Alberta hit with $10.8-billion lawsuit by coal companies over policy changes

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Five coal companies are suing Alberta for a combined $10.8-billion, claiming the government’s coal policy reforms have cost them billions in lost investment and potential revenues and have made mining the land they leased all but impossible.

At the same time, the government and the Alberta Energy Regulator are facing questions about why an Australian company was allowed to apply for exploration licences to pursue a potential coal mine at Grassy Mountain when a joint federal-provincial regulatory panel rejected an application for the same site in 2021. The regulator is still assessing the new applications, submitted by Northback Holdings Corp., but critics are pushing the government to do more to boost environmental protections.

The claims are laid out in four separate submissions to Alberta’s Court of King’s Bench by Cabin Ridge Project Ltd., Atrum Coal Ltd. and its subsidiary Elan Coal Ltd., Black Eagle Mining Corp. and Montem Resources Ltd. (recently rebranded as Evolve Power Ltd.) All were pursuing mines for metallurgical coal, which is used for making steel. The case is slated for trial early next year.

At the heart of the case is Alberta’s 1976 Coal Policy, which used land categories to protect fragile ecosystems and watersheds flanked by the Rocky Mountains from open-pit coal mines. The government nixed the policy in 2020, saying the categories were an investment barrier and confusing for industry, but a furious public backlash forced it to backpedal in 2021.

Along with reinstating the 1976 policy, the government halted exploration on a swath of sensitive land, cancelled a series of leases earmarked for potential new mines and struck a committee to consult with Albertans on new coal-mining rules. An order by then-energy minister Sonya Savage in 2022 declared an indefinite moratorium on coal exploration.

The companies contend in their claims that those decisions overhauled the province’s coal-mining landscape, where previously “established regulatory guidance, land-use planning, and representatives of Alberta’s government all allowed and in fact encouraged exploration in support of coal development.”

Atrum, Elan and Black Eagle also say that, as far back as 2019, company representatives met with provincial officials, who provided guidance on policy matters, processed various applications and encouraged them to invest in their proposed projects – and at no point did those officials indicate a change was in the works.

Each company says it spent millions of dollars under previous rules to advance their projects, but the government’s policy backflip and development moratorium left them out of pocket and stuck with land they can’t use, for which the province has offered no compensation.

The office of Alberta’s current Energy Minister, Brian Jean, declined to comment on the case but said in an e-mail that the government is “committed to protecting the areas Albertans cherish, while allowing responsible resource development where appropriate.”

Australia’s Montem Resources was attracted by the quality of the coal in Alberta, and the company concentrated its investment in the province where mining had occurred before, said the chief executive of its Alberta operations, Peter Doyle, in an e-mail Tuesday.

“We were confident we could responsibly restart and redevelop these old mines,” he said, but in 2021 the government changed the rules. “As a result, the company and our shareholders are suffering.”

Montem acquired land leases in 2016 to develop several projects on the eastern slopes of the Rockies. The most significant, its Chinook Project, has an estimated 172 million tonnes of coal. It would have encompassed about 10,000 hectares and included five old mines (three underground, two open-pit) in the Crowsnest Pass in southwestern Alberta.

The company spent about $15-million to explore and develop its properties, according to its statement of claim, and continues to pay the province for a series of coal leases on Crown land.

Montem says Alberta has represented for decades that coal development applications would be considered on their own merits, even on lands included in the 1976 policy. Furthermore, its claim says that “since at least May 2016, Alberta and its representatives have actively encouraged coal mining companies to invest, explore, and develop in Alberta’s metallurgical coal resources.”

As a result, the company believed that metallurgical coal development was permitted, the claim says, so it “incurred significant costs” to acquire property and advance its projects.

Indeed, when the government rescinded the 1976 policy, it cited the economic potential of the fossil fuel and invited applications for coal leases on lands where the old rules had restricted the issuance of leases. Montem took the province up on the offer, and in December, 2020, was granted 10 new leases. One month later, the government found itself in hot water over its coal policy and cancelled all of them.

Montem argues that Alberta’s prohibition on coal development has prevented the company from accessing its freehold mineral rights and has blocked all reasonable uses of the land. Nor has the province compensated the company, “despite having confirmed its commitment to repurchase leases” that fall under the reinstated 1976 Coal Policy, the company says in its claim.