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DENVER, Colorado (miningweekly.com) – Colorado has been blessed with a bounty of minerals that has historically played a critical role in ensuring the state’s economic success; however, new legislative measures has cast doubt over the future stability of the region’s coal mining industry.
Increasingly strict legislation aimed at reducing the US’s reliance on coal-fired electricity was making residents nervous about impending rising electricity rates, as cheaper coal-fired power plants are forced to shut down in favour of more expensive sources of energy, while removing a critical prop that underpinned local economies.
COAL IN DISTRESS
In June, the US Environmental Protection Agency (EPA) introduced its toughest action yet to cut down on carbon emissions, ordering a 30% reduction in carbon dioxide emissions from power plants from 2005 levels by 2030, which did not augur well for struggling North American thermal coal producers, which had earlier this year expressed some optimism for recovering prices.
Under the direction of US President Barack Obama, the Clean Power Bill would be implemented through a state-federal partnership, under which states would identify a path forward using either current or new electricity production and pollution control policies to meet the programme’s proposed goals.
Power plants accounted for roughly one-third of all domestic greenhouse-gas (GHG) emissions in the US. While there were limits in place for the level of arsenic, mercury, sulphur dioxide, nitrogen oxides and particle pollution that power plants could emit, there were currently no national limits on carbon pollution levels.
“This spelled a lot of negativity for Colorado’s nine coal mines,” Colorado Mining Association (CMA) president Stuart Sanderson told Mining Weekly Online on the sidelines of the Denver Gold Forum.
He said states such as Colorado would be hardest hit by the new rules, owing to its reliance on coal for about 64% of its electricity.
Sanderson noted that previous EPA regulations had already shuttered 20% of the nation’s coal plant capacity, pushing the reliability of the power grid close to the edge.
Indeed, North American coal miners are dealing with weak prices amid low demand for thermal electricity-making coal and metallurgical steelmaking coal as competition from the emerging shale gas industry impacts on markets.
Last month, US coal producer Alpha Natural Resources said eight of its affiliates had given about 1 100 employees, working at 11 West Virginia surface mines, notice that they would be laid off in three months. Alpha joined other coal miners such as Consol Energy and Walter Energy that had, in recent months, either given notice to idle mines, or had shuttered operations, as they battled the stubbornly low coal prices.
Two significant Canadian development projects had also been placed on the back burner as a result of the low prices. Teck Resources had deferred restarting the Quintette coal mine, in north-east British Columbia, which had the potential to produce between three-million and four-million tonnes of steelmaking coal a year, until market conditions improved.
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