Big Coal's Hard Road to China
Mike Seely, a third-generation mint farmer in the Pacific Northwest, says the fear of coal dust wakes him up in the middle of the night. Coal companies, which are suffering from a steep drop in demand in the U.S., see their salvation in China. To ship coal from the mines of Wyoming’s Powder River Basin to Asia, the mining companies are backing a half-dozen proposed coal ports in Washington state and Oregon. Among their allies are BNSF Railway, owned by Warren Buffett’s Berkshire Hathaway, and Goldman Sachs, which is an investor in a company building one of the ports. If all the ports were built, analysts estimate that the mining companies could sell 146 million tons worth at least $1.3 billion annually to the Chinese.
Yet so far not a single facility has been started, and the projects are running behind schedule. The Sierra Club and a coalition of at least 60 other environmental groups have been staging rallies against the ports, lobbying state legislators, and urging towns in the region to pass resolutions opposing the terminals. They’re emboldened by a January victory in which President Barack Obama rejected TransCanada’s Keystone XL Pipeline, which would have brought crude from Alberta’s oil sands to Gulf Coast refineries. “This is the biggest deal since Keystone,” says Krista Collard, the Sierra Club representative in Washington state.
Many of the port opponents are farmers concerned that if the projects go ahead, toxic coal dust will blow off the hundreds of train-hauled coal cars passing through the region daily. What’s good for Buffett and Goldman may not be good for every business, says Seely, whose mint plants get turned into an oil used by toothpaste and chewing gum manufacturers. “If we get coal dust on our mints, we’re finished. Nobody wants a mint tea with a nice taste of coal in it.” The Sierra Club has another objection to the planned ports: They’d contribute to the high pollution levels in China, which relies heavily on coal for its power plants. Global coal demand is projected to grow by 2.8 percent a year to 6.18 billion metric tons in 2016, and the most important factor in the rise is China’s economic expansion, the International Energy Agency said in December.
Many backers of the terminals argue that they would help bolster Washington’s sagging economy. The state’s unemployment rate in May was 8.4 percent, higher than the national average of 8.2 percent. In Cowlitz County, where one of the ports would be built, the jobless rate was 11.2 percent in May. “The coal’s there, let’s put people to work,” says Dan Coffman, president of the Longview, Wash., chapter of the International Longshore and Warehouse Union in Cowlitz County. “If China is going to buy it, let them buy it from us.”
In Cowlitz County, says the chief executive officer of Millennium Bulk Terminals, Ken Miller, about 1350 jobs would be created during construction of the $600 million coal terminal. Once finished it will employ 135 people, he says, and about 300 people in the community indirectly as they sell food and other goods and services to the employees. The terminals would also let the U.S. capture benefits now going to its neighbor, says BNSF Chief Executive Matthew Rose: “These shipments are currently being made via Canada.” Among other measures, the risk of contamination from coal dust could be mitigated by spraying a crusting agent on the coal, says Miller. Once the coal is stored at the site, Millennium would contain coal particles by spraying the piles, which would be kept low enough to decrease the possibility of dust blowing away.
When the Cowlitz County project was announced in January 2011, Arch Coal said that it figured shipments would begin this year. Miller says the permitting process is in its “infant stages” and that he initially figured 2015. He’s more hesitant to place a timeline on it now. “There’s the same environmental opposition here in the Northwest as there is in the whole country,” he says. “We’ll let that play out however it plays out.”