Asia coal export boom brings no bonus for U.S. taxpayers

Comments (1)
harrywr2 wrote:

Comparing the price of a ‘premium grade’ of coal in a Chinese port to the price of a ‘below average grade’ of coal 1,000 miles from the nearest seaport which is another 5,000 miles from China involves a bit of work.

Powder river basin coal has a relatively low heat content. So it won’t fetch the same price in a Chinese port that high heat content Australian Coal will fetch. The Chinese are currently paying about $95 for a metric tonne(10% larger then a standard US ton) for 5500 Kcal/Kg coal. (Australian coal can be over 6,000 KCal/Kg).

Powder River Basin coal only has 85% of the heat content of 5500 Kcal/Kg coal.
So take that $95 and multiply times.85 = $81/metric tonne.
Then convert to the metric tonne price to US tons $81/Metric tonne / 1.1 = $73 US Ton.

Rail transportation costs are substantial, on the order of 2-3 cents/ton mile by rail(trains run on diesel and diesel isn’t cheap). It’s 1,000 miles from Gillette, Wyoming to the nearest sea port. So lets call it $25 for the railroad.

Now we are at $48/ton.

Then there are ‘port fees’.

Westshore Coal Terminal in British Columbia(The largest coal terminal on the West Coast of North America) reported $205 million in revenue on 27 million tons of coal in 2011.
About $8/ton for port handling fees.

So now we are down to $40/ton.

It’s a 5000 mile trip from Vancouver, BC to a Chinese coal port. If we allow 1/2 cent per ton mile for the seaborne transport costs that is $25/ton.

Now we are at $15/ton.

Obviously the US Government should insure it gets it’s 12.5% of the ‘minemouth price’ of the coal.

Dec 04, 2012 12:44pm EST  --  Report as abuse
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