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MINING NEWS: Usibelli sends coal test shipment to Chile Alaska’s only commercial coal producer will send shipment to northern Chile power plant through agreement with Glencore Patricia Liles Mining News Editor
Usibelli Coal Mine Inc., Alaska’s only commercial coal producer, will send a shipment of its Healy coal south this fall to be test burned in a power plant operation in Chile, opening the door to a potential new international market.
The test supply contract was signed with Glencore Ltd., a leader in the international coal trade business, the company said in a July 20 press release.
Usibelli currently ships about 400,000 tons of coal to South Korea for consumption in an electric generation plant. This international customer has purchased more then 17 million tons of Alaskan coal since 1984.
With more than 100 years worth of reserves on its coal leases in Interior Alaska, Usibelli has long looked to expand its export business. Recent changes in energy markets appear to be helping in that effort.
A near-doubling of coal prices on the Pacific Rim within the last year has made Usibelli’s coal more attractive, according to Steve Denton, vice president of business development at Usibelli.
“The price of coal in the Pacific Rim has dramatically increased during the last year. That’s creating an interest in looking for new coal sources,” he said on July 21. “We’ve been getting inquiries from a lot of potential customers.”
For example, Australian coal prices have jumped from the mid $20s to $30 per ton up to $55 to $60 per ton, Denton said.
One factor driving that jump is an increase in consumption within the Pacific Rim. “China’s economy is booming and they are rapidly consuming more and more of the coal they produce,” Denton said. “A supply shortage is creeping into the marketplace.” Cleaner burning coal In addition, Healy coal is known for its extremely low sulfur content, averaging about 0.17 percent, whereas the normal range is 1 to 2 percent, or higher.
“Usibelli coal is among the lowest sulfur coal produced in the world and noted as the lowest sulfur coal in the nation by the Environmental Protection Agency,” Usibelli said on its website. “Other environmental benefits include low nitrogen content, high calcium content and excellent performance characteristics in equipment designed to clean exhaust gas emissions.”
Healy coal’s main drawback is a high moisture content, averaging about 25 percent. That means that for every four tons of coal shipped, one ton is water. Raw, untreated Healy coal averages about 7,800 Btu, on the lower end of the spectrum, although that energy content bumps up considerably when it is dried.
Usibelli’s coal is also difficult to grind, Denton said, a factor that will be considered and evaluated during the initial tests in Chile. Test shipment this fall The initial shipment of 45,000 metric tons of Usibelli’s coal will be transported to the northern Chile power plant by ship, scheduled to arrive for loading in Seward in the last half of August, the company said in its press release.
Allowing for roughly two weeks or more for transit time, the initial coal test should be completed by the end of September, Denton said.
If the coal in the first shipment proves to be compatible with the customer’s boilers, there is an option for a second shipment of the same size in November, the company said.
“This is a very significant event for our company,” said Joe Usibelli Jr., president of Usibelli Coal Mine, in the press release. “Not only is this our first shipment to South America, it is also a great opportunity to establish a relationship with Glencore.”
In the past, the company has sent test shipments of coal to Taiwan and Russia, ranging in size from 20,000 to 70,000 tons, Denton said. This will be the company’s first test shipment of its ultra-low sulfur coal to a customer on the eastern Pacific Rim.
“We think that (with) all those power plants on the West Coast of the U.S., in Mexico, Nicaragua, Peru — all along the West Coast of North and South America — maybe someone will take notice of coal from Alaska going by,” Denton said. “We’re a lot closer to them than many other suppliers.” Existing export contract The family-owned and operated business has a 20-year history of coal exporting in the Pacific Rim. In past years, it has shipped up to 750,000 tons annually to South Korea. Usibelli uses Hyundai Merchant Marine as the ocean-going freight service and as the sales company to deal directly with the Asian customers, shipping the coal south from Healy to the Port of Seward via the Alaska Railroad.
Usibelli’s export business halted temporarily in 2002 and early 2003, when a contract extension was not renewed. Since then, the port facilities have been acquired by the Alaska Railroad, thanks to a $9.6 million federal grant, thereby reducing ongoing debt and lowering shipping costs. Usibelli resumed its South Korea exports in late 2003. Long mine life According to the company’s website, Usibelli has about 32,500 acres of land in Interior Alaska under state lease or sub-lease provisions. About 50 million tons of coal is already permitted for mining, while more than 100 million tons of proven reserves are located at depths amenable to surface mining.
Approximately 250 million short tons are contained in an indicated in-place surface mineable coal resource.
Usibelli could “mine for another 100 years at today’s production levels on their active coal leases and still have only scratched the surface,” the company said.
Usibelli’s workforce of about 85 produces 1.2 million tons of coal annually. About 800,000 tons of coal provides fuel for power generation and heat throughout Interior Alaska.
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