Published: May 1, 2020 |

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Its corporate parent might be in bankruptcy protection fighting off impatient creditors, but a Utah coal producer is seeking to expand its federal lease holdings by 5,500 acres around an Emery County mine.

The Bureau of Land Management last week released an environmental review of the first of two proposed leases sought by UtahAmerican Energy that would extend the life of the Lila Canyon Mine, whose current reserves under lease are expected to run out in 2026 at current production levels. Up to 9.1 million tons of high-quality coal can be extracted from the 1,273 acres on the eastern periphery of its existing leasehold in the Book Cliffs south of Sunnyside, extending operations there for three years.

The BLM, meanwhile, continues to study UtahAmerican’s application to lease the 4,232-acre Williams Draw tract immediately south of the mine.

UtahAmerican’s parent is Ohio-based Murray Energy Corp., the nation’s largest coal company founded by coal magnate Bob Murray. The firm filed for Chapter 11 bankruptcy in October in the face of a long-standing drop in demand predating the coronavirus crisis. According to news reports, Murray Energy is preparing to cede control of its assets to its lenders and could face liquidation. Murray has asked the bankruptcy court to let it walk away from health care obligations of up to $6 million a month, according to the Pittsburgh Post-Gazette.

Given the financial peril UtahAmerican’s owner faces, observers posed, why would it consider investing millions expanding the footprint of the Lila Canyon mine?

The world wants Utah coal, according to Brian Somers, president of the Utah Mining Association, who contends it’s not fair to peg Utah’s coal industry in the same category as the troubled Appalachian mines.

“Utah has some of the most efficient coal mines in the country — all of which are still operating despite the current crisis— and the greatest coal on earth,” said Somers.

“Utah coal operators are seeking to expand for the simple reasons that Utahns rely on coal to generate 66% of their inexpensive and reliable electricity, and because Utah coal commands a premium in international export markets where demand continues to grow,” added Somers.

According the U.S. Mine Safety and Health Administration, Lila Canyon has ratcheted up its production, hitting 3.7 million tons in 2019, much of it burned in Emery County’s Hunter and Huntington power plants. If the mine produces from the proposed lease areas, some and possibly all of that coal could get shipped by rail to a coastal terminal for export, according to the environmental review released last week and open for public comment through May 25.

Source: Salt Lake Tribune

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