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Colorado coal takes a dive in 2013, lowest production in 20 years

Colorado coal production –- hobbled by mine closures and a decline in demand for power plant coal — hit a 20-year low in 2013.

The state’s nine mines produced 23.8 million tons of coal, according to the federal Energy Information Agency – a 17 percent decline from 2012 and down 41 percent from the 2004 peak. In 1993, the state produced 21.9 million tons.

“It has been a rough year and there were a number of factors” said Stuart Sanderson, president of the Colorado Mining Association.

Two mines closed, the winter of 2013 was mild, a key contract was cut, coal lost in the market place to natural gas and policies at the state and local level hurt the fuel, Sanderson said.

“The market was weak nationally and coal production was down nationally,” Sanderson said, “We slipped a little more.” Nationally production was about 995 million tons, down from a little more than 1 billion tons in 2012, according to the EIA.

West Palm Beach, Florida-based Oxbow Carbon LLC fired 250 worker at its Elk Creek Mine, in Paonia, after fires force the mine’s closure. The company also had to abandoned expensive long-wall mining equipment.

The neighboring West Elk Mine, operated by St. Louis-based Arch Coal, saw a contract it had withe the Tennessee Valley Administration, country’s largest public power company, expire at the end of the year.

In Routt County, near Steamboat Springs, St. Louis-based Peabody Energy backed off on plans to develop a new tunnel to access a new coal source now that supplies are dwindling at the company’s Twentymile Mine. Twentymile employs about 500 miners.

The New Elk Mine, in Trindad, which produced metallurgical coal for making steel, also closed after its owner Toronto-based Cline Mining defaulted on a $2.5 million debt payment.

About 60 percent of the decline in production came from the closed mines, the mining association’s Sanderson said.

The shift by utilities such as the TVA from coal to natural gas also hurt production. Administration officials said that are looking to pare their just of coal to 20 percent.

The Clean Air-Clean Jobs Act, which gave Xcel Energy, Colorado’s largest electricity provider, incentives for closing six Front Range coal-fired power units and replacing them with gas-fired generation will also reduce demand by another 4 million tons when all the conversion are completed in 2017, Sanderson said.

The aim of the act is to cut power-plant pollution to help comply with Colorado’s federal Clean Air Act requirements. The closures are projected to cut power-plant nitrogen oxides emissions—an ingredient in smog – by 86 percent.

Two coal-fired units at Xcel’s Arapahoe Station closed in 2013, Sanderson said.

The Run of bad luck and bad news led Bill Koch, Oxbow’s chief executive officer, to tell an interviewer, “The coal business in the United States has kind of died.”

Source: The Denver Post