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Westmoreland files for bankruptcy; US threatened by critical minerals reliance

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Westmoreland files for bankruptcy; US threatened by critical minerals reliance

After years of trying to renegotiate its debt, Westmoreland Coal Co. filed for Chapter 11 bankruptcy protection Oct. 9, along with its master limited partnership Westmoreland Resource Partners LP, and entered into a restructuring support agreement with an ad hoc group of lenders.

The company said it expects to continue its operations during the process without laying off any employees and to emerge from bankruptcy by the end of February. Westmoreland is proposing to sell its Canadian business and mines as well as its San Juan operations in New Mexico to company debt holders as part of the restructuring plan.

The filing came four days after American Electric Power Co. Inc. told employees that it plans to close its Conesville coal-fired plant in Ohio, a facility primarily supplied by Westmoreland, in 2020.

The U.S. Energy Information Administration expects coal's share of domestic power generation to decline through 2019 as natural gas increases to 35% of the nation's power sector. The agency decreased its 2018 coal projections from 28.3% to 27.8%, while natural gas' share increased from 34.1% to 34.8%.

While the coal mining sector is struggling, several mining experts and leaders said reducing permitting timelines would help the U.S. jump-start its critical minerals sector. Doing so may be increasingly important, given that the U.S. depended on other nations for more than half of its nonfuel mineral commodities in 2017, and was entirely reliant on imports for 21 of those minerals.

The U.S. Senate confirmed Brett Kavanaugh to the U.S. Supreme Court on Oct. 6, which is expected have implications in the energy sector. While serving as a judge on the U.S. Court of Appeals for the District of Columbia Circuit, Kavanaugh broke from majority decisions to uphold the U.S. Environmental Protection Agency's regulations on greenhouse gas emissions from power plants and its Mercury and Air Toxics Standards.

The White House also sent Bernard McNamee's nomination to the Federal Energy Regulatory Commission, or FERC, to the Senate for consideration late last week.

Though FERC denied the U.S. Department of Energy's rulemaking in January that would have supported struggling coal and nuclear plants, North Dakota's lignite organization wants coal producers to be compensated for the fuel's resilience in the energy market. Jason Bohrer, president and CEO of the Lignite Energy Council, said his organization will speak with regional transmission organizations to ensure coal operators "are compensated for the value that they provide through resiliency in the grid."

While North Dakota is working on ways to strengthen its coal fleet, Colorado energy experts said their state's coal sector is likely to continue to decline regardless of the outcome of the gubernatorial race. Democratic U.S. Rep. Jared Polis is campaigning on a plan to generate 100% of the state's energy from renewable resources by 2040, while Republican contender Walker Stapleton is more friendly to fossil fuels.

A Polis victory may accelerate coal's demise in Colorado, but that outcome is "somewhat inevitable," said K.K. DuVivier, a University of Denver energy law professor, given its health impacts and difficulty competing in the energy mix.

Carbon capture leaders championed their technological developments at an energy event, but called for more research funding to make their small-scale models commercially viable. While investors seem interested in the technology's potential, many are unwilling to start writing checks until there's another boost in funding to move "these exciting innovations across that really early-stage Valley of Death," said Noah Deich, executive director of Carbon180.

In addition to carbon capture, some entities are also ramping up research into alternative uses for coal. Virginia Tech is seeking a $25,000 grant from the statewide GO Virginia board to study using coal to make graphene, a thin, lightweight, strong material that can be used in manufacturing and other products, The Coalfield Progress, a southwestern Virginia newspaper, reported.

Peabody Energy Corp. declared force majeure at its North Goonyella metallurgical coal mine in Queensland, Australia, this week after a fire broke out in the mine, likely idling it for the fourth quarter. The company announced in an Oct. 11 update that it expects future financial impacts due to the fire and high gas levels found in the mine.

A coal company owned by the family of West Virginia Gov. Jim Justice, Justice Low Seam Mining Inc., was also hit with a financial setback this week when a state circuit court judge ordered the company to pay $478,000 in a settlement with Virginia Drilling Company, LLC, according to the Charleston (W.Va) Gazette-Mail. The Justice company reached settlements with Virginia Drilling in September 2017 and May 2018 but failed to make payments.