Engineering & Mining Journal

DEC 2015

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The Lee Ranch mine was idled in 2013. Production at these mines is fully committed for the next several years and, like Bowie, also supported by other contracts that run into the next decade, Siegel explained. After the transaction, the workforces of El Segundo and Twentymile are all expect- ed to remain in place and become Bowie employees. The transaction, which includes coal reserves of approximately 330 million tons, has been by approved by the Peabody Board of Directors and is expected to be completed in the first quarter of 2016. This will increase Bowie's reserves to more than 500 mil- lion tons and expand its reserve life to more than 20 years. Bowie currently operates three underground coal mines in Utah's Uinta Basin capable of producing 12.6 million tpy. The majority of the com- pany's current coal sales are to domes- tic customers, pursuant to long-term, high-volume coal supply agreements with fixed pricing. Britain Intends to Close Coal Plants by 2025 Posturing for the upcoming COP-21 talks in Paris, the British government announced plans to close all coal-fired power plants by 2025 and restrict their use by 2023. "It cannot be satisfactory for an advanced economy like the U.K. to be relying on polluting, carbon inten- sive 50-year-old coal-fired power sta- tions," said Secretary of State for Energy and Climate Change Amber Rudd. "Let me be clear, this is not the future. We need to build a new energy infrastructure, fit for the 21 st century." Coal still accounts for 30% of U.K.'s electricity, Rudd said. "If we take this step, we will be one of the first devel- oped countries to deliver on a commit- ment to take coal off the system," Rudd said. The idea is to replace the coal- fired plants with gas-fired plants, increase renewables over the next five years, and build new nuclear power sta- tions in the longer term. Grande Cache Mine to Idle December 24 has been set as the clos- ing day for one of Canada's under- ground operations, the Grande Cache met mine west of Edmonton, Alberta. About 220 have already received termi- nation notices; GCC President and CEO Max Wang cited "uncertainties of the continuously deteriorating global coal market" for its decision to cut costs and, thus, staff. He also called the idling a "temporary suspension," citing "unfavorable construction timing" for the company's new mine, though no timelines were outlined. Cloud Peak Enters Amendment to Transportation Agreement With BNSF Cloud Peak Energy, one of the largest U.S. coal producers and the only pure- play Powder River Basin (PRB) coal company, announced that Cloud Peak Energy Logistics entered into an amended transportation agreement with BNSF Railway to eliminate both par- ties' volume obligations for the period 2016 through 2018 in exchange for a series of payments. Under the amended agreement, Cloud Peak Energy made an upfront payment to BNSF and has the right to make payments from 2016 through 2018 replacing the previous take-or- pay commitments during this three-year period. The aggregate reduction in potential payments if they do not ship any export tons during this three-year period is substantially comparable to the reduction under the export terminal throughput amendment announced in October 2015 by Cloud Peak Energy. Except as amended, the original trans- portation agreement remains in place through the end of 2024. The parties will continue to meet reg- ularly going forward to discuss market conditions and any potential shipments and the terms for any shipments. If export shipments do not occur, it is expected that Spring Creek mine produc- tion volumes will be reduced accordingly. Eskom Terminates Supply Deal With Exxaro After two years of talks and disagree- ments on its 40-year-long coal supply agreement, Eskom has confirmed that the pair's longtime coal deal will not be renewed. The existing contract was due to expire this month, and Eskom con- firmed this week that it would no longer take coal as of December 31. Earlier this year, Eskom told Exxaro that the price for its coal, which Eskom used to fuel its Arnot power plant, was too high. Despite entering into a memoran- dum of understanding (MoU), negotia- tions dissolved; subsequently, Eskom advised Exxaro to commence closing the Arnot mine. Eskom has been reportedly tighten- ing its restrictions on CSAs because ini- tial agreed-upon costs are now less sus- tainable. Some media reports indicated Exxaro was charging R900 per metric ton (mt) or $62.62/mt. "We have been in discussion with Exxaro since 2013…they have not been able to supply us with the number of tons we had agreed to, yet they contin- ued to charge high prices," Eskom spokesman Khulu Phasiwe told Reuters . "Our plan is to exit from all our cost plus mines contracts and move to a buyer of coal and not a mine owner." Eskom officials noted in its confir- mation of the plan this week that it is continuing discussions with the com- pany to reach a joint closure solution. "We are conscious and concerned about the potential for negative consequences on Arnot mine employees," the com- pany said. Eskom, which is also in a dispute with Glencore's Optimum division in South Africa for a similar reason, will bid out a new contract, though officials did not provide a plan for timing. Alberta Government Completes Review of Tailings Dams The Alberta Energy Regulator has wrapped up an investigation of nearly three dozen coal mine water structures across the province and has found them all to be without significant deficien- cies except for one. "One structure, owned by Coal Valley Resources, was found to be significant- ly deficient," AER Executive Vice President of Operations Kirk Bailey said. "Inspectors found erosion within the structure, which was causing a free flow of water from a partially reclaimed pit, which is a contravention of several Environmental Protection and Enhance- ment Act approval conditions." The mine pond, which is located near Edson, is now under investigation. Bailey said the AER will release the probe's results when complete. DECEMBER 2015 • E&MJ; 35 www.e-mj.com NEWS-THIS MONTH IN COAL

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