Paonia coal mine has links with energy-starved China

International interest in Colorado coal is a welcome economic signal, but it doesn’t mean clean coal from the northwest will soon be sent across the Pacific Ocean, the head of the mining association said.

State officials are pinning some hopes for an economic recovery on exports of 3 million tons of coal annually from the New Elk Mine near Trinidad to be used in steelmaking.

Markets for metallurgical coal, though, “won’t help existing mines in northwest Colorado that produce thermal or steam coal for electricity generation,” said Colorado Mining Association President Stuart Sanderson.

A company with links to energy-starved China, meanwhile, last fall loaned money and obtained options to buy into Bowie Resources, which then restarted work in Bowie Mine No. 2 near Paonia.

L&L Energy Inc. (Nasdaq: LLEN) said the agreement gave the company a valuable foothold in the international energy market, providing it with access to high-quality coal in the United States.

L&L has more than 1,000 employees and offices in Seattle,  Guangzhou and Shenzhen, China, Hong Kong and Taipei, Taiwan, and operates coal mines, as well as coking and coal-washing facilities, in the Yunnan and Guizhou provinces of China.

It’s not as though more coal wouldn’t be welcome in China. Many communities in central and northern China face electricity rationing as winter coal supplies have fallen short, The Associated Press reported.

The L&L link between Paonia and China, however, is unlikely to mean that clean coal dug out in Paonia will burn in Beijing, Sanderson said.

No Colorado coal is now shipped to China for steam use, “and it would take some major infrastructure changes to facilitate such shipments, including creating and expanding port capacity that does not currently exist,” Sanderson said.

Transportation costs also would be prohibitive, Sanderson said, and in any case, China can look to sources that are nearer, such as Australia and Indonesia, which has low-sulfur coals similar to those in Colorado.


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