Enviro group report targets federal coal leasing program

A new report by the Sightline Institute, produced with the Western Organization of Resource Councils, Northern Plains Resource Council, Powder River Basin Resource Council and WildEarth Guardians, claims that the U.S. Bureau of Land Management is leasing coal reserves to private industry too cheaply.

In Colorado, where the BLM is planning to sell the Spruce Stomp coal lease on July 30, the issue is front and center, said WildEarth Guardians in a July 24 statement about the report. That lease sale is for additional reserves for the Bowie No. 2 longwall mine of Bowie Resources.

The report, “Unfair Market Value: By Ignoring Exports, BLM Underprices Federal Coal,” claims that coal companies operating in the Western U.S. have bought federally owned coal for pennies per ton, and are now reselling that coal on international markets for hundreds of times more than they bought it for. The report argues that BLM has consistently sold publicly owned coal to private coal companies at unreasonably low prices—thereby boosting profits for the coal industry while shortchanging the American public by millions of dollars per year and exporting carbon pollution abroad.

“By ignoring potential profits from coal exports, BLM has set prices for federal coal too low,” said Clark Williams-Derry, the study’s author. “Private coal companies are buying federal coal on the cheap—and when market conditions are favorable they can make a killing selling that coal to Asia.”

The report examines seven mining projects in Colorado, Montana, Utah, and Wyoming. The report covers Bowie Resources’ current exports of coal from its mine and highlights that the company is seeking additional export capacity at West Coast ports. Despite Bowie’s stated export plans, the BLM has not even acknowledged exports in analyzing and approving the sale of the Spruce Stomp lease, the environmental groups said.

Examples cited in the report include:

  • Spring Creek Mine, Montana. Cloud Peak Energy reports that it sold 18 million tons of coal to Asian customers from the beginning of 2010 through the first quarter of 2014. The large majority of this coal came from Spring Creek, where Cloud Peak purchased federal coal for $0.18 per ton. “Cloud Peak has developed an ambitious export growth strategy centered on Spring Creek, and has applied for a new 198 million ton coal lease adjacent to the existing mine to supply its export plans,” the report said.
  • Decker Mine, Montana. Ambre Energy, co-owner of the Decker Mine, markets itself to potential investors as a “vertically integrated” coal export firm that owns both coal mines and coal terminal assets. Ambre has signed long-term coal export agreements to ship up to 5 million tons of coal to Korean utilities per year for 10 years, the report said. The company is now seeking an additional 40 million tons of coal on land adjacent to Decker to fulfill its export ambitions.
  • Signal Peak Mine, Montana. Signal Peak Energy, a three-way venture between the Boich CompaniesFirstEnergy, and international energy trader Gunvor, purchased 35.5 million tons of federal coal for $0.30 per ton, the report said. In recent years, the company has exported roughly 4 million tons of coal per year from its longwall-equipped mine to Asia.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.