Even At Bargain Basement Prices, No Coal Company Bids At Auction

Update September 19:  

A second coal sale was cancelled because the auction drew the lowest bid in 15 years – just 21 cents a ton! That’s more than 20% lower than bids a year ago, purportedly because of low natural gas prices and looming carbon regulations from the EPA.

"This represents a high degree of uncertainty about whether coal will stay robust in the future," Mark Northam, director of the University of Wyoming’s School of Energy Resources, told Bloomberg. 

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For the first time, the Department of Interior can’t even give our coal away at bargain basement prices – it did not receive even one bid on the auction it held this week.

Department of Interior’s Bureau of Land Management (BLM) held an auction to lease 149 million tons of coal to be mined on public land in Cheyenne, Wyoming, known as Powder River Basin.

Powder River Basin, which straddles the Wyoming-Montana border, is the largest coal mining region in the U.S.

Even though that land is leased at notoriously low prices – about $1 per ton – it’s not economically viable "given current market conditions and the uncertain political and regulatory environment of coal and coal-fired electricity," says coal company Cloud Peak Energy.

The energy value of the coal at this tract is lower than its other mines and the company is considering cutting production at the Cordero Rojo mine – the third largest US coal mine – by 10 million tons a year, beginning in 2015, reports Wyoming Star Tribune.

Nearly 5 billion tons of federal coal is being leased or sold in the Powder River Basin, even as the domestic market for the resource is tanking, notes Sierra Club. In June, BLM auctioned 21 million tons of coal in Colorado to a company that
runs one of the dirtiest coal plants in the region. About 40% of the coal mined in the US comes from our public lands – more auctions are planned.

Coal train

Of course, much of the coal produced in the US these days isn’t used by us, it is exported mostly to China.

If the Obama Administration was truly on board with tackling climate change as it claims, it would no longer lease coal from our public lands. 

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