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'When rather than if' for new West Coast coal port
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12th November 2010
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TORONTO (miningweekly.com) - A new coal-export port facility on the US West Coast is "absolutely more than a pipedream", Cloud Peak Energy CEO Colin Marshall said on Thursday.

Cloud Peak produces coal from three big surface coal mines in the Powder River Basin, and would benefit from increased export capacity as it could send more coal to energy-hungry customers in Asia.

Other Powder River Basin producers, including top US coal miner Peabody Energy, have talked about the potential for a new export facility on the West Coast.

"I would say it is absolutely more than a pipe dream," Marshall said in a presentation at a conference hosted by Raymond James.

"There is a lot of real action in terms of people trying to pull that together."

There is also real demand from Asian utilities, particularly in Korea, which are concerned about future coal supply, he said.

"They would like to be assured of coal supply in the long term, because they are building power stations that obviously are going to run for a long time," Marshall said.

"So I think it's very real, it's a question of when rather than if," he said.

"Obviously, everyone is talking to everyone else about it."

PRB coal is particularly low cost to mine, but has historically been sold to domestic power utilities because of the high transport costs to ship it to the coast and then to export markets.

Cloud Peak expects to ship three-million tons of coal from its Spring Creek mine through the existing Westshore terminal this year, and plans on exporting another three-million tons next year, Marshall said on Thursday.

However, the Westshore facility is battling capacity constraints as exports of both metallurgical and thermal coal rise, and Cloud Peak would be "very supportive of someone getting the pieces together to expand that capacity", he said.

Peabody said in June that it had narrowed down potential sites for a West Coast port, and had begun detailed engineering work.
It was also holding discussions with customers and counterparties from Asia that might be interested in participating in the project, president Rick Navarre said in a presentation at the time.

Marshall confirmed that the company is also seeing increasing interest for its PRB coal from utilities in the eastern US, as less material is available from their traditional Central Appalachia sources.

"It's not a tidal wave of coal going east," but there are certainly utilities that previously had no interest in PRB coal starting to ask for price quotes, he said.

Cloud Peak Energy started trading on the NYSE in November 2009, after Rio Tinto sold 30,6-million shares in the company in an initial public offering.

The company expects to sell 94-million tons this year, all of which is already contracted.

 

Edited by: Liezel Hill

 

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