Alberta awards 11 coal leases in SW Alberta for $36 a hectare

The 15-year leases cover 1,853 hectares and were awarded to 2 Australian mining companies.

At the beginning of this month, the Alberta government posted on their website a notice for public offering of crown coal rights.

The notice was to solicit bids to purchase 12 coal leases for 1,980.68 hectares in the Livingstone–Porcupine Hills and Kananskis regions of southwestern Alberta. The leases are on land within ranges 3, 4, and 5

According to the notice, rent for the leases would be $3.50 a hectare or $50, which ever is greater. There was also a bid fee of $625. These prices are similar to those listed in a 2012 offering for 20 coal leases in the Crowsnest Pass area.

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The government indicated that they would not consider any offers—otherwise known as a bonus—that were under $2.50 a hectare for any of the 12 leases.

The notice also listed which of the leases were in sensitive areas

  • 3 were in a heritage resources management area
  • 4 were in a critical wildlife zone
  • 1 was in a general recreation zone
  • 8 are within key wildlife and biodiversity zones
  • 4 are within mountain goat and sheep areas
  • 11 are within the Livingstone Grizzly Bear Zone

Some of these leases were in multiple areas.

The public offering date was 15 December 2020, and the notice indicated that accepted bids would be published on the government’s website the following day.

According to the notice of accepted offers posted on the website earlier this week, 11 of the 12 leases received offers. The lease that received no offers was the only land in the Kananaskis Country Zone. All the accepted offers were in the Livingstone–Porcupine Hills region.

Here’s where the leases for the accepted offers are located:

Calgary is in yellow at the top of the image. Lethbridge is in yellow on the bottom right. Crowsnest Pass is in brown on the bottom left.

The shaded squares on the left-hand side are the townships where the leases are located.

Only two companies had offers accepted: one of them for 1 lease and the other for 10 leases.

Benga Mining offered a bonus of $672 for the lease in Township 5-04-008, which is represented by the green shaded square on the above map. Their lease would apply to 192 hectares within 8 legal subdivisions and 1 quarter section of 3 sections in this township. The rent in their offer was the minimum: $3.50 a hectare.

Montem Resources offered a combined $65,890.62 in bonuses for its 10 leases, ranging from $2,024.67 to $33,450 per bonus; 5 bonuses were each $2,025. The rents ranged from $7.03 a hectare to $125.36 a hectare. Here are the townships for the leases they bid on:

Legal subdivisions and quarter sections are the subdivisions of the sections listed in the same lease.

One lease covers 5-04-010 and part of 5-04-011, so the 192 hectares under 5-04-010 is split between the two townships, not just Township 10, and the 206.3 hectares listed under Township 11 is actually larger.

Montem’s 2 leases for Township 5-04-008 are in the same township as Benga Mining’s lease.

Townships 5-04-009 through 11 are immediately north of township 5-04-008 and are shaded in purple on the above map. There are no leases in 5-04-12, which is unshaded, but there is 1 lease in 5-04-013 just north of that, as well as 1 in 5-03-013, to the east of that, both of which are also shaded in purple.

This isn’t the first time these townships have seen coal leases granted. For example, Townships 5-04-008 and 009 had a 880-hectare coal lease awarded to Coal Valley Resources in 2012, but for different sections in those townships than these new leases.

As well, 5-04-008 had a 384-hectare petroleum and natural gas license issued in 2000 to Crestar Energy for a $2.3 million bonus and a fee of $1,152.89 a hectare. That 2000 PNG license covered the same sections that Benga’s 2020 coal lease does, including 10 of the same legal subdivisions.

All leases are in what used to be category 2 and category 3 lands under the 1976 Coal Policy, but that policy was rescinded by the UCP government this past June.

The old policy restricted mining in category 2 lands to underground mining because “infrastructure facilities are generally absent or considered inadequate to support mining operations” and they contained “local areas of high environmental sensitivity”, but such “in-situ” mines had to be “environmentally acceptable”.

Category 3 lands had similar restrictions but were generally less environmentally sensitive as category 2 lands were. These lands include the eastern portion of the Eastern Slopes Region, as well as class 1 and 2 agriculture lands. Approval for mining under the 1976 policy for category 3 lands required assurances “that such lands will be reclaimed to a level of productivity equal to or greater than that which existed
prior to mining.”

Benga Mining is a wholly-owned subsidiary of the Australia-based Riversdale Resources Limited. They are also applicants in the Grassy Mountain Coal Project, a proposed open-pit coal mine that would see the removal of the top of Grassy Mountain in the Crowsnest Pass in an effort to extract 3.8–4.5 million tonnes of metallurgical coal annually from the mountain for 23 years.

Montem Resources Alberta Operations Ltd is a subsidiary of the Australia-based Montem Resources. In 2016, they purchased two coal mine projects in the area: Tent Mountain (just west of Castle Wildland Provincial Park) and Chinook Project in the Crowsnest Pass. Both projects were coal mines previously.

Coal leases in Alberta last for 15 years but are renewable. They grant the lease holder the exclusive right to win, work, and recover coal. In addition to the rent paid, lease holders pay royalties on any coal produced. The royalty rate for coal from mountain and foothill mines is 1% of mine mouth revenue before mine payout and 1% of mine mouth revenue plus 13% of net revenue after mine payout.

Combined, Benga and Montem offered $66,562.62 in bonuses for 1,852.68 hectares, for a cost of $35.93 a hectare. Remember, that doesn’t include rent (as listed above) or royalties, assuming any of these leases result in extraction.

This offering is the 17th public offering of crown coal rights made since 2006. The most recent was 8 leases to a single company in May 2020.

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By Kim Siever

Kim Siever is an independent queer journalist based in Lethbridge, Alberta. He writes daily news articles, focusing on politics and labour.

14 replies on “Alberta awards 11 coal leases in SW Alberta for $36 a hectare”

Hi Kim, can you also write about the environmental impacts from the steel coal mining if this goes ahead? Alot of argument from people to do this “jobs” and the area can be “reclaimed” just fine because its successful in other parts of alberta. No discussion on the impacts on the people in town, the wildlife, at risk fish and even the watershed.

That’s interesting Kim. So little money to the Province for all of this land. I realize they will have to pay a royalty if these leases are developed.
I used to work in oil and gas. The minimum bid for P&NG leases was $2.50/ha and was $1.25/ha for licences since 1977. This year they raised
the minimum bids to $35.00 dollars a hectare for leases and licences. The industry is not happy about this but I assume they did it because so
many small companies, some of them from China, were defaulting on their leases and passing the cost for clean up and reclamation back to the taxpayer.
What a quagmire.

This is scary, where is all the coal going? Is it getting shipped to China off the coast of BC? I thought they were putting more regulations of what gets shipped off the coast in BC?

This is great news, lots of people have lost there jobs and homes this year let’s hope development happens right away, family’s could really use the income even if that means sacrifice to the environment. Yes I know how rude of me to want family to keep roofs over there heads now and not concerned about years to come.

Development won’t happen right away. They’d need to explore first and conduct studies. Then they’d need to get a development permit and set up the mine. If they even end up mining, it will take a while. Also, there are plenty of other options for creating jobs in Alberta; coal mines aren’t the only way.

The $36 an acre is the price of the bonus, which is a one-time payment. The rents are annual amounts.

I imagine anyone could bid on a lease, but ultimately, the approval of leases lies with the government.

Benga is paying $672 bonus for 192 hectares, i.e. $3.50 per hectare, plus an annual rent of $3.50 per hectare, plus royalties. Why are they paying so much less than Montem? The Benga land is many times inferior for mining?

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