MiningWeek Online
February 20, 2004 Volume 10, Issue 7

This Week's Issue:

• New energy bill may reach Senate floor next week
• Craig raises critical mining issues during Committee hearing on Interior budget
• DOE releases solicitation for second round of CCPI proposals
• OMB grants EPA’s request for approval of TRI information collection requests
• RAG Coal International sets stage for sale of all foreign mining operations
• Cleveland-Cliffs agrees to sell idle mine assets to Polymet
• MMS: Energy, mine royalties to states jump 46 percent last year
• Newsbits

The slimmed down version of the energy bill introduced by Sen. Pete Domenici (R-NM) last week could be on the Senate floor as early as next Tuesday (Feb. 24), when the Senate returns from a recess this week. The Domenici measure (S. 2095) is expected to score at 45 percent of the cost of the old bill – approximately $14 billion, compared with $31 billion. Although the White House this week said it favored a bill that did not exceed $8 billion, the administration stopped short of using a veto threat on the new legislation, and said it would continue to work with congressional leaders on the measure. Senate Majority Leader Bill Frist (R-TN) and Minority Leader Tom Daschle (D-SD) have indicated they plan to bring the bill up expeditiously when Congress returns. They agreed to use a procedure called Rule 14 to bypass any further committee action and place the new bill directly on the Senate calendar. They also indicated they intend to seek an agreement to limit amendments to the bill and to attempt to consider it in a “constrained manner.” However, it remains to be seen whether the bill’s opponents will cooperate. Although smaller in terms of overall funding, the new bill still contains $7.4 billion in mining-related provisions, including $2.2 billion in clean coal technology tax provisions and $5.2 billion in authorizations subject to annual appropriations. NMA President and CEO Jack N. Gerard said he welcomed the introduction of the new bill, noting that “energy supply and natural gas feedstock shortages that have gripped our country – causing job losses in key manufacturing industries and higher electricity bills for millions of American consumers – must be addressed by Congress. Our continued economic recovery is dependent upon reliable and affordable electricity. By ensuring fuel diversity and providing for increasingly clean energy from coal – our most abundant domestic energy source – we can meet our growing need for electricity, improve the environment and strengthen our economy,” he said. Gerard added that NMA “stands ready to work with the Senate and the House to reach consensus on this vital legislation.” House leaders have indicated they are waiting for the Senate to conclude its activity before reacting to the new energy measure. .

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Craig raises critical mining issues during Committee hearing on Interior budget

While questioning DOI Secretary Gail Norton, Craig remarked on a recent study comparing the regulatory environments faced by mining activities around the world, noting the U.S. process is the most inefficient of all the countries studied – in some cases taking over 10 years to complete the permitting process for one mine.

“This country was dead last in terms of its permitting process,” he said. “More and more of our mining is moving offshore. At some point we will find ourselves vulnerable, just like we are with foreign sources of oil, by being entirely dependent on other countries for our mineral resources,” he said, asking Norton about management practices Interior could put in place to improve its performance.

Norton said the department had been focusing on forest and energy permitting issues and to a lesser extent on mining, which, she said, often requires more site specific solutions. She added that DOI had issued a revised millsite opinion that impacted the mining industry. Craig acknowledged and thanked the secretary for that action, and Norton agreed to submit more detailed answers to Craig’s questions in writing. NMA is working with Sen. Craig and other legislators on how to improve the permitting process.

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DOE releases solicitation for second round of CCPI proposals

The call for proposals requires that prospective projects “must ensure coal is used for at least 75 percent of the fuel energy input to the process,” DOE said, “while electricity is at least 50 percent of the energy-equivalent output from the technology demonstrated. Additionally, proposals must show the potential for rapid market penetration upon successful demonstration of the technology concept.”

DOE said Round II projects will support the President’s Clear Skies Initiative to reduce power plant emissions, particularly mercury, by about 70 percent by 2018, and the Global Climate Change Initiative to reduce carbon emissions growth over the next 10 years. The CCPI projects will also provide the technical foundation for the FutureGen Initiative to create the world’s first zero-emissions, coal-based power and hydrogen production plant, which will include carbon dioxide removal and sequestration.

DOE said it is encouraging proposals for coal gasification system advances that enhance efficiency, environmental performance and reliability, as well as expand the gasifier’s flexibility to process a variety of feedstocks; and technologies that permit better management of carbon emissions. For each project, industrial sponsors must be willing to at least match the federal funding share – industry has until June 15 to submit proposals. For more information, visit www.fossil.energy.gov.

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OMB grants EPA’s request for approval of TRI information collection requests

NMA submitted comments to both agencies, urging OMB to grant only a one-year approval instead of the normal three-year period of the Form R ICR and to require that EPA “advance serious (TRI) burden reduction proposals” by the end of that year.

OMB noted that its interest in TRI burden reduction is no secret to EPA, and indicated that the two-year approval period coincides with a reasonable timeframe within which the agency could conclude rulemaking on TRI burden reduction.

“OMB understands that EPA is exploring options for reducing the burden of this (TRI) collection while still maintaining the practical utility of the data, and is currently accepting public comments on a discussion draft of various burden reduction options,” OMB said. “OMB supports this effort and looks forward to an update on progress in this area when it reviews the next ICR submission.”

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RAG Coal International sets stage for sale of all foreign mining operations

The company has signed a memorandum of understanding for the sale of the U.S. operation which provides for a period of exclusive negotiations with a U.S. based private equity consortium consisting of First Reserve Corp., the Blackstone Group and American Metals & Coal International.

In November and December 2003, RAG signed memoranda with Peabody Energy for the sale of its mining activities in Australia, Venezuela and Colorado. The company’s U.S. operations in Colorado, Illinois, Pennsylvania, West Virginia and Wyoming produce a combined 65 million tons annually. The latest transaction is subject to a number of conditions and the negotiation of definitive agreements.

In 1999, the RAG Group combined all foreign coal and mining related activities within RAG Coal International AG. The company said it is now focusing on its mining equipment and coal trading activities.

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Cleveland-Cliffs agrees to sell idle mine assets to Polymet

Cleveland-Cliffs Inc. this week said it has entered into an option agreement with Polymet Mining Inc., a U.S. subsidiary of Polymet Mining Corp., that grants Polymet exclusive right to acquire certain land, crushing, concentrating and other ancillary facilities located at the company’s Cliffs Erie site in Hoyt Lakes, MN.

Cleveland-Cliffs said the assets were formally owned by LTV Steel Mining Co., which permanently closed its iron ore mining and palletizing operations in January 2001.

Under the terms of the agreement, Cliffs will receive $500,000 and one million common shares of Polymet Mining Corp. for maintaining certain identified components of the Cliffs Erie facility, while Polymet conducts a feasibility study on the development of its Northmet polymetallic non-ferrous ore deposit located near the Erie site. Polymet will have until June 30, 2006 to exercise its option and acquire the assets covered under the agreement for additional consideration.

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MMS: Energy, mine royalties to states jump 46 percent last year

During calendar year 2003, the state of Wyoming again received the largest share of revenues collected from mineral production (including oil and gas production) on federal lands within its borders -- $503 million. New Mexico was second with $318 million, followed by Colorado, $62.7 million; Utah, $54.4 million; Louisiana, $31.5 million; Montana, $26.9 million; and California, $25.3 million.

A state is entitled to a share of the mineral revenues collected from federal lands located within its borders. For the majority of onshore federal lands, states receive 50 percent of the revenues, while the other 50 percent goes to various funds of the U.S. Treasury, including the Department of the Interior Reclamation Fund. Alaska receives a 90 percent share as prescribed by the Alaska Statehood Act. States may also receive appropriations from the offshore royalty-funded Land and Water Conservation Fund to help with park and land acquisitions.

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Newsbits

Ingersoll-Rand Co. Ltd. announced Thursday it has agreed to sell its Drilling Solutions business unit to Atlas Copco AB, headquartered in Stockholm, Sweden, for approximately $225 million. The transaction, which is expected to be completed in the second quarter of 2004, is subject to government regulatory approvals . . . . Crow Tribal Chairman Carl Venne said last week the tribe and Westmoreland Resources Inc. have reached an agreement to explore and develop tribal coal reserves adjacent to the Absaloka Mine in Montana. The mine has provided substantial royalty and tax revenues tot the tribe for the past 30 years, as well as dozens of high-paying jobs – tribe members comprise 75 percent of the mine’s work force . . . . Bucyrus International Inc. said it has signed a contract for providing the first large dragline, a model 8750 with a 117 cubic yard bucket, in China. The dragline will be shipped to the Zhungeer Mine, part of the Shenhua Group, and signals “the rapid technological advances happening within the Chinese coal mining industry,” the company said . . . . The Colorado School of Mines will conduct “Mineral Processing: An Introduction to the Principles,” May 3-7, 2004, in Golden, CO. For more information, contact the Office of Special Programs and Continuing Education, 303-273-3321, or e-mail space@mines.edu. . . . . American Electric Power has announced two promotions – Chuck Zebula, previously senior vice president-portfolio management and optimization, has been named senior vice president-fuel; Charles Patton, vice president of governmental affairs, has been named Texas state president for the company.

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