New report details coal mining companies exports of publicly-owned coal

by Joe Smyth

July 24, 2014

A new reportdetails how the US coal mining industry is exporting coal owned by the American people, taking advantage of the low prices offered by the federal coal leasing program. Ive written about the corrupt federal coal leasing program several times, including how it effectively subsidizes the industrys export ambitions, and this report providesthe most detailed account yet of the specific mines and coal companies that are ripping off the American public with coal exports. As the executive summary of thereport, Unfair Market Value: By Ignoring Exports, BLM Underprices Federal Coal, explains:

Coal companies operating in the western United States purchase much of their coal through federal coal leasing programs operated by the Bureau of Land Management (BLM), which allow private coal companies to mine and sell coal owned by the American public. Although a growing share of federal coal is exported to overseas customers, the BLM has almost completely ignored the value of export sales when determining the minimum price it will accept for federally owned coal. The failure to assess the economics of coal exports has led the agency to systematically underprice coal owned by the American public, potentially leading to millions of dollars in foregone revenue each year.

The report details the export of publicly owned coal in Montana, Colorado, Wyoming, and Utah by several companies, including Arch Coal, Ambre Energy, Cloud Peak Energy, Signal Peak Energy, and Peabody Energy, as well as their efforts to increase those exports. One company that deserves particular scrutiny right now is Bowie Resource Partners, since the Bureau of Land Management is planning to sell 8 million tons of publicly owned coal in Colorado next Wednesday, July 30, that would allow the company to expand its Bowie #2 mine. From the report:

Bowie Resource Partners Mines, CO and UT

In 2013, the Kentucky-based Bowie Resources partnered with private equity firm Galena Private Equity Resource Fund to purchase three bituminous coal mines in Utah from Arch Coal. The two firms created a new company, Bowie Resource Partners (BRP), which now operates the three mines as well as the Bowie #2 Mine, a bituminous mine in Colorado. BRP now advertises itself as The Nations Largest Western Bituminous Coal Producer. All four of BRPs mines rely on federal coal leases. The company paid $0.32 per ton for its coal lease at the Bowie #2 Mine; $0.28 per ton at the Sufco Mine; $0.21 per ton at the Dugout Mine; and $0.23 per ton at the Skyline Mine.

In the announcement of its agreement with Galena, BRP specifically mentioned exports as a key element of the companys coal business plan, touting loading agreements with the ports at Stockton and Richmond, California.

Bowie has a long-term agreement with Metropolitan Stevedore Company ("Metro Ports") for the Port of Stockton, which will provide BRP with the opportunity to ship up to 2.3 million tons annually, as the Metro Ports/Stockton agreement will be assigned by Bowie to BRP. Separately, Bowie has been in negotiations with Levin Richmond Terminal Corporation for the port of Richmond, which would provide BRP with annual topping off capacity of an additional 1.2 million tons. Bowie has also signed a Letter of Intent for significant export capacity via a Pacific port in the Northwestern US, which would also be assigned to BRP. We think the time is right to introduce the new Bowie Brand into markets where the need and appetite for coal-fired power generation is growing, not abating.

But despite the fact that Bowie Resource Partners is openly aiming to export this coal, the Bureau of Land Management didnt even acknowledge the potential for exports when it analyzed and approved the coal lease sale - see thisfact sheetfrom WildEarth Guardians for more, and you can join thispetitionto Interior Secretary Sally Jewell to cancel the lease sale, led by theWestern Organization of Resource Councils. The planned sale of the Spruce Stomp lease is case in point that the BLM is not looking out for the public interest when selling federal coal, said Jeremy Nichols, Climate and Energy Program Director for WildEarth Guardians. Coal exports arent just undermining taxpayers, theyre fueling more carbon pollution at the expense of our climate. Were calling on the BLM to cancel the sale of the Spruce Stomp coal lease and start to take into account the economic and environmental implications of exporting publicly owned coal. Ive asked the Colorado office of the Bureau of Land Management to comment, and will update this post if I receive a response. The report wasproduced by the Sightline Institute, an environmental think tank in Seattle,in collaboration with several organizations that have worked on coal mining issues in the Western Unites States for many years, including the Western Organization of Resource Councils,Northern Plains Resource Council, Powder River Basin Resource Council, and WildEarth Guardians.

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