Western Slope coal mines face uncertain future

Mike Moran
Business Times

These are challenging times for the coal industry in Western Colorado.

As political and economic pressure builds to force power plants to switch from coal to natural gas, coal miners nervously wonder what the future holds for production and employment.

And for a coal mine located north of Loma, that future is right around the corner. The planned closure of the Xcel Energy power plant at Cameo early next year will force the operators of the McClane Mine to find new customers for its coal. Xcel Energy currently is the one and only customer for that coal.

“We’re going to have to lay off part of our work force,” said Gary Isaac, manager of the McClane Mine. The mine employs 26 people and has been holding at that number for more than a year.

Still, Isaac holds out hope of eventually increasing staffing to as many as 60 next year. That’s partly because Rhino Energy, the company that owns the mine, is searching for new markets in the eastern United States. Rhino Energy also purchased a mine owned by Castle Valley Mining and located about 18 miles south of Price, Utah. In addition, Rhino Energy operates mines in Kentucky, West Virginia and Ohio.

Shipping Colorado coal to markets outside the state is nothing new. In fact, about two-thirds of coal mined in Colorado is shipped to other states and foreign markets, according to the Colorado Geological Survey.

Should Rhino Energy find new places in which to ship McClane Mine coal, it will do so from a rail line located at the former oil refinery near Fruita, Isaac said. “The markets are not going to be here,” he said. “We’ll ship it to places that commit to contracts.”

Meanwhile, the Red Cliff Mine, a coal mine proposed for an area near the McClane Mine, awaits federal approval. The Bureau of Land Management is reviewing  the potential environmental effects of the proposed mine, which also would be owned by Rhino Energy.

Isaac said the BLM hasn’t given the company a timetable, but he expects the process to take another two years. And it could be three or four years before the Red Cliff Mine actually opens, he said.

As recently as the summer of 2009, officials hoped to begin mining at Red Cliff in 2011. But that timeline now appears to be overly optimistic. Rhino Energy plans to employ as many as 250 people at the mine.

The closure of the Xcel power plant in Cameo actually will occur later than the utility initially had planned. Xcel announced last year it planned to close the plant because of its age and the expense associated with upgrading the facility. However, Xcel received economic incentives to install solar panels at the site as part of an experiment to test the feasibility of a hybrid solar and coal facility. The experiment is scheduled to end by January.