Western Fuels buys ColoWyo

RBC I Western Fuels-Colorado LLC, a cooperative fuel supplier that delivers coal under contract to the Craig Station and Nucla Station power plants in western Colorado, has entered into an agreement to purchase the Colowyo Mine from Rio Tinto.
Western Fuels-Colorado currently delivers coal produced by Colowyo Mine to the 1,304-megawatt Craig Station, which is operated by Tri-State Generation and Transmission Association.
“The purchase of Colowyo Mine secures a clean-burning fuel supply,” said Duane Richards, chief executive officer of Western Fuels Association, an affiliate of Western Fuels-Colorado. “This transaction provides certainty in the long-term supply and cost of fuel.”
In 2010, the Colowyo Mine produced approximately 1.5 million tons of coal under contract for Western Fuels-Colorado for delivery to Tri-State.
“Western Fuels-Colorado’s purchase of Colowyo will ensure a reliable and affordable supply of coal to Craig Station for the expected life of the power plant,” said Mike McInnes, senior vice president of production at Tri-State.
Craig Station, which has undergone a series of major efficiency improvements in recent years, is expected to operate in its current state for the next 30-40 years.
Craig Station’s three generating units are fueled with coal primarily from Colowyo Mine and Trapper Mine, which is located adjacent to the power plant. Trapper Mine will continue to deliver coal to Craig Station. Colowyo Mine is located approximately 30 miles from Craig Station and transports coal by rail. All three facilities are located in Moffat County.
“This purchase further strengthens the energy economy in northwestern Colorado,” said Darcy Owens-Trask, Director of the Craig/Moffat Economic Development Partnership. “Our region will continue to stay strong with the high-value jobs that responsibly and safely generate electricity from locally-produced coal.”
Colowyo Mine, Trapper Mine and Craig Station make a significant contribution to the economy of northwest Colorado. An economic impact study of the plant and mines identified a $428 million annual direct and indirect economic output value of Craig Station that supports 752 direct and indirect jobs with a payroll of $54.8 million. Based on standard multipliers for the industry, the study shows the coal purchased annually for Craig Station supports 446 jobs with a payroll of $38.9 million.
A transition team will support Colowyo Mine’s employees as they transfer to Western Fuels-Colorado, with a priority on continuing the safe operation and environmental stewardship of the mine.
“We expect a seamless and positive transition of all of Colowyo employees into the Western Fuels family,” said Duane Richards. “There is a lot of work that needs to be done between now and when the sale closes, but we are confident that for Colowyo employees, it will be a positive and welcoming experience.”
Terms of the transaction will not be disclosed. The sale is expected to close by the end of 2011.
Western Fuels-Colorado is an affiliate of Western Fuels Association, a not-for-profit cooperative that supplies coal and transportation services to consumer-owned cooperative and municipal electric utilities throughout the Great Plains, Rocky Mountain and Southwest region; Western Fuels-Colorado supplies coal under contract to Tri-State. Western Fuels-Colorado operates the New Horizon Mine, which produces coal for Tri-State’s Nucla Station in southwest Colorado.
Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and New York Stock Exchange listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange. Rio Tinto’s business is finding, mining and processing mineral resources. Major products are aluminium, copper, diamonds, thermal and metallurgical coal, uranium, gold, industrial minerals (borax, titanium dioxide and salt) and iron ore. Activities span the world and are strongly represented in Australia and North America with significant businesses in Asia, Europe, Africa and South America.
Based in Denver, Tri-State supplies wholesale power throughout a 200,000-square-mile service territory to 18 electric cooperatives in Colorado, 12 in New Mexico, eight in Wyoming and six in western Nebraska. The 44 co-ops, in turn, provide electricity to more than 600,000b meters – which translates to a population of approximately 1.5 million end-use consumers. More information is available at www.tristate.coop.