MARKETS

Cloud Peak renegotiates take-or-pay agreement

US coal giant Cloud Peak Energy’s subsidiary Cloud Peak Energy Logistics LLC has entered into an amended throughput agreement with Westshore Terminals to eliminate both parties’ volume obligations for the period 2016 through 2018 in exchange for a series of payments.

Lou Caruana
Cloud Peak renegotiates take-or-pay agreement

Under the amended agreement, Cloud Peak Energy made an upfront payment to Westshore and will make quarterly payments from 2016 through 2018 in lieu of the previous take-or-pay commitments during this three-year period.

“If this amendment were in effect as of September 30, 2015, our outstanding undiscounted port take-or-pay commitments at that time would have been approximately $US454 million through the remaining term of the agreement if we do not ship any export tons,” the company said.

Except as amended, the original throughput agreement remains in place through the end of 2024.

The parties are expected to meet on a quarterly basis during the next several years to discuss market conditions and any potential shipments and the terms for any shipments.

If export shipments do not occur, Cloud Peak said it would reduce its Spring Creek mine production volumes accordingly.

Cloud Peak CEO Colin Marshall said: “Westshore is a critical part of our effort to build a viable long-term Asian export business.

“We value our strong relationship with Westshore and appreciate their willingness to work with us in recognition of extremely depressed international prices. We believe in the long-term opportunity for Asian exports of Powder River Basin coal as oversupplies of seaborne thermal coal are rationalized.

“We are also engaged in active discussions with the BNSF regarding potential modifications to our rail take-or-pay commitments for our Asian export business. We are hopeful we can reach a mutually acceptable agreement with the BNSF and will provide an update on the outcome of those discussions as appropriate.”

TOPICS:

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

editions

Mining Magazine Intelligence Exploration Report 2024 (feat. Opaxe data)

A comprehensive review of exploration trends and technologies, highlighting the best intercepts and discoveries and the latest initial resource estimates.

editions

Mining Magazine Intelligence Future Fleets Report 2024

The report paints a picture of the equipment landscape and includes detailed profiles of mines that are employing these fleets

editions

Mining Magazine Intelligence Digitalisation Report 2023

An in-depth review of operations that use digitalisation technology to drive improvements across all areas of mining production

editions

Mining Magazine Intelligence Automation Report 2023

An in-depth review of operations using autonomous solutions in every region and sector, including analysis of the factors driving investment decisions