Washington (Platts)--16Feb2011/606 am EST/1106 GMT
The Australian developer of a Washington state coal terminal planned to build an export facility to annually ship up to 60 million short tons of western US coal, even as it told state and local government officials last fall that it would build a facility one-twelfth that size. The plans, revealed in detailed documents produced by the company in court and released by environmental groups this week, ratchets up scrutiny on the controversial Millennium Bulk Logistics project in advance of a key appeals board hearing next week in the state capital of Olympia. The documents show Millennium planning details last year that were needed to navigate a tricky political and investment landscape in order to build what would be the largest coal export facility in North America. Mining companies in Utah, Colorado, Wyoming and Montana had all expressed interest in shipping coal through the facility. As the plans for a massive project developed, Millennium officials were telling county commissioners considering a state shoreline permit that the company's ambitions stopped at 5 million st annually. The company also told state regulators that were there were no future plans for expansion at the terminal on the Columbia River in Longview, documents show. Former Millennium CEO Jeff Torkington laid out a plan that increases the size of the terminal in stages from 5 million mt to 20 million mt by as early as 2013, in an email dated October 26 that acknowledges significant political risks of angering state and local government agencies. Another document titled "Project Platinum" calls for a 60 million-st facility in the "longer term" that would serve mines acquired by Millennium's Australian parent company, Ambre Energy, and other producers. The US produces about 1 billion st annually. The "Project Platinum" document goes on to show the company projecting coal-handling costs that would "be set at around $9/t which compares favorably to the $8/t-$12/t coal handling fees charged at Westshore [Terminals in Vancouver]." The company expected operational costs to be about "$1/t which delivers an exceptionally healthy margin to those operators who have scale in their coal handling facilities." Millennium expected to haul up to 18 million st annually through the terminal -- 10 million st from Montana mines to be acquired by Ambre and 8 million st through trading deals. Several other companies showed "strong interest ... securing port access," including Peabody Energy and Arch Coal, which Millennium projected could haul up to 10 million st a year. The company also identified Westmoreland Coal, American West Resources' Horizon mine and the Signal Peak mine, a joint venture between First Energy and Boich Companies, as companies interested in hauling up to 1 million st annually through the facility. "The value uplift in this strategy is exporting the coal to Asia via the US West Coast," the company wrote in the "Platinum" document. "While rail capacity is available and there is identifiable demand for the coal in Asia the critical constraining factor is coal loading capacity at suitable North American West Coast ports." The documents show that the company studied 29 current and potential port sites on the West Coast for development of a coal-handling facility that could handle up to 10 million st within three years. It identified three -- the Longview location, Ridley Terminals in Prince Rupert, British Columbia, and the Port of Kalama, Washington, the last of which presented barriers to expansion. The disclosure of the documents, first reported Tuesday in the New York Times, drew an immediate outcry from environmental groups, which are appealing a shoreline permit issued to the project in November by Cowlitz County commissioners. The state Shoreline Hearing Board is set to consider a motion for summary judgment brought by Millennium on February 25. The environmental groups, concerned with climate-change impacts of coal that would be burned, are seeking additional environmental reviews bypassed by county commissioners who say they were given incomplete information about the project. Millennium CEO Joe Cannon did not return a call seeking comment. In an interview with Platts last year, he said the Longview terminal would be a "test case" for coal terminals, which have generated significant interest from companies seeking to access Asian thermal markets. Signal Peak and Westmoreland have both been in talks with Millennium, according to officials familiar with the companies' thinking. Peabody and Horizon had not responded to requests for comment by press time. Arch spokeswoman Kim Link reiterated the company's standing agreement announced earlier this year to ship 2 million st annually through the port, referring other questions to Ambre.--Peter Gartrell, peter_gartrell@platts.comSimilar stories appear in International Coal Report See more information at http://bit.ly/InternationalCoalReport