Permitting 'log jam' hangs over US coal sector

28th July 2009 By: Liezel Hill

TORONTO (miningweekly.com) – Ongoing delays in issuing permits for US coal mines, coupled with recent changes to the ways applications are evaluated, continue to have a negative effect on the nation's coal-mining industry, Patriot Coal CEO Richard Whiting said on Tuesday.

“There continues to be a log jam in the granting of mining permits by the Army Corps of Engineers under the Clean Water Act,” he told analysts and investors on a conference call.

For the most part, the delays are related to the Environmental Protection Agency's (EPA's) decision to weigh in more heavily in the Clean Water Act permitting process, and the EPA has also recently indicated it will become more involved in permitting at a state level.

Earlier this month, the EPA submitted a letter to the West Virginia Department of Environmental Protection, indicating its intent to review discharge permits associated with surface coal mining operations in the state of West Virginia.

“Clearly, these actions and delays make the permitting process more burdensome,” Whiting commented.

“They also threaten to reduce surface mining activity or, at a minimum, substantially lengthen the permitting process.”

Patriot has been waiting for some time for a permit pending on its Hobet mine, and now expects that the delay will impact on production at the operation next year.

Depending on if and when the permit is received, production could be between 500 000 t and one-million tons lower in 2010 as a result of the delay at Hobet.

The difficulties facing Patriot are “typical” of the industry overall, and, if the permitting challenges and delays continue, production in central Appalachia could decline “pretty quickly” over the next year or two, Whiting speculated.

To offset the regulatory challenges to its large, low-cost surface mines, the company is also focusing on potential underground mining at its operations.

“We asked our guys earlier in the year to roll up their sleeves and consider that” potential for exploiting underground reserves, Whiting said.

“It would be a travesty for these permits not to come through, but we are hedged to manage through it.

“But, we certainly will be fighting the hard fight and making our case that, where we are compliant with the laws of the land, we should be issued these permits.”

CLEAN ENERGY ACT

Patriot is also “concerned” about the new American Clean Energy and Security Act, which aims to establish an economywide greenhouse gas cap-and-trade system.

The legislation has passed through the House of Representatives and is now pending in Congress.

“In our view, it is not practical to implement a cap-and-trade system for carbon dioxide before the technology for carbon capture and sequestration is commercially available,” Whiting argued.

“This is a clear case of legislation being ahead of the available technology.”

Almost half of the electricity consumed in the US is currently generated from coal.