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

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.

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:

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:

Township	Hectares	Leases	Sections	LSDs	Quarters
5-04-008	652.00	2	4	6	4
5-04-009	436.00	3	4	10	5
5-04-010	*192.00	1	2	6	0
5-04-011	206.30	3	3	12	2
5-04-013	352.00	1	4	6	3
5-03-013	122.38	1	2	10	0

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.