The Arctos Anthracite Project (formerly known as Mount Klappan Anthracite Metallurgical Coal Project) is one of the world’s premier metallurgical coal projects and the most advanced Canadian deposit of anthracite – a key ingredient in steel and metal processing. The project is owned by the Arctos Anthracite Joint Venture, a joint venture between Fortune (80%) and Posco Canada Ltd. (“POSCAN”) (20%), a subsidiary of Korea’s POSCO – one of the world's largest steel producers. POSCAN acquired its interest in 2011 by paying $30 million to Fortune, $20 million of which was contributed to the joint venture to fund future work on the property. POSCAN is responsible for funding 20% of the capital and operating costs for the project and will receive 20% of the coal in-kind. POSCAN is anticipated to make initial cash payments to Fortune and contributions to the joint venture totaling $188 million.
Fortune engaged Deloitte & Touche Corporate Finance Canada (“Deloitte”) as its financial advisor to help identify strategic investors for the Arctos project, including the successful first stage partnership with POSCO. Deloitte has been re-engaged to attract a second stage partner to help Fortune finance its share of mine construction costs. The focus is on Asia and companies with a strategic need to secure reliable sources of metallurgical coal.
Pilot plant for the 1985-86 test mining and trial cargo of 100,000 tonnes of clean coal products.
The Arctos project consists of 16,411 hectares of coal exploration licenses in northwest British Columbia, 330 km northeast of the Pacific Ocean Port of Prince Rupert. The licenses straddle the BC Railway right-of-way and largely completed rail bed, 150 km north of the current terminus of track at Minaret where the Canadian National Railway Limited (“CN”) is currently operating. Fortune and CN are working together to extend the railway to the mine site to enable the transportation of coal to the Ridley Coal Terminal at Prince Rupert for export to the overseas steel industry.
The four resource areas at Arctos are referred to as the Lost Fox, Hobbit-Broatch, Summit and Lost Fox Extension deposits. Collectively, they contain Measured and Indicated Resources of 231 million tonnes and Inferred Resources of 359 million tonnes. Also, there is a historical Speculative Resource of 2.2 billion tonnes that are no longer NI 43-101 compliant, but indicate the world class mineral potential of the project. The initial open pit mine for the Lost Fox deposit contains Run-of-Mine Reserves of 125 million tonnes that can be washed to produce 69 million product tonnes of a 10% ash pulverized coal injection (“PCI”) / sinter product used for steel making.
In excess of $100 million of work has already been conducted at Arctos by Fortune, POSCAN and the previous owner Gulf Canada Resources Limited (“Gulf”) prior to its takeover by ConocoPhillips in 2002. This included test mining 200,000 tonnes of run-of-mine coal from two of the deposits and pilot plant processing to produce 100,000 tonnes of clean coal products for trial cargos to customers in North America Asia and Europe.
The Lost Fox deposit has been assessed in several feasibility studies, the latest of which was in 2012 by Marston, a Golder Associates Company. This study assessed development of an open pit mine, wash plant, and site infrastructure, as well as the costs to upgrade and extend the railway to the site. Production was contemplated at 3 million tonnes per annum of PCI coal for the steel industry.
Click here to view the NI 43-101 Technical Report
Anthracite – Steel Making Coal
Metallurgical coal together with iron ore are the principal raw materials used to make steel. Anthracite is the highest quality metallurgical coal, measured by carbon and energy content, and represents just 1% of world coal reserves. It is also the most versatile coal, suitable for use in a broad range of metallurgical, thermal, water purification and composite material products. The natural high carbon and very low volatile (gas) content of anthracite makes it ideal for use as a premium ultra-low volatile pulverized coal injection (“PCI”) product that is injected into the blast furnace during crude steel production. This reduces the consumption of higher cost metallurgical coke and improves the efficiency of the steel making process. High carbon and low volatiles also allow anthracite to be used as a direct coke replacement and also as a blend coal with hard coking coal to make metallurgical coke. Anthracite is the only coal that can be used as sinter feed, and reductants used in electric arc and direct reduction steel manufacturing, and for processing of titanium, ferro-chrome, tin and aluminum. Carbon filters for water purification are made with anthracite coal as well as some carbon composite materials. The high carbon content of anthracite makes it the preferred coal for gasification and liquefaction technologies to make urea fertilizers, plastics and high quality synthetic fuels.
China is by far the dominant producer of anthracite with annual production of more than 500 million tonnes, representing more than 80% of global production. China became a net importer of anthracite in 2004 and coking coal in 2007, whilst Vietnam, the largest exporter, has been reducing exports to preserve their remaining reserves for domestic use. The dramatic reduction of exports from the two dominant producers, together with depletion of reserves in other countries, has created a supply imbalance supporting future higher prices.
There is a global shortage of metallurgical coals as a result of dramatically increased steel production and declining coal reserves. Chinese annual economic growth is about 8%, but imports of coal have been significantly higher to support the need for new infrastructure. Other emerging economies are also showing significant growth in steel production, for instance both India and Brazil plan to quadruple crude steel production. About 500 million tonnes of new annual metallurgical coal production will be required by the end of the decade to service this growth in demand. The shortage of supply for metallurgical coal is also driving innovation in the steel industry as producers develop new technologies to be globally competitive, reduce greenhouse gas emissions, and diversify their sources of supply of key raw materials. Many of these new technologies use even greater amounts of anthracite.