Western Fuels-Colorado closes on purchase of Colowyo Mine

Western Fuels-Colorado LLC, a fuel supplier that delivers coal under contract to Tri-State’s Craig Station and Nucla Station power plants in western Colorado, has completed its purchase of the Colowyo Mine from Rio Tinto.

Tri-State is the majority owner of Western Fuels-Colorado, which delivers coal produced at Colowyo Mine to the 1,304-megawatt Craig Station.

“Electricity responsibly produced with coal remains a remarkable value to serve the power needs of the region,” said Ken Anderson, executive vice president and general manager of Tri-State.  “The purchase of Colowyo Mine ensures Tri-State will have a cost-based supply of coal to generate affordable power for the benefit of our member electric cooperatives.”

In 2010, the Colowyo Mine produced approximately 1.5 million tons of coal under contract for Western Fuels-Colorado for delivery to Tri-State.  Total production of Colowyo Mine in 2011 was 2.3 million tons.

“The Colowyo Mine will help supply clean-burning coal to Craig Station for the expected life of the power plant,” said Mike McInnes, senior vice president of production at Tri-State.  “Tri-State will continue to invest in Craig Station and in the development of clean coal technologies.”

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.  Tri-State is also a partner in the Rocky Mountain Carbon Capture and Sequestration partnership.  This $11 million effort is characterizing geologic formations in and around the town of Craig, Colo., for their potential as future carbon dioxide storage options.

Energy production sustains significant employment and economic benefits in northwestern Colorado.  Craig Station’s three generating units are fueled with coal primarily from Colowyo Mine, located approximately 30 miles from the power plant, and Trapper Mine, which is located adjacent to the power plant.  Trapper Mine will continue to deliver coal to Craig Station.  All three facilities are located in Moffat County, Colo.

“This transaction 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.

With the closing of the purchase, Colowyo Mine’s employees are transitioning to Western Fuels-Colorado.  “It has been a smooth transition of all of Colowyo employees into the Western Fuels family,” said Duane Richards, chief executive officer of Western Fuels Association, an affiliate of Western Fuels-Colorado.  “Our priority is to continue the safe operation and environmental stewardship of the Colowyo Mine.”

Terms of the transaction were not disclosed.


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