Gentlemen, good discussion. I want to address a misunderstanding in your conversation - the difference between Raven coal and Quinsam coal. The general ranking of the two coals as high volatile bituminous is misleading - it does not mean that they are identical coals, nor does it necessarily mean that they are semi-soft coking coal. There are other attributes to look at, besides the proportion of volatile components (mainly hydrocarbons), which will decide the matter as to whether the coal can be sold as a coking coal.
Three of these are the free swelling index (FSI), the hardgrove grindability index (HGI), and the rank measured as a thermal value.
- High FSI values (5 and above) are good for metallurgical coal. Low values are preferred for thermal coals.
- Low HGI values are associated with harder coking coals, higher values are typical of softer coals. 50-52 is desirable.
- Thermal values above 7778 cal/gm or 14,000 BTU/lb are in coking territory, and are ranked High volatile A bituminous or better (medium and low volatile bituminous). High vol B bituminous falls between 7222 and 7778 cal/gm (13,000 - 14,000 Btu/lb). I want you to watch this characteristic closely.
This is what we get comparing Raven to Quinsam North. You will immediately appreciate that there is a significant difference between the two.
Raven FSI: 5.5 – 9.0 compared to Quinsam North FSI: 0.5 - 2.0. The FSI by itself immediately puts Raven coal in the running as a potential coking product, and removes Quinsam from consideration.
Raven HGI: 51 compared to Quinsam North HGI: 41 – 48. Raven again is in the running, Quinsam not so much.
Raven Rank: 7212 to 7877 calorie/gram, averaging 7549, making it high volatile B bituminous since B becomes A at 7778 cal/gm.
Quinsam Rank: one zone 7818-7901 cal/gm making it high volatile A bituminous, another zone 7526 cal/gm high volatile B bituminous
The persistent story that Raven will produce metallurgical coal is misinformation. It's like saying that my old Toyota is a Mercedes Benz because it's got a Mercedes hood ornament. It's clear from the technical analysis that the thermal properties of the coal are not metallurgical rank - even though it has an attractive FSI (the hood ornament). Hence, to make coke, Raven coal has to be blended with a higher rank of coal.
Raven will produce High volatile B bituminous coal, which can be marketed as a low-grade coking coal or a thermal product. If they process it for a thermal product, the processing is cheaper and they get more end-product, which they can only sell for the thermal price. If they process it for a met product, the processing costs more and they get less marketable coal, but they can sell it for a price somewhat above the thermal price, but well under the price commanded by high-rank met coal. In the end, as the feasibility report indicates, they don't get a significantly better internal rate of return from the met mix than they would from going straight thermal. So why bother to deceive the public with the glittery hood ornament? LG and Itochu and any sophisticated investors can see through the deception. Or maybe in January Itochu suddenly realized they'd been looking at the hood ornament and not the car, and said, nope, we're not putting any more money into this thing.
The technical reports give a more complete list of the characteristics of the coal that they look at for prospective coking/steel-making coals. The technical reports are available on sedar.com as well as on the CoalWatch website.
https://www.coalwatch.ca/sites/default/files/TechnicalReportRavenProject-PincockAllenHolt-08Jun2011.pdf
https://www.coalwatch.ca/sites/default/files/QuinsamNorth43-101-15Apr2009.pdf
Earlier in these discussions, one of you mentioned Minfile information. Minfile is pretty high level, and the empirical data it draws on is often quite dated. Nobody would invest in a mine based on it, and we should also be careful how we use the info. It’s an excellent guideline, but it generalizes from sometimes a few dated specifics and is no substitute for empirical results from samples of the coal you're actually concerned about.