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Article: In the West, Big Coal makes a stand - Forbes

May 21st, 2013

Overshadowed by the debate over natural gas exports, a battle is brewing in the Western United States over exports of coal to Europe and, especially, to the booming economies of Asia. Buoyed by rising overseas demand for American coal, big coal producers including Arch Coal and Peabody are seeking to build new ports and new shipping facilities, particularly along the West Coast, to send U.S. coal from the Powder River Basin, in Montana and Wyoming, across the Pacific.

Those plans have met with fierce resistance from local residents and environmental groups. ”I want to make it absolutely clear: I am vehemently opposed for a private, for-profit corporation to use eminent domain to condemn my private land for a rail line to export coal to China,” Clint McRae, a rancher whose family has owned their ranch in the Powder River Basin for 125 years, told a an Army Corps of Engineers hearing in Seattle last December, according to The Los Angeles Times.

Also lining up to oppose the exports are elected officials in Oregon and Washington who don’t wish to see huge coal export facilities built on their coastlines. Saying that rail links to bring Powder River Basin coal to the West Coast “threaten the health of our communities, the strength of our economies, and the environmental and cultural heritage we share,” Seattle mayor Mick McGinn announced last month the formation of the Leadership Alliance Against Coal, which includes Native American tribal groups as well as politicians from towns in Washington State.

Black Piles

Behind the export push are the remaining Big Coal companies, particularly Arch Coal and Peabody, who have largely abandoned their mines in Appalachia and have seen their share prices drop by as much as two-thirds over the last 2 years as utilities across the United States have moved to burn low-cost natural gas rather than coal. Peabody actually projects that U.S. coal consumption for power generation will rise in 2013, by 60 million to 80 million tons. Even as coal consumption drops in the United States over the long run, though, demand continues to climb in China, India, and even European countries like Germany, which is phasing out its fleet of nuclear power plants.

U.S. coal exports set a record last year of more than 124 million tons, topping the previous record set in 1981. Because of “must-take” contracts signed years ago, some utilities in 2012 literally found themselves with piles of coal they didn’t want, and dumped these supplies of “distressed coal” on the international market. As a result, exports of coal are expected to drop this year, while remaining high.

 

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