projected demand for metallurgical coal is forecast to outstrip supply, likely leading to a market crunch in the 2030s – particularly because so few coal mines are being developed.
“A lot of it’s got to do with politics – I won’t beat around the bush on that – but we do have a constant stream of Asian steel mills coming to visit us and traders coming to visit us to say, ‘When are you going to get into production? Because we want your product,’” he said.
Even if demand does fall, the quality of Grassy Mountain coal means it would be one of the last to leave the market; comparing it with beef, Mr. Young said, “It’s not Wagyu, but it’s triple A.”