February 7, 2019 Read More →

Peabody says it will close Kayenta mine in Arizona by October

E&E News:

Peabody Energy Corp. said yesterday it will shut down an Arizona coal mine by October as time runs out to find a buyer for its only customer, one of the West’s largest coal plants.

America’s top coal company said it would cease operations at the Kayenta mine on the Navajo and Hopi reservations in the third quarter of this year in anticipation of the Navajo Generating Station’s (NGS) scheduled closure in December. All coal burned at NGS comes from the Kayenta mine.

The news reflects the grim state of U.S. coal markets, where demand has fallen in response to a wave of power plant closures last year. The St. Louis-based company said it also intends to cut production 10 percent this year at the North Antelope Rochelle mine in Wyoming, the nation’s biggest coal-producing operation.

The announcement represented an ominous sign for NGS, a 2,250-megawatt coal plant outside Page, Ariz. Peabody has been a driving force for keeping the plant open, spearheading efforts to find a buyer and coordinating rallies in Washington and Phoenix to generate public support for the economically distressed facility.

The Navajo Generating Station emerged as a test of the Trump administration’s promise to aid the coal industry after four utilities with an ownership stake in the plant announced its retirement in 2017.

A buyer interested in acquiring the facility backed out last year. And with Democrats now in control of the House, the prospects for congressional intervention have all but disappeared.

The last hope for the facility is the Navajo Transitional Energy Co. (NTEC). The tribal-owned energy company has expressed interest in buying NGS and Kayenta.

NTEC has coal experience. It took over the Navajo mine in New Mexico from BHP Billiton Ltd. in 2017 and recently purchased a 7 percent stake in two units at the Four Corners Generating Station, a large coal station near Farmington, N.M.

Institute for Energy Economics and Financial Analysis (IEEFA) research editor Karl Cates said an NTEC purchase would be “catastrophic” if the tribe gets stuck with the massive cleanup liabilities at both the mine and plant.

“It’s a big mess that the owners of the power plant would love to walk away [from],” Cates said. “It’s a big mess that Peabody Energy would love to walk away from.”

The Salt River Project, NGS’s majority owner and operator, has said it is willing to sell the facility, but a deal must be completed before its lease with the Navajo Nation expires at the end of the year.

Peabody’s announcement “is consistent with our stated shutdown plans,” said Scott Harelson, a spokesman for the Salt River Project (SRP).

($) E&E News: Peabody to close mine linked to troubled power plant

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