West Elk Mine helps state coal production rebound

The West Elk Mine led the state last year in production, at about 3.28 million tons, up from about 2.68 million tons the previous year. The state data shows 226 miners working there as of December.

Coming in second in production last year was the Deserado Mine, in western Rio Blanco County, which produced about 2.71 million tons, up from 2.4 million tons in 2020. That mine sells all its coal to the Bonanza power plant just across the Utah border.

The Colowyo and Trapper mines in Moffat County, which supply the Craig Station power plant outside Craig, produced about 2.2 million and 1.57 million tons respectively last year. The Foidel Creek Mine in Routt County produced about 1.74 million tons; the King II Mine in La Plata County, 466,410 tons; and the New Elk Mine in Las Animas County, 167,380 tons.

As of December, the seven mines employed a combined 957 miners. Last year’s production occurred with no fatalities taking place but 15 miners being injured. The most injuries, six, occurred at the West Elk Mine, the state data shows.

Thermal coal, which is produced in most of Colorado’s mines, is used in power production. Over the long term, thermal coal producers have faced market challenges as coal-fired power plants close due to concerns about environmental impacts and the availability of increasingly cheap renewable energy. But the thermal coal market has strengthened in the short term, something Arch Resources attributed in a news release last fall to countries struggling to secure sufficient supplies of energy to support economies quickly recovering after the downturn at the start of the pandemic.

Stan Dempsey, president of the Colorado Mining Association, said of West Elk, “They market their coal throughout the United States and around the world and I think they’ve responded to the uptick in the market for thermal coal that’s been documented I think in the last six months at least.”

Arch Coal said last fall that its production for this year at West Elk was effectively sold out. In a February release on its quarterly results it said it is approaching sold-out status at the mine for 2023 as well.

Dempsey cited factors such as natural gas supply issues in Europe and volatility in natural gas prices as also playing roles in the heightened demand for coal for power generation.

Over the longer term in Colorado, though, he noted the significant downturn that’s in store for coal production starting in 2025, with the planned shutdown of the first of three generating units at the Craig Station, which is operated by the Tri-State Generation and Transmission Association. The last unit there is to shut down by the end of 2029.

The Bonanza plant supplied by Deserado is under a legal agreement requiring its closure once it cumulatively burns 20 million tons of coal over a time period that started in 2020 and is expected to end around 2030.

Back in Colorado, Xcel Energy is to close its Hayden Station power plant, a customer for the nearby Foidel Creek Mine, by the end of 2029.

Dempsey said such developments will result in significantly diminished tax revenues.

He added, “Colorado’s on a very aggressive schedule to shutter coal-fired power plants and I’m not sure we have all the answers in terms of reliable supply” after that happens.

Utilities are facing pressure in Colorado and other states in the form of laws, regulations and consumer demand to convert to greater use of renewable power sources such as wind and solar. Those sources have become highly cost-competitive, though concerns remain about the ability of utilities to provide backup power when weather conditions reduce the output from wind and solar power.