Amid investigation, coal exports at record levels

April 13, 2013 • Business

In this April 4, 2013 photo, a truck carrying 250 tons of coal hauls the fuel to the surface of the Spring Creek mine near Decker, Mont. From the time coal is blasted from strip mines in remote southeastern Montana to the point where it reaches customers in Asia, the fuel’s price gets marked up by five times or more, offering a lucrative emerging market for the companies that ship it overseas. But as the federal government investigates whether companies are unfairly bilking the treasury by paying royalties based on a far lower coal price, one of the industry’s main players, Cloud Peak Energy, is defending the practice. (AP Photo/Matthew Brown)

DECKER, Mont. (AP) — From the time coal is scooped from the depths of the Spring Creek strip mine in Montana’s wide-open Powder River Basin until it travels more than 6,000 miles across the Pacific Ocean to power plants in South Korea, the price can increase more than fivefold.

Mining companies, however, are only paying government royalties on the price of the coal when it is mined from federal lands, not when it is sold for more overseas, saving them millions of dollars in the process.

As the Interior Department investigates the industry’s export practices and considers a new royalty system, several exporters in the Montana-Wyoming coal region — the nation’s most productive — are planning to increase shipments abroad to energy-hungry Asia.

Whatever the department decides on royalties, a matter currently under internal review, the results have the potential to cut into profits at a time when the industry is looking to foreign markets to offset some of the daunting challenges it faces at home.

Proposed ports on the West Coast have the potential to increase U.S. coal exports by 60 to 100 million tons a year, said Jim Login to read more

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