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The Sanpete Messenger

Things get worse for Utah coal

Coal trucks and other vehicles constantly travel Convulsion Road to support the Sufco Coal mine east of Salina City, which is in the process of a 120-acre expansion. With coal production moving forward at a good pace in Utah thanks to coal producing giant, Wolverine Fuels, appearances are deceptive, since the company is scrambling to sort out a rapidly escalating problem with exporting their coal.

 

Things get worse for Utah coal

 

By Robert Stevens 

Managing editor

1-30-2020

 

Things are looking bad for Utah coal.

A vital export gateway for Utah coal mines is being shut, and another proposed facility that was planned to expand export infrastructure for Utah’s coal producers is mired deeper than ever in setbacks and challenges.

On Tuesday, Jan. 14, the Bay Area municipality of Richmond City, Calif. passed a unanimous vote that puts in place a three-year phase-out plan for the city’s one and only coal handler, the Levin-Richmond Terminal. The plan effectively becomes a ban on storage and handling of coal in the city, and the terminal is being given three years to shut down operations.

About 1 million tons of Utah coal is exported yearly to Asian markets from the terminal after arriving via rail, making it a vital component in getting Utah coal to markets willing to pay for it.

Levin-Richmond terminal vice president Jim Holland says the ban will put the terminal out of business, and claims litigation is in the works. Utah’s No. 1 coal producer, Wolverine Fuels is also threatening a lawsuit, made public in a letter to the Richmond City Council.

But the Richmond coal ban is just another in a series of setbacks for Utah coal interests. The City of Oakland reneged on an agreement with California developer Phil Tagami to build a bulk export terminal on an old military base after claiming to have concerns about potential health and safety issues due to the storage and handling of coal in their city.

A federal judge ruled that Oakland failed to demonstrate the export terminal posed enough of a threat to the public to go back on their agreement with Tagami, but the city has continued to impede the terminal by revoking the lease and claiming the development contract is terminated due to Tagami’s inability to move forward with the development. Oakland Mayor Libby Schaff told Tagami in an email, “Never ever will you ship coal from my city.”

Now, Insight Terminal Solutions, the company who was financially backing the Oakland bulk terminal, has filed for Chapter 11 bankruptcy protection. Insight is run by John Siegel, former chairman of Wolverine Fuels, formerly known as Bowie Resource Partners. Siegel planned the Oakland bulk terminal with Tagami to create an export path for the company’s coal.

Despite the setbacks with the City of Oakland and the bulk terminal, Wolverine Fuels has still been moving steadily forward with coal production in its Sufco and Dugout mines, as well as a planned 120-acre expansion.

The phase out plan for Richmond’s terminal creates some real problems for Wolverine, who exports their coal by first shipping to the inland Port of Stockton on the Sacramento River in California. The ships get loaded to two-thirds capacity in Stockton and then go from there to the deeper waters of Richmond, where they are topped off.

The proposed Oakland terminal was going to handle 10 million tons of coal a year, but with city leadership halting the project, an export bottleneck is quickly approaching.

Despite Insight Terminal Solution’s bankruptcy filing, the Oakland port may still have financial backing from Japanese utility company Jera Co., who has committed to buying 4.4 million tons of the coal to be shipped through the Oakland terminal.

According to a declaration in Siegel’s bankruptcy filings for Insight, Jera is considering financing the construction costs for the terminal to ensure the company’s coal needs are filled.

None of the support from Jera will matter much if Tagami is unable to push the Oakland terminal project forward. A lawyer for Insight Terminal Solutions has gone on record with a statement that the company is willing to consider an agreement with the city to bring less than 10 million tons of coal through the port each year if the project is allowed to move forward unfettered.

Some efforts are being made to sort out another route to export Utah coal to Asian markets. More than one meeting has taken place in the last few years between Utah lawmakers and diplomats in Mexico. The next stop for Utah coal might be across the border.