US coal miners’ last-ditch hope for shipping big volumes to Asia has crumbled as the developer of a sprawling export terminal abandons its project on the Pacific coast.
The Millennium Bulk Terminal would have loaded 44m metric tonnes a year of thermal coal for export to electric utilities — a potential boost for producers reeling from the decline of coal-fired power generation in the US.
But the project’s bankrupt owner on Saturday pulled the plug, making it the last of more than half a dozen proposed west coast coal ports never to be built. “It’s the end of the pipe dream that Asia can save the US coal industry,” said Clark Williams-Derry, analyst at the Institute for Energy Economics and Financial Analysis, a research group that favours clean energy.
The terminal’s demise is a victory for climate activists who fought to hinder coal exports and their associated carbon emissions. It is a blow to the economies of Wyoming and Montana, whose open-pit mines in the Powder River Basin would have supplied the facility on the Columbia river in coastal Washington state.
It also runs counter to the pro-coal agenda of outgoing president Donald Trump.
US coal producers began to pursue deepwater export terminals as cheap natural gas and environmental rules undermined demand from domestic coal-fired power plants. Millennium was originally a joint venture of Ambre Energy of Australia and the US miner Arch Coal. “We like our competitive position going forward in the Asian markets,” an Arch executive said in 2011.
The market has changed. Arch is now trying to sell its Powder River Basin mines and has removed the word “coal” from its name.
The Millennium project’s current owner, the mining company Lighthouse Resources, filed for bankruptcy protection in December. The company on Saturday relinquished the site to land owner Northwest Alloys, a subsidiary of the aluminium maker Alcoa. Alcoa said it would evaluate plans for the location, making no mention of coal.
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“About 10 years ago there were maybe a half-dozen major terminals proposed for the west coast because of some excitement about PRB coal. All those have fallen through,” said Matt Preston, research director for North American coal markets at Wood Mackenzie, a consultancy.
US coal exports peaked at 125.7m short tons in 2012. In 2019 they had fallen to 93.7m short tons and the majority was metallurgical coal used in steelmaking, not thermal coal burnt by power plants to generate electricity, according to the US Energy Information Administration. In the first nine months of 2020 US coal exports were down 32 per cent on the year.
Pacific coast ports are the closest and cheapest route to Asia for the Powder River Basin. The basin’s 16 mines produced 294.2m short tons of coal last year, or 42 per cent of US supply.
Yet existing ports on the US west coast can only export about 13m tons a year, while a nearby terminal in Vancouver, British Columbia can handle another 33m tons, according to data from the National Mining Association.
New port projects encountered strong opposition. A plan to export coal from Utah through Oakland, California, was blocked by the local government and its developer filed for bankruptcy late last year, IEEFA reported.
The Trump’s administration weakened regulations on US coal plants, giving a boost to an industry that former president Barack Obama had hoped to wind down in order to cut harmful emissions that drive global warming © AFP/Getty Images
Washington state, led by the climate-activist governor Jay Inslee, denied Millennium a water-quality permit in 2017. Lighthouse Resources sued and was joined by the governments of Montana and Wyoming, which argued that Mr Inslee was unfairly restraining trade.
“Without port access, the landlocked states of Wyoming and Montana are unable to access overseas markets for one of the states’ most important commodities and one of the biggest drivers of their economies,” the states said in their complaint to the US Supreme Court. “Washington is seeking to regulate conduct — the export and combustion of coal in foreign markets — that is wholly outside its borders.” The court is yet to rule in the case.
The collapse of the Millennium project comes as Asian thermal coal markets stage a rally driven by supply shortfalls in Colombia and a winter cold snap in east Asia. The price of high-energy Australian coal — the benchmark for the vast Asian market — almost doubled late last year to $90 a tonne, according to Argus Media.
Yet seaborne coal prices were well above $100 a tonne when developers first proposed their export projects on the US west coast. The future of coal is in question as more countries pledge to shift to cleaner alternatives such as natural gas and solar power.
“Korea, Japan, the Philippines, Vietnam, Egypt and Bangladesh are just a few of the countries that have changed their vision of the role of coal power generation in the future,” the International Energy Agency said in a recent electricity report.
Source: Economy - ft.com
