Study says Rockies coal mining provides no benefit

U of C report finds economic gains do not outweigh negative effect on environment

Coal mining on environmentally sensitive slopes of Alberta's Rocky Mountains wouldn't be of overall benefit to the province, a wide-ranging analysis from the University of Calgary has concluded.

“The net economic benefit is minimal,” said Jennifer Winter, an economist at the university's School of Public Policy.

“When you compare that to the fairly significant impacts to wildlife, to the natural landscape, to other economic activities, it's not in Alberta's interest to proceed.”

The comments come as a panel gathering public input on coal mining in the Alberta Rockies has been given another six weeks to hand in its report.

A Ministry of Energy statement released Wednesday said the Dec. 31 extension was requested and granted “due to the extraordinary volume, breadth and depth of the input provided by Albertans.”

Winter and her colleagues took a different approach to their analysis than a strict cost-benefit breakdown. She said they looked beyond weighing wages earned and taxes paid to examine overall economic, social and environmental effects.

“In many of these project assessments, there is a big emphasis on the economic impacts because we have numbers to attach to them,” she said. “It's much more holistic to look at these other impacts as well and identify not just that there are impacts, but who specifically would be affected.”

The analysis, released Wednesday, considers the effects of a hypothetical open-pit coal mine built on land now considered environmentally sensitive. Much of the technical information was drawn from recent hearings, which rejected the Grassy Mountain coal mine proposal for the Rockies.

Using the most recent figures for the price of steelmaking coal and projections for the market, the paper concludes the hypothetical mine would be marginally profitable — about $140 million over the life of the mine. Factoring in a higher cost of capital could even make it a $72-million money-loser.

The report estimates total wages over the life of the mine would be about $35 million, most of which would remain in the coal-mining region.

Against that, the report attempts to weigh environmental and social effects.

“We can't necessarily monetize them, but they are really important to discuss,” Winter said.

“We're not trying to come to a single bottom line. We're trying to decide are these impacts significant enough to outweigh the potential economic benefits.”

Those effects, says the report, affect all Albertans while the benefits are concentrated more tightly.

“The private benefits are concentrated in the project proponent; any increases in tax revenue are marginal given the size of Alberta's economy, and any incremental labour income is captured by a few individuals employed by the hypothetical mine,” the report concludes. “In contrast, the negative environmental and social impacts would affect a much broader population.”

Mining companies said it wasn't fair to draw conclusions about unique, real-world projects using hypothetical models.

“The paper focuses on a theoretical mine that is entirely different from, and irrelevant to, the Grassy Mountain Project,” said an email from Jackie Woodman, spokeswoman for Grassy Mountain proponent Benga Mining.

Peter Doyle of Montem Resources, which is considering a Rockies coal mine, said in an email the report “grossly misrepresents project economics, has little or no basis for various claims and is factually incorrect.”

He said the price forecasts used in the report are little more than half what they should be.