Twentymile Coal seeks royalty reduction from state with Craig, Moffat County support
July 27, 2017
Twentymile Coal Mine in northwestern Colorado is seeking a reduction in the royalty rate it pays on its coal production from 12 to 8 percent, citing the need to remain economically competitive in a tough market.
Both Moffat County Commissioners and Craig City Council signed letters of support this month for Twentymile's request to the director of the Colorado State Board of Land Commissioners, noting the important role the mine plays for the local economy. Routt County Commissioners also supported the reduction.
"Through the sale of 2.6 million tons of coal in 2016, the mine contributed $380 million worth of economic benefits to our region and employed approximately 300 Coloradans," the letter of support said.
Twentymile Environmental Manager Jerry Nettleton added at Tuesday night's council meeting that about 60 percent of those employees live in Moffat County.
He also noted that other mines in the region already received federal royalty rate reductions from the Bureau of Land Management between 2009 and 2012, putting Twentymile at a competitive disadvantage.
The mine's owner, Peabody Energy, just emerged from bankruptcy in April. Back in 2012, Twentymile was preparing to open the new Sage Creek mine portal, but in a difficult political and economic climate, managers put the plan on hold.
Recommended Stories For You
In 2016, the mine dropped down to the Wolf Creek seam underneath the coal seam it had mined previously, adding costs to the operations because of conditions.
"We have some tough conditions in the Wolf Creek Seam," Nettleton said Tuesday. "We're having to spend extra money on ground support… and keeping our miners safe, and that's increased our costs."
Twentymile's royalties are paid to the state and a rate change would not directly impact tax revenues for neither Moffat County nor Routt County, where Twentymile resides. However the amount counties receive in severance taxes is tied to production, Nettleton said, meaning a further decline in coal production would impact local governments.
"It's going to keep one of our employers in business," said Craig Mayor John Ponikvar, voicing his support for Twentymile's request.