Consultants' survey: Skelly and Loy

IN RESPONSE to mine development delays and consultants’ changing roles, Skelly and Loy officials took the stance that the newest projects are potentially the ones with the most to lose given the current environment, and that concern is warranted for the future of coal-fired electric power plants.

Donna Schmidt

Published in the March 2009 Coal USA Magazine

With our clients, we are not seeing project components (such as environmental, social or otherwise) of mine development, planning, or expansion taking a backburner. In some cases we are seeing projects as a whole taking a backburner. By the same token, we are also seeing projects going forward without any apparent interruption.

Skelly and Loy believes many factors of the current economy are having an impact on planned projects and projects in their early stages of development. These factors include, but are not limited to, declining coal prices, tight money (due to its own set of factors), and less product (coal) demand.

Any such factor may influence the type of reaction taken by a developer and each developer may react differently to the same factor – presenting a very muddled picture. However, with the current regulatory environment and intense focus on safety, we find it hard to substantiate that environmental or social matters would take a backburner due to current economic conditions.

To the contrary, it is practical to consider that greater attention is being given to factors of this nature. Is it not reasonable to assume that developers have greater control over these factors than current economic issues?

Hence, the old adage of “taking care of what you can take care of” may make practical sense and may be what is actually occurring. At least, that is what we believe we are observing.

Skelly and Loy is experiencing much the norm in current development activities. While we have had our sights on certain pending projects that have yet to come to fruition, other development projects not on our radar have taken off.

What we believe we are witnessing is that venture capital is still available (probably not to the extent that it was 18-24 months ago) while conventional commercial lending has been dramatically slowed.

As far as our consulting role changing, generally speaking, we don’t believe that to be the case. We are seeing considerable activity in the regulatory and environmental sectors at the moment primarily due to Government Imposition Claims resulting from the 2006 MINER Act and a clouded 404 permit approval process.

However, Skelly and Loy may be unique in that we provide such a wide range of engineering and environmental services to mining and related industries that it is difficult to note any significant change in our role with clients.

A major concern to us and many of our clients is what lies on the horizon for coal mining and coal-fired electric power plants. The unknown is generally a concern and can be downright scary.

The ultimate direction that the new administration takes on energy and the environment could be very dramatic, not only to this industry, but to all Americans – only time will tell. At present, all that we can do as a business concern is to keep our finger on the pulse of the industry, be as informed as possible, and remain well diversified in the services that we provide.

Prior to passage of Public Law 95-87, mining consultants had little reason to be staffed with multiple environmental disciplines. In retrospect, we have no difficulty in justifying the development of such diversity and going forward. We may need to again expand our capabilities to serve the energy industry in a manner not yet defined.