White Energy’s wholly owned subsidiary, White Energy Coal North America, Inc. (WECNA), entered into agreement with Buckskin Mining Company (Buckskin), a wholly owned subsidiary of Kiewit Group, to enable WECNA to develop coal upgrading plants at Buckskin’s mine in the Powder River Basin near Gillette, Wyoming. The agreement envisages the project to have an initial capacity of 1 million tonnes per annum, with the parties intending to expand the capacity to 8 million tonnes per annum.
The Buckskin Mine produces in excess of 27 million tons of sub-bituminous coal annually, and since 1981 has shipped more than 406 million tons of coal from the Southern Powder River Basin.
The key terms of the Buckskin joint venture are as follows:
- The first 1MTPA plant is to be built at the Buckskin mine will be financed and owned by WECNA;
- White Energy will own 100% of the Buckskin project;
- Buckskin has agreed to lease the land required to construct the first 1 MTPA plant and will provide ancillary site related services; and
- WECNA and Buckskin have entered into a long-term coal supply contract, under which Buckskin will supply the feedstock coal to be upgraded at the plant.
In late 2013, WECNA obtained a minor source clean air-permit, enabling it to construct a BCB plant at the Buckskin mine.
Although the Buckskin project remains part of White Energy’s longer term business strategy, the economical viability of the project is dependent on an improvement in U.S. coal market conditions, as well as the planned construction of export port facilities on the West Coast of the U.S. It may therefore take a number of years before the proposed Buckskin project becomes operational.