Montana coal production down 3.3 million tons

Montana coal production down 3.3 million tons

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Spring Creek Mine

Aerial view of the Cloud Peak Energy Spring Creek Mine near Decker, Montana. Regulators Tuesday moved toward approving an expansion of the mine that is within the existing permit boundary.

Montana coal production is down 3.3 million tons compared to a year earlier, according to federal energy data.

It’s been a challenging 12 months for Montana coal, starting with the closure of two coal-fired generating units at the Colstrip Power Plant and ending with furloughs at the state’s largest mines as demand for coal slumped during the coronavirus pandemic.

Through the first week of June, coal mines in Montana had produced 32.8 million tons during the previous 12 months. During the same time span a year earlier, production was 36.1 million, according to the U.S. Energy Information Administration.

The big events in Montana coal’s economic contraction include the closure of Colstrip Units 1 and 2 in early January. Owners Talen Energy, of Pennsylvania and Puget Sound Energy of Washington declared the units uneconomical in June 2019, saying they would close for good in six months. Electricity generated with natural gas or renewable energy sources, like wind and solar, have become more affordable than coal power. 

The power plant is fueled by Rosebud Mine, which is within walking distance of Colstrip. Mine owner Westmoreland Coal Company also went bankrupt in 2019. Two units continue to operate at Colstrip.

Spring Creek Mine laid off 73 workers at the end of April, citing a 12% decline in energy demand in the Midwest where manufacturing was slowed or halted in response to the coronavirus pandemic. The mine is owned by the Navajo Transitional Energy Company, which bought the assets of Cloud Peak Energy at bankruptcy sale in fall 2019. Spring Creek is Montana’s largest coal mine.

In May, Decker Coal Company furloughed 98 miners for two weeks in response to weak domestic demand. The workers were called back May 28.

The decline in production shows up on the state’s tax rolls, where coal severance tax collections have been lower than expected since October. For the first 10 months of the state fiscal year, which runs July through June, severance tax revenue was $47.3 million about $11 million less than the same period a year earlier. For comparison, cigarette taxes brought in $54 million during the same period.

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