Cloud Peak Energy looks to bring Youngs Creek Mine back into production

May 14, 2018

Cloud Peak Energy is among the U.S.-based coal mining companies that sees opportunities in the export market and is attempting to revise its permit for the Youngs Creek mine in Wyoming that was initially issued in 1977 to provide more export coal to the Asian market.

The Youngs Creek mine is on the border of Wyoming and Montana and near the companies’ existing Cordero Rojo and Antelope mines in Wyoming and the Spring Creek mine in Montana. Cloud Peak is one of the few Powder River Basin companies exporting coal to Asian markets, via a port in Canada.

The Casper Star Tribune reported that Cloud Peak hopes permitting will be complete by late this year. Potentially Youngs Creek could produce coal by 2019, ultimately providing the firm with up to 907 kt/a (1 million stpy), according to Cloud Peak.

Domestic demand for coal has continued to slump in recent years. Nationally, coal plants have been retiring early as demand declines. The Energy Information Administration projects coal’s portion of the national electricity mix could fall to 29 percent this year.

Wyoming coal producers have turned an eye toward the export market and the proposal to bring Youngs Creek back online has the support of Wyoming gubernatorial hopeful Sam Galeotos who recently filed his support for the mine, noting Cloud Peak’s strong safety record. He also plugged for the Asian markets. Cloud Peak has only tapped Asia with its Spring Creek coal, just across the border from the Youngs Creek site.

“This proposed mine gives Wyoming the opportunity to extract high energy coal for use in Asian markets via the Pacific Northwest,” Galeotos said. “These markets are ripe for more coal imports.”

Cloud Peak CEO Colin Marshall noted in an investor’s call earlier this month that many hope the wave of coal-fired power plant closures is coming to an end. But Marshall and others acknowledge the structural decline in the national coal market.

The hope to send coal elsewhere has only intensified for operators, miners and coal-dependent business owners in the Powder River Basin, who are desperate for new long-term customers.

There is a demand internationally. Though coal-burning plants continue to shutter in the U.S., countries like South Korea and Japan continue to build. Middle Eastern countries like Iran and Pakistan also continue to add new coal-fired plants, according to the Energy Information Administration.

But, the economics remain a problem for Wyoming mines. Hotter value coal from Montana mines — which are geographically closer to ports — continue to be the Powder River Basin source for Asian-bound coal. And the economics of coal in Wyoming are currently less than ideal.
Cloud Peak is billing Youngs Creek as part of its Spring Creek mining complex, potentially adding higher heat Wyoming coal to its marginal Asian business in 2020 to 2021.

In 2012, the coal firm bought the Youngs Creek Mining Company from Chevron for $300 million, which included 450 million tons of in-place coal and 38,800 surface acres. It has sat idle since the mid aughts, when operations and reclamation activities ceased.

The company has also applied for a permit in recent years from the Army Corps of Engineers. According to that application, mining would impact two waterways as early as 2020. Post mining reclamation was slated to begin in 2051.


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