Trump offers federal coal to industry awash in reserves

Tue Mar 28, 2017 6:07pm EDT
 
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By Timothy Gardner and Richard Valdmanis

WASHINGTON (Reuters) - U.S. President Donald Trump's administration has billed his move to reopen federal lands to new coal leases as a win for miners seeking to expand production. But a review of company filings shows that coal miners with the most to gain already have enough leases in hand to last well over a decade.

Trump signed a decree on Tuesday to reverse former President Barack Obama's 2016 ban on new federal coal leases, part of a wide-ranging executive order to sweep away green regulations his administration says have hobbled the drilling and mining industries.

"You know our nation can't run on pixie dust and hope, and the last eight years showed that," Interior Secretary Ryan Zinke said before Trump signed the executive order on a stage at the Environmental Protection Agency lined with coal miners.

But companies focused on coal deposits below federal lands, such as Peabody Energy Corp BTUUQ.PK, Arch Coal Inc (ARCH.N: Quote), and Cloud Peak Energy Inc (CLD.N: Quote), have enough coal in the ground on existing leases to last an average of more than 17 years at 2015 sales levels, earnings reports show. (Graphic: tmsnrt.rs/2lr2p5o)

That suggests miners could already ramp up production levels immediately if the market demanded more coal. Energy experts say that is unlikely on a large scale due to stiff competition from cheap and abundant natural gas.

"These initiatives prevent things from getting worse for coal, but they won't help much," said Charles Dayton, vice president of market analytics at Doyle Trading Consultants in Colorado, which has been tracking reserve levels on public lands.

Shares of Cloud Peak closed 4.9 percent higher at $4.51 after the executive order. Arch closed 1.8 percent higher at $69.00 and Peabody gained 6.8 percent to end at $2.22.

The current level of reserves appeared to be within historical norms. A decade ago, under Republican President George W. Bush when there were no bans on federal coal leasing, the industry had about 18 years' worth of leases on federal lands, according to a Reuters examination of securities filings.   Continued...

 
Haul trucks move coal as seen during a tour of Peabody Energy's North Antelope Rochelle coal mine near Gillette, Wyoming, U.S. June 1, 2016. REUTERS/Kristina Barker