Another month, another coal export project down the tubes. This time it’s the proposed Chuitna mine in Alaska, a controversial export project launched a few years ago near the peak in the Pacific Rim coal bubble. After submitting several thousand pages of permitting documentation, the project backers had no choice but to shelve the project after the main investor pulled out—no doubt disheartened that Asia’s formerly red-hot coal market has cooled off, making the costly new mine a financial dud.
It’s yet another sign that West Coast coal export projects—once a Wall Street darling—are now on the ropes. Just last month Cloud Peak Energy, a major coal producer in the vast Powder River Basin in Montana and Wyoming, revealed that it had jettisoned its long-term commitments to Asian exports. The company paid some money to exit its long-term shipping contracts, while simply abandoning its property interest in the now-canceled Gateway Pacific terminal outside of Bellingham, Washington.
Cloud Peak’s decision to withdraw from exports raises an important question: what will happen to the mines that Cloud Peak once counted on to supply its export ambitions?
For years Cloud Peak has sourced its export coal from the company’s Spring Creek mine in southern Montana. A few years back, when the company envisioned that it could ship tens of millions of tons of coal per year to Asian power plants, Cloud Peak started to develop two new export-mines near Spring Creek: the Youngs Creek mine in northern Wyoming, and the Big Metal project on Crow Nation territory in Montana.
But the collapse of Asian markets has placed all three of these mines in jeopardy.
The Spring Creek mine could be in for some rocky times starting in 2019. Cloud Peak still expects to export 5 million tons of Spring Creek coal in 2017 and 2018—but after that, the company will likely dip in and out of the export markets, shipping coal overseas only when prices are high. Meanwhile, Spring Creek only has a handful of domestic customers, many of whom are closing shop in the next 8 years.