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Australian coal company seeking more than $3.5B from Alberta government on policy changeOUS News

An Australian coal company is alleging that Alberta is liable for billions after the province overturned policy on coal development.

As first reported by the Calgary Herald, Atrum Coal Ltd., along with its subsidiary, Allen Coal Ltd., says it is seeking $3.53 billion tied to the value of its Allen project. It is also seeking an additional $300 million in damages to shareholders.

It claims that recent actions surrounding Alberta’s 1976 coal policy forced Atrum’s share price to slash and deprive the companies of the value of ongoing coal projects.

The companies filed the claim in Calgary Court of King’s Bench on September 14.

In May 2020, the Alberta government rescinded a 1976 policy that limited coal development in the Eastern Slopes. After much pushback and criticism and legal challenges, the province briefly reversed course, abandoning exploration and development.

But in that period, companies such as Atrum began exploration work, with plans to establish coal mines, build new roads, and set up hundreds of drill sites.

Now, Atrum alleges that the Alberta government is responsible for the effects of that policy reversal.

In their statement of claim, Atrum and Elan write that the Elan project contains an estimated 486 million tonnes of metallurgical coal and a mine life of approximately 34 years.

The growth of Isolation South alone, the companies wrote, would have created about 500 direct jobs and 650 indirect jobs, valuing it at more than $3.53 billion.

A spokeswoman for Alberta Energy Minister Sonya Savage did not respond to a request for comment by publication time. Representatives for Atrum also did not comment by publication time.

Atrum’s lawsuit follows a similar lawsuit filed in early July by private coal company Cabin Ridge, which said it was seeking more than $3.4 billion in damages from the government of Alberta, plus coal. Citing the province’s vicissitudes on policy.

After the reinstatement of the 1976 policy, Atrum halted its Allen hard coking coal project. Its shares, which were trading at a peak of around $1.95 AUD in 2013, were trading at $0.0080 AUD as of September 23.

Carleton-James Osakawe, an associate professor of finance at Mount Royal University in Calgary, previously told CBC News that the company finds itself in a challenging position today.

“The Company’s low cash balance and low projected cash flows from operating activities indicate that without external cash flows (through an equity issue) it may be difficult for the Company to remain a going concern beyond 2022 unless that its announced project, which is on hold, is somehow able to start production,” he said in an email.

Read | Statement of Claim filed by Atrum Coal Ltd. and Allen Coal Ltd.: