Nation’s largest two surface mines mostly hold course, others see large drops

From the Casper Star Tribune

Wyoming mines that produce lower heat coal appear to have struggled in the first quarter of the year while the state’s largest mines held steady, according to early production counts from the U.S. Mine Safety and Health Administration.

Powder River Basin coal production in the first quarter, obtained early by S&P Global Market Intelligence on Tuesday, reveals overall production was down from last year by about one percent.

Wyoming’s lower heat mines appear the weakest producers starting off 2018, falling in line with expectations that those mines are not as well placed to face the challenges of coal’s new normal.

Production at Kiewit’s Buckskin mine between January and March fell by about 24 percent compared to the last three months of 2017, according to the preliminary data.

Blackjewel’s newly acquired Eagle Butte and Belle Ayr mines also produced less in the last few months than the previous quarter. Production at Eagle Butte fell by about 10 percent, while Belle Ayr production dropped by 8 percent.

The two mines were once referred to as the crown jewels of Alpha Natural Resources. The firm sold the mines during bankruptcy to newly formed Contura Energy, which recently sold them to a newcomer in Wyoming, Blackjewel LLC. Combined about 500 miners work at the two mines in Campbell County.

Arch Coal’s Coal Creek produced about 35 percent less coal in the first three months of the year than it did over the same period in 2017.

The two largest surface mines in the country held steady from the last quarter: Peabody Energy’s North Antelope Rochelle complex and Arch Coal’s Black Thunder, both outside Wright.

North Antelope has done better than Black Thunder compared to last year. The Peabody mine’s first quarter production was up by about 5 percent compared to 2017, while Arch’s production fell by nearly 3 percent.

Fighting for smaller share of electricity market: Wyoming coal has moved away from long term contracts

Wyoming’s coal industry has moved away from the long-term contracts that guaranteed stable production in past years introducing a new volatility. Mining firms are in greater competition for a smaller share of the electricity market and companies with diverse portfolios have reported that their higher heat coal is faring better in the new normal of the coal market than their lower heat assets.

The coal industry in Wyoming has long been an economic bedrock. Production increased nearly every year from the 1960s until recently when cheap natural gas began to steal part of the power market from coal. A steep downturn in the market in 2015 and 2016 cut 1,000 miners from the workforce as state production fell by about 100 million tons.

Though jobs have not returned, moderate improvement in production began in late 2016, introducing equilibrium in the sector last year. Experts do not expect significant improvements in production this year.

A complete first quarter production report is expected from the federal agency in the next few weeks. The early numbers published by S&P Tuesday do not include Cloud Peak Energy’s production.

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