Colowyo in early stages of sale consideration

Mark Roberts, Colowyo director of commercial planning and business development, confirmed Friday that Colowyo Coal Co. is in the “early stages of looking into a possible sale” of the coal mine.

“There has been nothing definitive that has happened with the sale,” Roberts said. “It is just something we are looking into and investigating.”

Employees were notified last week about the company investigating the sale.

“What we want to do is be transparent with our employees that we are investigating options to sell the company,” Roberts said.

Colowyo has been in discussions about selling the mine for “some weeks trying to solicit interest,” he said.

“We are looking at how we can create the most value for our parent company Rio Tinto,” he said.

Roberts also said the company is looking at all of its options including long-term contracts with coal-fired power plants.

“One of those options is a sale of the company, and another option would be to get long-term contracts,” he said. “Right now, we don’t have either of those in place. We are still looking at both options.

“In order to get into new reserve areas at Colowyo, we have been looking at it in terms of having a long-term contract to support that investment and we don’t have that long term contract yet. That’s why we have reduced our production levels.”

The possible sale comes on the heels of Colowyo’s December announcement it would cut 10 percent of its staff because of lower anticipated coal production.

Roberts said the cut was to match staffing with production levels.

He could not speculate on the availability of Colowyo jobs if the mine were to be sold.

“If it is sold … what it means for jobs going forward is that whoever buys the mine will have an interest in maintaining its future,” he said. “But I don’t know that for certain, it’s dependent on the buyer’s decisions at that point.”

Across the U.S., coal production in 2009 was below 2008’s production, and the Energy Information Administration predicts coal production will down again in 2010, Roberts said.

Roberts said the potential sale of the company and the reduction in coal production are “not necessarily a related issue by any means.”

Colowyo is located on Colorado Highway 13 south of Craig and has been continuously producing coal since 1977.

It is owned by Rio Tinto, a worldwide mining and exploration company, which mines thermal coal, copper, borates and talc across the U.S.

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