Coal mine liquidation sale

Oxbow Mining plans a June 25 auction of machinery and equipment from the idle Elk Creek underground coal mine in Somerset. It once employed hundreds of miners, but ceased operations in late 2013 after a fire about a year earlier stranded its longwall mining machinery in part of the mine. Oxbow has been able to recover the longwall equipment.



Oxbox Mining has federal coal leases at Elk Creek in Somerset and has drilled exploratory test holes in the Oak Mesa area north of Hotchkiss. However, “with the market conditions the way they are, we have not pursued the leasing of the coal,” said company President Mike Ludlow.



Oxbow Mining is selling machinery and equipment from its idle Elk Creek underground coal mine in Somerset, but continues to hope to eventually reopen the site.

The company already has sold some items, and plans an auction June 25.

Oxbow Mining President Mike Ludlow said the sale doesn’t mean Oxbow is giving up on trying to resume mining there.

“If the market will support the coal mining in the area and environmental regulations will allow it, then we certainly would like to take advantage of a business opportunity” if one arises, Ludlow said.

But Mark Squillace, a University of Colorado law professor who during the Clinton administration served as special assistant to the solicitor in the Interior Department, said mines are closing or shrinking all over the country.

“It would be surprising if they would reopen that mine. The trend is toward closing mines, not opening new mines,” said Squillace.

Oxbow ceased mining in late 2013 after a mine fire about a year earlier stranded its longwall mining machinery in part of the mine. It once employed hundreds of miners.

It has been unable to recover the longwall equipment, which can cost tens of millions of dollars. The longwall operation enabled the mine to produce millions of tons of coal a year.

Ludlow said what equipment Oxbow was able to recover from the mine is being sold.

Oxbow already has sold some supply vehicles, continuous mining machines that are used to open up areas to install longwall machinery, ventilation equipment and other items, Ludlow said. The rest will be offered at the auction.

“Mining equipment, like any other equipment, doesn’t get better just sitting outside. We feel that it’s a benefit to the corporation to sell the equipment that we have right now, and if market conditions improve and look better then we would reinvest in additional mining equipment as needed,” Ludlow said.

Ludlow said the equipment isn’t protected from the weather, and improvements in technology also could make equipment outdated.

“So we feel it’s best to realize what monetary gains we can out of the equipment now,” he said.

Despite the coal industry being 
depressed, “we’ve been able to place some of the equipment with people who have had a need,” he said.

These include companies in the Midwest and West.

According to a March inspection report of the Oxbow mine by the Colorado Division of Reclamation, Mining and Safety, some equipment has been sold to the West Elk Mine, which Arch Coal operates in the Somerset area. The last of the Oxbow mine’s coal stockpile was sold in February.

The mine employs about 10 people now. Ludlow declined comment on whether that number might change after the auction.

Oxbow’s state mine permit remains active as it continues to hope to revive operations. Ludlow said he knows of no requirement to undertake final reclamation there as long as Oxbow is complying with things such as bonding requirements and maintaining the property in an environmentally compliant state.

Oxbow has federal coal leases at Elk Creek, and has drilled exploratory test holes in the Oak Mesa area north of Hotchkiss. Ludlow said that work confirmed the existence of minable coal reserves underground.

“With the market conditions the way they are, we have not pursued the leasing of the coal,” Ludlow said.

The Elk Creek shutdown and Bowie Resources Partners’ elimination of 150 jobs last year at the Bowie No. 2 mine near Paonia have hit the North Fork Valley economy hard.

Last year, Oxbow owner Bill Koch spoke with concern about the state of the domestic coal industry, saying that “a lot of the profit has gone out of” it thanks in part to increased use of natural gas for electricity generation.

Ludlow said he can’t speculate about when the market might improve.

Squillace said some U.S. coal mines are likely to continue operating for some time because they’ve got supply contracts with power utilities, but mines without those contracts aren’t likely to get new ones, and running a mine that sells solely on the spot market isn’t a good investment these days.

The problem for the coal mine industry is that coal-fired power plants aren’t being built anymore, and many such plants are closing.

“That trend is likely to continue, and so I just don’t see any good opportunities for opening up new markets for coal,” Squillace said.

Many utilities are relying increasingly on plants powered by cleaner-burning natural gas, at a time of increasing regulation of pollution from power plants and a new abundance of gas following the domestic boom in shale drilling.

Squillace said operating mines all over the country already have excess production capacity, and it seems that utilities looking to buy coal can get a better price from these mines than from a start-up operation that must invest in equipment.

There’s a lot of excess production capacity at mines in the Powder River Basin, and it can be mined relatively cheaply, Squillace said. The Powder River Basin is in Wyoming and Montana, and surface coal mining there is cheaper to carry out than underground mining in places like the North Fork Valley.

While domestic coal producers have increasingly been looking to overseas exports as an emerging market as countries like China and India built coal-fired plants, Squillace said those countries are starting to turn away from coal power as well. He said hundreds of coal mines in China are being closed, and the country is aggressively pursuing sources such as wind and solar.

“China is all in with renewables right now,” he said.

Oxbow Mining is selling machinery and equipment from its idle Elk Creek underground coal mine in Somerset, but continues to hope to eventually reopen the site.

The company already has sold some items, and plans an auction June 25.

Oxbow Mining president Mike Ludlow said the sale doesn’t mean Oxbow is giving up on trying to resume mining there.

“If the market will support the coal mining in the area and environmental regulations will allow it, then we certainly would like to take advantage of a business opportunity” if one arises, Ludlow said.

But Mark Squillace, a University of Colorado law professor who during the Clinton administration served as special assistant to the solicitor in the Interior Department, said mines are closing or shrinking all over the country.

“It would be surprising if they would reopen that mine. The trend is toward closing mines, not opening new mines,” said Squillace.

Oxbow ceased mining in late 2013 after a mine fire about a year earlier stranded its longwall mining machinery in part of the mine. It once employed hundreds of miners.

It has been unable to recover the longwall equipment, which can cost tens of millions of dollars. The longwall operation enabled the mine to produce millions of tons of coal a year.

Ludlow said what equipment Oxbow was able to recover from the mine is being sold.

Oxbow already has sold some supply vehicles, continuous mining machines that are used to open up areas to install longwall machinery, ventilation equipment and other items, Ludlow said. The rest will be offered at the auction.

“Mining equipment, like any other equipment, doesn’t get better just sitting outside. We feel that it’s a benefit to the corporation to sell the equipment that we have right now, and if market conditions improve and look better then we would reinvest in additional mining equipment as needed,” Ludlow said.

Ludlow said the equipment isn’t protected from the weather, and improvements in technology also could make equipment outdated.

“So we feel it’s best to realize what monetary gains we can out of the equipment now,” he said.

Despite the coal industry being depressed, “we’ve been able to place some of the equipment with people who have had a need,” he said.

These include companies in the Midwest and West.

According to a March inspection report of the Oxbow mine by the Colorado Division of Reclamation, Mining and Safety, some equipment has been sold to the West Elk Mine, which Arch Coal operates in the Somerset area. The last of the Oxbow mine’s coal stockpile was sold in February.

The mine employs about 10 people now. Ludlow declined comment on whether that number might change after the auction.

Oxbow’s state mine permit remains active as it continues to hope to revive operations. Ludlow said he knows of no requirement to undertake final reclamation there as long as Oxbow is complying with things such as bonding requirements and maintaining the property in an environmentally compliant state.

Oxbow has federal coal leases at Elk Creek, and has drilled exploratory test holes in the Oak Mesa area north of Hotchkiss. Ludlow said that work confirmed the existence of minable coal reserves underground.

“With the market conditions the way they are, we have not pursued the leasing of the coal,” Ludlow said.

The Elk Creek shutdown and Bowie Resources Partners’ elimination of 150 jobs last year at the Bowie #2 mine near Paonia have hit the North Fork Valley economy hard.

Last year, Oxbow owner Bill Koch spoke with concern about the state of the domestic coal industry, saying that “a lot of the profit has gone out of” it thanks in part to increased use of natural gas for electricity generation.

Ludlow said he can’t speculate about when the market might improve.

Squillace said some U.S. coal mines are likely to continue operating for some time because they’ve got supply contracts with power utilities, but mines without those contracts aren’t likely to get new ones, and running a mine that sells solely on the spot market isn’t a good investment these days.

The problem for the coal mine industry is that coal-fired power plants aren’t being built anymore, and many such plants are closing.

“That trend is likely to continue, and so I just don’t see any good opportunities for opening up new markets for coal,” Squillace said.

Many utilities are relying increasingly on plants powered by cleaner-burning natural gas, at a time of increasing regulation of pollution from power plants and a new abundance of gas following the domestic boom in shale drilling.

Squillace said operating mines all over the country already have excess production capacity, and it seems that utilities looking to buy coal can get a better price from these mines than from a start-up operation that must invest in equipment.

There’s a lot of excess production capacity at mines in the Powder River Basin, and it can be mined relatively cheaply, Squillace said. The Powder River Basin is in Wyoming and Montana, and surface coal mining there is cheaper to carry out than underground mining in places like the North Fork Valley.

While domestic coal producers have increasingly been looking to overseas exports as an emerging market as countries like China and India built coal-fired plants, Squillace said those countries are starting to turn away from coal power as well. He said hundreds of coal mines in China are being closed, and the country is aggressively pursuing sources such as wind and solar.

“China is all in with renewables right now,” he said.


COMMENTS

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WAKE UP AMERICA! we will continue to see this type of closure go on and with it the cost of electricity will rise astronomically. The bicycle generator and wind mill crowd will think that is great until Grandma, the sick, the poor, and the lowly that they constantly promote find it just too hard to survive without heat, lights, and safety due to triple the cost of electricity. All courtesy of the EPA, in WA D.C. in their warm and comfortable tax dollar paid for amenities. Mr. Bright

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