MRO Magazine

Hundreds of coal mining jobs to end as power company switches to natural gas


Industry

November 9, 2020
By Dan Healing

Industries

(CP) CALGARY – Alberta power producer TransAlta Corp. says it will end operations at its Highvale thermal coal mine west of Edmonton by the end of 2021 as it switches to natural gas at all of its operated coal-fired plants in Canada four years earlier than previously planned.

The announcement will result in hundreds of mine job losses as employment drops to 40 to 50 people involved in reclamation work, expected to take about 20 years, from a peak workforce of around 1,500, said CEO Dawn Farrell on a conference call on Wednesday.

TransAlta confirmed last week it had closed a $400-million second tranche of a $750-million investment by an affiliate of Brookfield Asset Management, with the proceeds to be used to advance its coal-to-gas conversion program and other corporate purposes.

But on the call, Farrell said Brookfield’s purchase of convertible securities wasn’t responsible for the board’s decision to accelerate its coal-to-gas conversions.

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“It’s really related to, overall, the economics of producing power in Alberta on coal with the carbon tax,” she said on the call.

“We’ve currently got a $30 (per tonne) carbon tax, it’ll be $40 by next year, $50 the year after. Coal plants get less economic and they’re less flexible in a merchant market.”

The percentage of power in Alberta generated from coal has fallen from more than 80 per cent in the 1980s to less than one-third now, in part due to rising provincial government prices on carbon that began in 2007. The electricity market was deregulated in 1996, which means prices are set through competition.

“It’s good news for GHG reduction and the health of Albertans to have coal being phased out earlier,” said Binnu Jeyakumar, director of clean energy for the environmental Pembina Institute, adding coal power profitability is becoming less attractive as the costs of renewable power fall.

She cautioned, however, that converted coal plants are unlikely to be as efficient as new natural gas powered plants and added that fugitive gas emissions from production and transportation of gas also present an ongoing GHG risk.

TransAlta said it will stop burning coal in its Keephills Unit 1 and Sundance Unit 4 plants, which will operate at lower capacity with natural gas, while it evaluates full conversion projects.

A conversion project at Sundance Unit 6 is to be complete in a few weeks and the conversions of Keephills Unit 2 and Unit 3 are to be wrapped up in 2021.

The company announced it will proceed with the full $800-million conversion of Sundance Unit 5 to allow it to produce about 730 megawatts when it comes online in Q4 2023.

“Our greenhouse gas emissions will be under 11.5 million tonnes by the end of 2022, down almost 70 per cent from 2005,” said Farrell, who said it has cut 32 million tonnes per year across its worldwide operations since 2005 and 21 million in Canada.

“TransAlta has more than met it’s fair share of the Paris agreement. To date, we alone have delivered 10 per cent of Canada’s goal of a 220-million-tonne reduction for Canadians by 2030.”

She said TransAlta should be a “sought after investment” for clean energy investors.

The company will still produce power from coal at its Centralia facility in Washington State, which has a transition agreement allowing it to burn coal until its end of life in 2025, Farrell said on the call.

TransAlta also owns a 25 per cent stake in the Sheerness power plant in western Alberta, which is operated by American firm Heartland Generation Ltd., and continues to burn coal although it has some dual-fuel capabilities.

TransAlta reported a loss attributable to common shareholders of $136 million for the quarter ended Sept. 30 compared with a profit of $51 million in the same quarter a year earlier.

Revenue was $514 million, down from $593 million in the same quarter last year.