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No country for old coal

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World Coal,

Gordon Cope examines some of the bright spots on the North American coal horizon.


It seems that every direction one turns, coal is in trouble: prices are shaky, production is stagnant and the pressure is on for miners and utilities to clean up their act – or close shop.

But not all is doom and gloom. In North America, despite all its detractors, coal will continue to play an important role in electricity generation.

Although closings and conversions currently dominate the sector, some coal mining companies are also taking an upbeat attitude toward the sector. Westmoreland Coal Co. was pleased to acquire Sherritt International’s Canadian thermal operations. For the last century, Westmoreland has operated sub-bituminous coal mines in Montana’s Powder River Basin (PRB), and lignite mines in Montana, North Dakota and Texas. The Sherritt acquisition adds 27 million short t of mine-mouth production and 4 million short t of export thermal coal production.

“The acquisition of Sherritt’s coal operations represents a transformational opportunity to acquire seven producing coal mines, which are highly complementary to our existing operations and expertise,” said Keith Alessi, Westmoreland’s executive chairman.

Coal working to meet environmental regulations

Mining companies are also working to meet environmental obligations. Centermount Coal is addressing the EPA’s objections to its Bingay coal project through a series of steps. A selenium study is currently underway: samples have been gathered and are being analysed in a laboratory. An environmental assessment is also currently proceeding and is expected to take 18 months. In the meantime, the company is communicating with affected communities to understand their concerns and identify challenges.

Other companies are fleshing out plans to open new mines and revitalise existing facilities. Calgary-based Coalspur Mines, which owns 313 million t of thermal coal reserves in the central Alberta region, last year announced a C$ 841 million, two-part development plan to export up to 12 million tpa to Asian markets. The first phase, a 5 million tpa opencast mine, is expected to open in 2015.

FGD drives resurgence in Illinois Basin coal

In the US, mid-continent producers are expressing optimism due to clean coal investments by utilities. According to the EIA, power plants have spent more than US$ 30 billion in flue gas desulfurisation systems (also known as scrubbers) at 110 facilities in 34 states. About 60% of US capacity is now equipped with the modern technology.

As a result, Illinois Basin coal, which is high in calorific value, but also high in sulfur, is seeing a renaissance in usage. While prices have been muted, demand rose 9% in 2012. “Illinois Basin coal is gaining ground as there are many retrofitted plants with coal sulfur scrubbers, and the higher energy coal represents greater value,” says Popovich.

Gas becoming less attractive

Natural gas is also beginning to lose its lustre as an alternative fuel. While production continues to climb, producers are looking to ship gas offshore as LNG, which commands a premium price in European and Asian markets. Petrochemical plants are relocating to North America to take advantage of low feedstock prices. Demand for gas spiked recently when several Arctic vortexes plunged into the Eastern Seaboard, sending much of the US into a deep freeze. The February natural gas contract on NYMEX was up 25.8¢ to US$ 4.69/million Btu.

All of these developments have the potential to make gas less attractive to utilities. “As the price of gas strengthens, coal’s share of electricity generation is expected to remain constant through 2014,” said Popovich.

Coal export potential strong in the long term

In the longer term, export potential is expected to grow strongly in emerging markets. The International Energy Agency (IEA) predicts that coal will become the single largest source of energy within the decade, largely driven by demand in China and India; China alone is expected to commission about 600 GW of new coal-fired generating units by 2030.

In anticipation, railways are upgrading their rolling stock and terminals are expanding capacity. Canada has three coal terminals on the West Coast: Ridley Terminals in Prince Rupert, and Westshore and Neptune terminals in the lower mainland near Vancouver. All three are under expansion. In all, these terminals expect to be handling approximately 70 million tpa by 2015. In the US, Ambre Energy has plans to build a 3.5 million tpa facility in the Port of Morrow, Oregon, with ultimate capacity of 8 million tpa.


Clearly, coal has great potential. It is cheap, bountiful and reliable: factors that will continue to grant it pre-eminence in the energy sector. But it still faces many challenges – not just from environmental critics and regulatory bodies, but also from competing sources of power. In order to remain a vital and valuable component of North America’s electricity future, both the mining and utility sectors must learn to adapt and persevere in a rapidly evolving energy landscape.

This article is an extract. The full article appeared in the April issue of World Coal as: COPE, G., “No country for old coal” World Coal, (April 2014), pp. 16 – 24. 

Written by Gordon Cope and edited by

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