Colorado coal mine expansion approved by BLM

June 15, 2020

The U.S. Bureau of Land Management announced that it had approved GCC Energy’s lease for its expansion of the King II coal mine near Durango, CO.

The Durango Herald reported that the lease is for a 981-ha (2,426-acre) expansion for the mine about 32 km (20 miles) west of Durango and is estimated to contain about 8.6 Mt (9.5 million st) of recoverable coal.

“The coal reserves in this tract are important for infrastructure projects and will generate millions of dollars for Colorado’s economy,” the BLM’s Colorado Director Jamie Connell said in a statement. “BLM supports working landscapes across the West and issuing this lease is a fine example of that.”

GCC Energy has operated the coal mine near Hesperus since 2007. But in preparation for its coal reserves to run out, it asked the BLM for the expansion to extend the life of the mine by about 20 years.

The BLM approved the expansion in October, but as a formality, was required to go through a bidding process. In April, only one bid was received, from GCC Energy, for $3,434,400.

With the lease, the BLM said GCC Energy will pay an annual rental of $3 per acre, along with a royalty payment of 8 percent of the value of coal produced. Company officials have previously said the mine pays $5 million a year in local, state and federal taxes.

“The BLM lease is one step in a long journey to continue to operate the King II mine,” Gina Lotito, vice president of energy and sustainability, said in a statement. “GCC will continue to work with the county, state and federal organizations to ensure we are good neighbors in the community.”

There was little public opposition to the proposed expansion. The BLM said it analyzed the potential impacts of leasing the coal resource in an environmental assessment and determined in October a “finding of no significant impact,” which means a larger analysis was not required.

Most of the coal extracted at King II goes to GCC Energy’s parent company – Grupo Cementos de Chihuahua, a multimillion-dollar international cement manufacturer based in Chihuahua, Mexico – for use in cement production.

Since the company took over the King II mine, it has produced an average of about 635 kt/a (700,000 stpy). But increasingly, production has waned as the industry takes a downturn. In 2019, GCC Energy extracted about 640 kt (658,000 st) of coal, according to state records.

 

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