Westmoreland Coal works out contract changes at U.S., Canadian mines

Westmoreland Coal in its March 6 annual Form 10-K report said there has been some recent activity in terms of coal contracting at some of its mines in the U.S. and Canada.

That includes in the U.S.:

  • Beulah – The Beulah lignite strip mine in North Dakota supplies approximately 2.5 million tons annually to the adjacent Coyote Electric Generating Plant via conveyor belt under an agreement that expires in May 2016. Westmoreland has gotten notice that the Coyote plant will not be renewing its contract past 2016. The Beulah mine also supplies approximately 0.5 million tons annually via rail to the Heskett Power Station under an agreement that expires in 2016.
  • Kemmerer – The Kemmerer strip mine in southwest Wyoming supplies approximately 2.7 million tons per year to PacifiCorp‘s adjacent Naughton Power Station via conveyor belt under an agreement that expires in December 2021. Kemmerer also supplies approximately 1.7 million tons a year to various industrial customers through long-term contracts extending to 2026. The mine services industrial customers via both short haul rail and truck to Trona plants in Green River, Wyoming. The company recently extended contracts with both Tata Chemicals North America Inc. and FMC Corp. through 2026.

In Canada the company sells the majority of its tons under contracts with remaining supply obligation terms of between one and 40 years. In 2014 this segment derived approximately 54.8% of its total revenues from coal sales to two customers: SaskPower (37.2%) and ATCO Power (17.6%). Recent contracting activity by mine has been:

  • Poplar River – This is a surface mine located in South Central Saskatchewan near the Town of Coronach. The mine operates two active pits and supplies lignite coal to the two generating units at the Poplar River Generating Station which is owned and operated by Saskatchewan Power (SaskPower). Current annual production of the mine is 3.6 million tons. The current coal supply contract for the mine expires on Dec. 31, 2015. The Poplar River Mine owns and operates the railway from the mine to the generating station. Work is underway to execute an extension of the existing coal contract.
  • Estevan – This mine combines two adjacent mines in southeastern Saskatchewan, the Bienfait Mine and the Boundary Dam Mine, which supply an approximate combined 6.1 million tons per year to SaskPower, domestic consumers and the char and activated carbon plants. Westmoreland recently extended the contract with SaskPower related to the Estevan Mine through 2024. The Estevan Mine operates four active pits and supplies lignite coal to the Boundary Dam Generating Station (five units), the Shand Generating Station (two units), the activated carbon plant, the char plant, as well as some domestic sales.

Notable in regards to the Coyote power plant’s coal supply is that the North Dakota Public Service Commission last fall approved a permit for a new coal mine located about 10 miles southwest of Beulah in Mercer County. This is the first major new mine permitted in the state since the late 1970s and is being developed by an affiliate of North American Coal. The permit covers a little over 8,091 acres for the new Coyote Creek Mine. The mine is scheduled to begin delivering coal to the Coyote plant operated by Otter Tail Power in May 2016, and will replace the supply from Westmoreland’s Beulah mine. Annual production will be about 2.5 million tons per year with a projected first year production of 1.7 million tons.

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.