Coal industry is a major economic contributor

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Brielle Will photo

A PwC economic report found that Canada's coal mining industry drives substantial benefits.

A new report from PricewaterhouseCoopers (PwC) revealed that coal production in Canada delivers more economic and social benefits than expected. The PwC report found an economic contribution of $5.2 billion to Canada's GDP, including $3.2 billion in direct impacts and $2 billion in indirect impacts. The industry is also a positive contributor to Canada's trade balance and benefits to employment and communities.

"Coal has always played an important role in contributing to Canada's economic strength," said Ann Marie Hann, president of the Coal Association of Canada. "However, this report helps to confirm the profound impacts the coal industry has on our economy and our communities through employment, taxes and royalties to governments and regional expenditures."

Canada's coal sector has experienced strong revenue growth and capital investment in recent years. Increased demand for metallurgical coal in emerging Asian economies, coupled with rising energy prices, has resulted in revenue growing at an annual average rate of 15 per cent between 2001 and 2010. Capital investment rose annually by almost 20 per cent on average during the same timeframe.

"PwC's research showed coal consumption in developed countries has remained stable over the last decade, but coal consumption in emerging economies has doubled and is trending upwards," said report author Janice Plumstead, director, Economics and Statistics at PwC. "If these consumption trends continue, we expect coal prices to continue above historic levels."

Along with a contribution to Canada's GDP and export trade, the report found that the coal industry benefits Canadians through employment. Over 42,000 people are directly and indirectly employed thanks to the coal industry. This includes those who work in mine production, construction, exploration, transportation and reclamation activities as well as those who supply goods and services to the industry. Since 2004, employment in the coal sector has been steadily increasing and accounts for 14 per cent of total mining employment. Average coal industry salaries are more than double the average national wage. From 2001 to 2010, salaries in the mining industry increased by 37 per cent.

Along with employment, Canadians directly benefit from the coal industry through the royalties coal companies pay to governments. In addition to royalties exceeding $300 million annually, additional economic impacts on government revenues in 2011 was estimated at $698 million, which was available to fund public infrastructure, such as roads, hospitals, schools and government programs, which have the potential to enrich the lives of Canadians.

In 2011, the Coal Association of Canada commissioned PwC to quantify the economic contributions of Canada's coal mining industry to the national economy. The PwC report is unique because it involved surveying coal companies across Canada to determine the scope of their mining activities as well as their operating and capital expenditures, salaries and employment information, research and development spending and coal shipments. This information, along with data from Natural Resources Canada and Statistics Canada, resulted in a unique picture of the coal industry's contribution to the Canadian economy.

Over the next few months the report will be used by the Coal Association of Canada to raise awareness of coal's importance to Canada. Click here to download a copy of the report.