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Fw: Links to IRPs
by James Kotcon 06 Jan '16

06 Jan '16

A few more filings, including the original order can be found by searching for General Order # 184.35 The links from Dave below take you to the actual cases filed by the utilities. To see the filing, click on the case number, then click on "Activities" at the top of the page. To find the complete listing of filings for a case: Go to the PSC web page, then click on "Case Information" in the column on the left side of the page. This opens the "web Docket" page. Then click on "Case: under "Search by" on the left side. Enter the case number (e.g. 15-2002) in the box after "Case Number contains" and click "Search" This takes you to the Case List. Click on "Activities" and a full listing of all filings under that case will appear. The actual IRP will open in a new page and is fairly large, so it will take a few minutes to download. JBK ________________________________ From: David Sturm <davidsturm(a)ymail.com> Sent: Tuesday, January 5, 2016 10:00 PM To: James Kotcon Subject: Links to IRPs These are from the Activities pages (where filings are kept), from links on the case number pages. With my browser, Download is much quicker. 15-2002-E-P<http://www.psc.state.wv.us/scripts/WebDocket/viewCaseForWebViewForm.cfm?Cas…> 12/30/2015 Incoming Document View PDF<http://www.psc.state.wv.us/scripts/WebDocket/ViewDocument.cfm?CaseActivityI…> / Text<http://www.psc.state.wv.us/scripts/WebDocket/ViewText.cfm?CaseActivityID=44…> / Download<http://www.psc.state.wv.us/scripts/WebDocket/ViewDownload.cfm?CaseActivityI…> Monongahela Power Company and The Potomac Edison Company 15-2003-E-P<http://www.psc.state.wv.us/scripts/WebDocket/viewCaseForWebViewForm.cfm?Cas…> 12/30/2015 Incoming Document View PDF<http://www.psc.state.wv.us/scripts/WebDocket/ViewDocument.cfm?CaseActivityI…> / Text<http://www.psc.state.wv.us/scripts/WebDocket/ViewText.cfm?CaseActivityID=44…> / Download<http://www.psc.state.wv.us/scripts/WebDocket/ViewDownload.cfm?CaseActivityI…> Appalachian Power Company 15-2004-E-P<http://www.psc.state.wv.us/scripts/WebDocket/viewCaseForWebViewForm.cfm?Cas…> 12/30/2015 Incoming Document View PDF<http://www.psc.state.wv.us/scripts/WebDocket/ViewDocument.cfm?CaseActivityI…> / Text<http://www.psc.state.wv.us/scripts/WebDocket/ViewText.cfm?CaseActivityID=44…> / Download<http://www.psc.state.wv.us/scripts/WebDocket/ViewDownload.cfm?CaseActivityI…> Wheeling Power Company 15-2004-E-P<http://www.psc.state.wv.us/scripts/WebDocket/viewCaseForWebViewForm.cfm?Cas…> 12/30/2015 Incoming Document View PDF<http://www.psc.state.wv.us/scripts/WebDocket/ViewDocument.cfm?CaseActivityI…> / Text<http://www.psc.state.wv.us/scripts/WebDocket/ViewText.cfm?CaseActivityID=44…> / Download<http://www.psc.state.wv.us/scripts/WebDocket/ViewDownload.cfm?CaseActivityI…> Wheeling Power Company 15-2009-E-P<http://www.psc.state.wv.us/scripts/WebDocket/viewCaseForWebViewForm.cfm?Cas…> 12/31/2015 Incoming Document View PDF<http://www.psc.state.wv.us/scripts/WebDocket/ViewDocument.cfm?CaseActivityI…> / Text<http://www.psc.state.wv.us/scripts/WebDocket/ViewText.cfm?CaseActivityID=44…> / Download<http://www.psc.state.wv.us/scripts/WebDocket/ViewDownload.cfm?CaseActivityI…> City of New Martinsville 15-2010-E-P<http://www.psc.state.wv.us/scripts/WebDocket/viewCaseForWebViewForm.cfm?Cas…> 12/31/2015 Incoming Document View PDF<http://www.psc.state.wv.us/scripts/WebDocket/ViewDocument.cfm?CaseActivityI…> / Text<http://www.psc.state.wv.us/scripts/WebDocket/ViewText.cfm?CaseActivityID=44…> / Download<http://www.psc.state.wv.us/scripts/WebDocket/ViewDownload.cfm?CaseActivityI…> Harrison Rural Electrification Association, Inc.

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Could the Hatfield's Ferry plant see a reboot?
by Duane 05 Jan '16

05 Jan '16

http://powersource.post-gazette.com/powersource/companies/2016/01/05/Hatfie… Could the Hatfield's Ferry plant see a reboot? By Anya Litvak, Pittsburgh Post-Gazette, January 5, 2016 Although few in the electric power industry could believe that FirstEnergy Corp. would follow through on its promise to close Hatfield’s Ferry — a huge coal power plant in Greene County with $700 million worth of relatively new pollution control equipment — the company shut the doors in October 2013 and stamped the plant retired. But quietly, the Ohio-based utility has been making plans for a possible reboot. In a process begun in 2014, FirstEnergy is now asking the region grid operator for permission to start supplying power from Hatfield’s back into the grid in summer 2019. The future of the 1,700-megawatt plant may depend on the price of natural gas, or how the current menu of environmental regulations shakes out in court, or on any other factors currently being considered by engineers and number crunchers to determine if restarting the plant makes sense. Hatfield’s Ferry is the only shuttered plant out of 11 that FirstEnergy has closed across Appalachia since 2011 that the company is evaluating for a restart and it’s the one with the most potential for future use, according to spokeswoman Jennifer Young. She said FirstEnergy is working through an engineering study to, once again, consider retrofitting Hatfield’s Ferry to burn natural gas along with coal. If it decides to go through with that plan, the plant won’t be ready until June 2019. The company is also studying restarting it as a coal plant or converting it entirely to gas. “This really was about keeping the options open,” Ms. Young said. “We haven’t done any work to restart that plant.” Hatfield’s, near Masontown, was shuttered at the same time as a smaller, 370-megawatt Mitchell Power Station in Courtney, with FirstEnergy blaming low electricity demand, cheap natural gas and environmental compliance costs for the closures. About 380 people lost their jobs at the facilities, though the company found many of them replacement work at other sites. Andy Sinclair was one of them. He worked as an instrument controls technician at Hatfield’s before it shut down. He now works at West Penn Power, which is also owned by FirstEnergy. A few months ago, when Mr. Sinclair was invited to have breakfast with FirstEnergy’s CEO Chuck Jones, he said he asked Mr. Jones what the company had in mind for Hatfield’s and was told there were no plans to reopen the power station. He didn’t know about the company’s current studies or about its request to the grid operator. “I can’t believe I didn’t hear about this until today,” Mr. Sinclair said. But he had heard of rumors of engineers wandering through the plant last winter to assess the possibility of restarting it to run on coal and gas. “I heard they got up to so much money that it was out of control,” he said. FirstEnergy said as much two years ago. Jim Lash, president of FirstEnergy Generation, told legislators in 2013 that the company had already evaluated adding natural gas to the mix at Hatfield’s and determined it wouldn’t be economical. On at least one occasion, Mr. Lash said it would be cheaper to build natural gas power plants from scratch than to convert a coal plant to co-fire with gas. “That was a snapshot in time and things do change over time,” Ms. Young said this week. It could be that retrofitting makes more sense now, she said, but the company isn’t far enough along in its evaluation to make that call. “It’s been three years now and market conditions have changed,” she said. What also changed was how PJM Interconnection Inc., the regional grid operator that coordinates the flow of electricity for 13 states including Pennsylvania, ensures that there is enough generation in the grid to feed demand in future years. After a push by generators, with FirstEnergy at the front of the pack, PJM revamped its process to favor more predictable, baseload generation. The PJM changes are a positive for FirstEnergy, but Ms. Young said that hasn’t been enough to compel the company to buy new generation or think about restarting shuttered plants quite yet. Hatfield’s Ferry was outfitted with scrubbers before it was acquired by FirstEnergy in 2011 as part of the Ohio company’s takeover of Greensburg-based Allegheny Energy Inc. The scrubbers were designed to keep sulfur dioxide emissions from the air and have the added effect of reducing mercury emissions. Ms. Young said that in order to comply with the mercury emissions rules that went into effect last year, the plant would need additional investment. She said an exact figure isn’t available. “Conversion to another fuel type would require significant investments as well,” she said. “It’s too soon to speculate what future operation of the plant might entail.” www.FrackCheckWV.net

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Fw: [WV Sierra Club Energy Efficiency Leaders] This doesn't really fit into this group, since...
by James Kotcon 17 Dec '15

17 Dec '15

This is important. I am reminded of a story last year when football practice had to be cancelled in Chicago due to high heat in August. When climate change starts to interfere with the WVU Mountaineer football team, we will start to see action on climate change in West Virginia! Jim Kotcon ________________________________ From: Emmett Pepper <notification+zlrdzo1f(a)facebookmail.com> Sent: Thursday, December 17, 2015 10:12 AM To: WV Sierra Club Energy Efficiency Leaders Subject: [WV Sierra Club Energy Efficiency Leaders] This doesn't really fit into this group, since... Emmett Pepper posted in WV Sierra Club Energy Efficiency Leaders . Emmett Pepper December 17 at 10:12am This doesn't really fit into this group, since this is focused on efficiency, not climate change, but I don't know what the best WV-based climate Facebook group is. Charleston, WV is slated to have the most "danger days" by 2050, due to climate change, according to a report from August comparing 144 cities across the country. I don't remember seeing it in my feed in August, though I may have just not been paying attention. http://grist.org/climate-energy/top-10-cities-facing-the-most-danger-days-d… Top 10 cities facing the most "danger days" due to climate change grist.org Climate change will make danger days a lot more common over the next 15 years. Like Comment Share [https://fbstatic-a.akamaihd.net/rsrc.php/v2/yk/r/_2faPUZhPI6.png]<https://www.facebook.com/n/?groups%2F273746069448855%2Fpermalink%2F55516804…> Facebook<https://www.facebook.com/n/?groups%2F273746069448855%2Fpermalink%2F55516804…> Emmett Pepper<https://www.facebook.com/n/?emmett.poivre&aref=1450365137249134&medium=emai…> posted in WV Sierra Club Energy Efficiency Leaders<https://www.facebook.com/n/?groups%2F273746069448855%2F&aref=14503651372491…>. [https://fbcdn-profile-a.akamaihd.net/hprofile-ak-xft1/v/t1.0-1/p100x100/123…]<https://www.facebook.com/emmett.poivre> Emmett Pepper<https://www.facebook.com/emmett.poivre> December 17 at 10:12am This doesn't really fit into this group, since this is focused on efficiency, not climate change, but I don't know what the best WV-based climate Facebook group is. Charleston, WV is slated to have the most "danger days" by 2050, due to climate change, according to a report from August comparing 144 cities across the country. I don't remember seeing it in my feed in August, though I may have just not been paying attention. http://grist.org/climate-energy/top-10-cities-facing-the-most-danger-days-d… [https://fbexternal-a.akamaihd.net/safe_image.php?d=AQCbyEHmnM798uNg&w=158&h…]<http://l.facebook.com/l/rAQGT2xJMAQE2L_RfXhlOpFYhEn7aaiFuYf18j9e58CoTMg/gri…> Top 10 cities facing the most "danger days" due to climate change<http://l.facebook.com/l/QAQECZYHvAQEq6QqzAjFdIQyGv2jZxy9HluusG0Q3suz2Gw/gri…> <http://l.facebook.com/l/QAQECZYHvAQEq6QqzAjFdIQyGv2jZxy9HluusG0Q3suz2Gw/gri…> grist.org Climate change will make danger days a lot more common over the next 15 years. <https://www.facebook.com/n/?email%2Fufi%2Fclick&action=like&target=55516804…> [https://fbstatic-a.akamaihd.net/rsrc.php/v2/yM/r/aL-TjjYppK9.png] Like<https://www.facebook.com/n/?email%2Fufi%2Fclick&action=like&target=55516804…> <https://www.facebook.com/n/?email%2Fufi%2Fclick&action=comment&target=55516…> [https://fbstatic-a.akamaihd.net/rsrc.php/v2/yK/r/pydUbhpFodk.png] Comment<https://www.facebook.com/n/?email%2Fufi%2Fclick&action=comment&target=55516…> <https://www.facebook.com/n/?email%2Fufi%2Fclick&action=share&target=5551680…> [https://fbstatic-a.akamaihd.net/rsrc.php/v2/yU/r/1xTlxxl7Lck.png] Share<https://www.facebook.com/n/?email%2Fufi%2Fclick&action=share&target=5551680…> <https://www.facebook.com/n/?groups%2F273746069448855%2Fpermalink%2F55516804…> <https://www.facebook.com/n/?groups%2F273746069448855%2Fpermalink%2F55516804…> View on Facebook <https://www.facebook.com/n/?settings&aref=1450365137249134&medium=email&mid…> <https://www.facebook.com/n/?settings&aref=1450365137249134&medium=email&mid…> Edit Email Settings Reply to this email to comment on this post. This message was sent to jkotcon(a)wvu.edu<mailto:jkotcon@wvu.edu>. If you don't want to receive these emails from Facebook in the future, please unsubscribe<https://www.facebook.com/o.php?k=AS3f6chL3nIXRexi&u=1081364345&mid=52719293…>. Facebook, Inc., Attention: Community Support, Menlo Park, CA 94025 [https://www.facebook.com/email_open_log_pic.php?mid=527192936e09cG40744f79G…]

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Rare earth elements from coal mining waste
by James Kotcon 16 Dec '15

16 Dec '15

FYI. Acid Mine Drainage may be valuable feedstock. JBK See more at: http://wvutoday.wvu.edu/n/2015/12/14/wvu-leads-efforts-to-study-recovery-of… West Virginia could become one of the country's significant sources for rare earth elements, the "vitamins of modern industry," without the expense or environmental cost of opening new mines. Last week, the United States Department of Energy's National Energy Technology Laboratory, or NETL, selected West Virginia University to conduct a $937,000 research project in support of DOE's program to Recover Rare Earth Elements from Coal and Coal Byproducts. Rare earth elements, or REEs, are chemical elements in Earth's crust that are essential ingredients in modern technologies such as cell phones, rechargeable batteries, DVDs, GPS equipment, medical equipment and many defense applications. Conventional rare earth extraction grinds large volumes of hard rock and removes rare earths through acid extraction. The process is energy intensive, disturbs large areas of pristine land, and generates large volumes of toxic tailings. Because of this and the cost of developing domestic sources, the U.S. imports nearly all of its REEs. There are other methods for obtaining REEs. Some coal-related waste streams are enriched with REEs, sparking interest in evaluation of these wastes as a potential domestic supply. WVU's project, "Recovery of Rare Earth Elements from Coal Mine Drainage," brings together academia, state regulators and industry to collaborate on finding a successful recovery technology for total REEs from acid mine drainage, or AMD. Paul Ziemkiewicz, director of the West Virginia Water Research Institute and principal investigator for the project, and co-investigators Xingbo Liu, professor of mechanical engineering, and Aaron Noble, professor of mining engineering, will test different sources of AMD solids and methods for extracting valuable REEs. The team has already identified solids precipitated during treatment of AMD, as an enriched source of REEs, particularly the more valuable, heavy elements. AMD is a waste stream generated by Appalachian coal mining that is created when sulfide minerals in rocks are exposed to air and water. Active coal mines are required to treat this water resulting in the precipitation of AMD solids which must be disposed of. In Pennsylvania and West Virginia alone, it is estimated that AMD generates more than 45,000 tons of total REEs per year or about three times the current U.S. demand for total REEs. The team will work with industry partners Mepco Inc., Consol Energy and Rosebud Mining as well as the West Virginia Department of Environmental Protection's Office of Special Reclamation to not only identify enriched AMD solids but to develop ways to integrate rare earth extraction with their current mine drainage treatment operations. WVU's approach capitalizes on the fact that acid mine drainage is an existing source of acid which extracts rare earths from coal-related rock. As the coal industry treats this acid water to meet regulatory requirements it generates huge volumes of solids which require disposal. "Those solids are our feedstock," Ziemkiewicz said. "And in a sense, it's already pre-processed." Liu and Noble will develop ways to further concentrate REEs so that it can supply the metal refining industry. No new mines will be needed to generate this domestic supply of rare earths, and rejects will be returned to the AMD treatment plant's disposal system requiring a negligible environmental footprint. -

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from ScienceDaily e=newsletter: Fracking plays active role in generating toxic metal wastewater, study finds
by Paul Wilson 16 Dec '15

16 Dec '15

Fracking plays active role in generating toxic metal wastewater, study finds <http://www.sciencedaily.com/releases/2015/12/151215134653.htm> Posted: 15 Dec 2015 10:46 AM PST The production of hazardous wastewater in hydraulic fracturing is assumed to be partly due to chemicals introduced into injected freshwater when it mixes with highly saline brine naturally present in the rock. But a new study investigating the toxic metal barium in fracking wastewater finds that chemical reactions between injected freshwater and the fractured shale itself could play a major role. <http://feeds.feedburner.com/~ff/sciencedaily/top_news/top_environment?a=e40…> <http://feeds.feedburner.com/~ff/sciencedaily/top_news/top_environment?a=e40…> <http://feeds.feedburner.com/~ff/sciencedaily/top_news/top_environment?a=e40…> <http://feeds.feedburner.com/~ff/sciencedaily/top_news/top_environment?a=e40…> <http://feeds.feedburner.com/~ff/sciencedaily/top_news/top_environment?a=e40…> I posted this on the Marcellus Campaign Facebook page, but think it is important enough to spread around via other lists etc. fyi, paul w. -- Paul Wilson Project Healing Waters Fly-fishing Sierra Club Military Outdoors 504 Jefferson Ave Charles Town, WV 25414-1130 Cell: 304-279-1361 "There is no forward until you have gone back" ~Buddha "In all things of nature there is something of the marvelous" ~ Aristotle JUSTICE, ONLY JUSTICE, SHALT THOU PURSUE. Deuteronomy 16:20

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from Jim Hightower in Otherwords
by Paul Wilson 09 Dec '15

09 Dec '15

Put This Coal Kingpin in the Stocks Disgraced CEO Don Blankenship won’t serve more than a year for effectively killing 29 of his workers. By Jim Hightower <http://otherwords.org/authors/jim-hightower/> [image: Jim Hightower] <http://otherwords.org/authors/jim-hightower/> Disgraced coal baron Don Blankenship didn’t get what he deserves in his recent federal trial. But he richly deserves what he got. “Guilty <http://www.wvgazettemail.com/article/20151203/GZ15/151209810/1419>,” declared all 12 West Virginia jurors, who convicted this arrogant and avaricious former CEO of Massey Energy of willfully conspiring to violate America’s mine safety laws. As a result of that conspiracy, 29 miners were essentially murdered by the corporation in a horrific explosion deep inside Massey’s Upper Big Branch coal mine back in 2010. Blankenship — a multimillionaire right-wing ideologue, union-buster, and political heavyweight — ran the doomed mine as a lawless operation. This kingpin of King Coal relentlessly put profit over people, recklessly endangering miners. He made Upper Big Branch one of the most dangerous workplaces in the country, [image: Powered by Pollution, an OtherWords cartoon by Khalil Bendib] Powered by Pollution, an OtherWords cartoon by Khalil Bendib But coal is indeed king in West Virginia, where the royals can count on being coddled <http://www.motherjones.com/politics/2015/09/blankenship-trial-king-coal-wes…>. Thus, Blankenship faces a maximum of just one year in prison. And his diamond-studded legal team intends to have the jury’s unanimous verdict tossed down the dark shaft of judicial favoritism for the rich. What the mining baron deserved was to be put in stocks and subjected to a steady stream of derision from the families of mineworkers who were hurt, sickened, and even killed to haul up coal so Blankenship could live in luxury. He escaped that justice, but he’ll never shake off the guilty judgment of the jurors. The month-long, widely covered trial fully documented the rank immorality of this man and his ill-gotten fortune. Blankenship undoubtedly thinks he got away with murder. But in the court of public opinion, he’s turned his name into a four-letter word. OtherWords columnist Jim Hightower is a radio commentator, writer, and public speaker. He’s also the editor of the populist newsletter, The Hightower Lowdown <http://www.hightowerlowdown.org/>, and a member of the Public Citizen board. OtherWords.org <http://otherwords.org/>. Tagged: coal <http://otherwords.org/tag/coal/>, corporate crime <http://otherwords.org/tag/corporate-crime/>, Corporate Greed <http://otherwords.org/tag/corporate-greed/>, Massey coalmine <http://otherwords.org/tag/massey-coalmine/>, West Virginia <http://otherwords.org/tag/west-virginia/>, workplace safety <http://otherwords.org/tag/workplace-safety/> -- Paul Wilson Project Healing Waters Fly-fishing Sierra Club Military Outdoors 504 Jefferson Ave Charles Town, WV 25414-1130 Cell: 304-279-1361 "There is no forward until you have gone back" ~Buddha "In all things of nature there is something of the marvelous" ~ Aristotle JUSTICE, ONLY JUSTICE, SHALT THOU PURSUE. Deuteronomy 16:20

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Fw: Invitation to Webinar: Energy Efficiency and the Clean Power Plan
by James Kotcon 09 Dec '15

09 Dec '15

I will be at a Marcellus workshop, but ti would be great if someone form the EECT could participatye in this webinar and report back what you learned. Synapse Energy is a consulting firm we have used in some past PSC cases, and they are rapidly gaining a national reputation as the go-to guys for this kind of stuff. It is credible, detailed, and very specific technical information delivered in a format that is easy for lay people like us to use. JBK ________________________________ From: Synapse Energy Economics <messenger(a)webex.com> Sent: Wednesday, December 9, 2015 11:45 AM To: James Kotcon Subject: Invitation to Webinar: Energy Efficiency and the Clean Power Plan [https://synapse-energy.webex.com/ec3000/downloadServlet/emailImage?USID=5a4…] Energy Efficiency and the Clean Power Plan Date: Tuesday, December 15, 2015 Time: 2 PM EST Duration: 1 hour Energy efficiency is widely recognized as an abundant and low-cost option for complying with the requirements of EPA's Clean Power Plan. Whether states choose a mass-based or a rate-based approach to compliance, energy efficiency should be the primary strategy for complying with the Clean Power Plan.<http://synapse-energy.com/about-us/blog/does-energy-efficiency-have-role-ma…> However, concerns about fairness between customer types-those who participate in programs and see immediate reductions in bills and those who do not-create a barrier to widespread implementation of efficiency programs. Synapse will release a factsheet and accompanying report next week that discuss strategies to increase customer participation, enhancing fairness. [http://www.synapse-energy.com/sites/default/files/synapse-header-logo.png]<http://synapse-energy.com/about-us/blog/does-energy-efficiency-have-role-ma…> Does Energy Efficiency Have a Role in Mass-Based Clean ... Yes, it does. Unfortunately, some confusion persists about how energy efficiency measures can be applied to mass-based compliance within the Clean Power Plan. Read more...<http://synapse-energy.com/about-us/blog/does-energy-efficiency-have-role-ma…> We invite you to join us for a webinar discussing these strategies and how states can leverage funds generated by Clean Power Plan compliance to further implement efficiency. Jennifer Kallay and Kenji Takahashi, Synapse experts on energy efficiency, will present and answer questions from participants. This webinar is free and open to the public. To register for the online event: ------------------------------------------------------- 1. Go to https://synapse-energy.webex.com/synapse-energy/onstage/g.php?MTID=eb66d4e4… 2. Click "Register." 3. On the registration form, enter your information and then click "Submit." Once the host approves your registration, you will receive a confirmation email message with instructions on how to join the event. Please note: The webinar software does not support computer audio on Mac computers. If you plan to use a Mac, please call into the conference line provided when you join the event. When calling in to the conference line, please enter the attendee number displayed under the access code. ------------------------------------------------------- For assistance ------------------------------------------------------- You can contact Synapse at: webinar(a)synapse-energy.com

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from ScienceDaily e-newsletter: Benefits and trade-offs of low-carbon energy
by Paul Wilson 02 Dec '15

02 Dec '15

Benefits and trade-offs of low-carbon energy <http://www.sciencedaily.com/releases/2015/11/151130125019.htm> Posted: 30 Nov 2015 09:50 AM PST Policymakers, industry and government officials will have to invest US $2.5 trillion for electricity generation over the next 20 years. A new report presents the environmental costs and benefits linked to different renewable energy sources, and makes one thing abundantly clear: anything is better than coal. <http://feeds.feedburner.com/~ff/sciencedaily/top_news/top_environment?a=V7O…> <http://feeds.feedburner.com/~ff/sciencedaily/top_news/top_environment?a=V7O…> <http://feeds.feedburner.com/~ff/sciencedaily/top_news/top_environment?a=V7O…> <http://feeds.feedburner.com/~ff/sciencedaily/top_news/top_environment?a=V7O…> <http://feeds.feedburner.com/~ff/sciencedaily/top_news/top_environment?a=V7O…> -- Paul Wilson Project Healing Waters Fly-fishing Sierra Club Military Outdoors 504 Jefferson Ave Charles Town, WV 25414-1130 Cell: 304-279-1361 "There is no forward until you have gone back" ~Buddha "In all things of nature there is something of the marvelous" ~ Aristotle JUSTICE, ONLY JUSTICE, SHALT THOU PURSUE. Deuteronomy 16:20

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McKinsey's take on the future of mining......dim.....but then, that's good if you're speculating for a possible big gain on future market changes
by William V. DePaulo, Esq. 19 Nov '15

19 Nov '15

Is there hidden treasure in the mining industry? Low equity prices may offer important M&A opportunities for the mining industry. November 2015 | byMichael Birshan, Guillaume Decaix, Nelson Ferreira, and Harry Robinson *Where is the mining industry* headed? Commodity prices are now far below their 2011 peaks—metallurgical coal by more than 70 percent, seaborne iron ore by more than 65 percent, and copper and gold by more than 30 percent—and the mining industry’s stock-market valuation has followed prices down. The big mining houses have been working hard on cutting costs, reducing capital expenditures, and boosting productivity. Still, the specter of a return to the bleak pre-China-boom period of sustained low profitability hangs over the industry. Amidst this gloom, there is an alternative reading of the industry’s mid- to long-term prospects. Our commodity-by-commodity modeling suggests that stock-market sentiment may have overshot—once again. In many commodities, declining ore quality and limited accessibility of new deposits will squeeze supply in coming years, potentially driving a commodity-price rebound as global demand continues to rise. If lessons of previous cycles hold, mining equity prices could be expected to spike as well. Such an outlook provides a moment of real opportunity. Growth is the big strategic conundrum in the mining sector. Exploration productivity has underperformed expectations for a full decade, project execution has been slow and costly, and government interventions to increase the take from new-project revenues has caused substantial slowdowns or outright withdrawal from prospective geographies. For mining leaders looking to grow or reposition their portfolios, current low equity prices could represent an important opportunity. We do not know exactly when the mining sector will rebound, and our analysis suggests the outlook is not equally rosy for all commodities, but the recent sparks of M&A interest indicate that some industry participants have a similar view and suggest that more of this kind of activity is likely as bid-ask spreads narrow. Building a picture of the industry’s prospects Equity prices are down . . . The metals and mining industry has a history of large swings in capital-market performance (Exhibit 1). From 1973 to 2000, industry total returns to shareholders (TRS) were low—below cost of capital in many years—and volatility was high. Exhibit 1 - Enlarge This pattern changed dramatically in the first decade of the new millennium, the China-driven “supercycle.” TRS doubled, while volatility increased further. From 2012 onward, however, slower demand growth in China has triggered a steep fall in the mining industry’s TRS. Mining and steel depart from comparable capital-intensive peers, overperforming in the boom periods and underperforming at other times, but always with substantially higher volatility than these other sectors. Valuing cyclical companies is challenging, because swings in product price radically affect profitability.1 <http://www.mckinsey.com/Insights/Energy_Resources_Materials/Is_there_hidden…> The mining sector is no exception; extreme commodity-price movements during the supercycle have made the sector very difficult to value. As a result, the market heavily weights the short term, and equity prices largely track commodity prices. Indeed, our analysis shows that the correlation between the two is significantly higher for mining companies than for similarly capital-intensive industries, such as oil and gas (Exhibit 2). Exhibit 2 - Enlarge . . . but demand and production continue to grow A look at mining fundamentals offers a less gloomy view. Demand for metals continues to grow worldwide, albeit at a slower pace, as does production. For almost all commodities, production is at record levels. For example, since 2003, copper production grew by almost 40 percent, coal by 55 percent, and seaborne iron-ore production by 70 percent. The slower rate of demand growth in China has let growing supply overtake demand in a number of commodities, and this overcapacity has pulled prices down—for now. Our analysis suggests that the steadily deteriorating quality of accessible resources, combined with the current cuts in new mine investment, will likely squeeze supply in the face of slow, steady demand growth, causing prices to rebound. So where is the industry really headed? To get beyond generalizations, we have developed a new approach to modeling the industry. This approach combines insights from three areas: drivers of supply and demand, mining cost and capital expenditure (capex) inflation, and pricing regimes and price premiums. Supply and demand Projecting out both supply and demand drivers over the next decade, we conclude that geological shortage is likely to be a stronger determinant of future price movements than variations in demand. We examined geological factors such as grade erosion and depletion on a mine-by-mine basis, and the combination of declining resource levels and delays in new projects raises the likelihood of increasingly severe shortages. The commodities likely to be most severely affected by ore-quality decline are copper, gold, and phosphate rock. (We also looked at how competitive behaviors among producers and substitution patterns for different metals could affect the supply-demand balance, but these generally have less impact than the geological factors constraining supply.) Cost inflation The principal drivers of cost inflation vary by commodity, so we have identified and projected the most important costs for each commodity. In the 2000 to 2013 period, cash cost inflation for the marginal producer has been close to 20 percent annually for copper, iron ore, and potash (coal has been lower at around 11 percent), primarily due to the geological factors just described. Inflation is influenced by external factors (for example, local consumer prices, increase in wages and diesel prices, and local-currency appreciation versus the US dollar) and internal ones (for example, productivity, metal grade, and geological mine conditions). Assuming a scenario of lower oil and diesel prices and a strengthening US dollar versus the local currencies of mining producers, our analysis suggests that external cost factors will be flat, or even negative, for most commodities. Inflation due to internal factors, however, is here to stay. Even with productivity gains, mines will increasingly suffer from declining ore grades and deteriorating mine conditions, such as deeper shafts, worsening stripping ratios, and longer hauling distances. We expect the level of geological cost inflation will continue to be the main determinant of cost increases, and that total inflation will average 4 to 7 percent per year going forward. Price regimes Price projections in minerals are typically based on reversion to historical price levels at a pace derived from supply and demand projections, plus political and environmental factors. Taking this approach has shortcomings. First, it does not take account of geological inflation. Second, these elements give an incomplete picture of margin evolution, which is crucial to capital-investment decisions—decisions that can substantially change the future balance of supply and demand. To fill this gap, our modeling looks separately at the two building blocks of commodity pricing. The first is the evolution of the cash cost of each commodity’s marginal producer, explicitly considering geological inflation per commodity. The second is the “price regime”—that is, the margin over cash cost that marginal producers will earn—which marries a commodity’s historical price dynamics with our simulation of its future supply-demand balance. There are four basic price regimes. The lowest is cash cost: price levels are close to the cash cost of the marginal producer, and there is minimal incentive to invest. The next one is brownfield inducement pricing, with prices high enough to justify extending the life of existing mines. More attractive to miners is greenfield inducement pricing, which would justify investing in new greenfield projects. The final regime is fly-up pricing, where demand grows so fast and capacity utilization is so tight that prices temporarily soar well above levels dictated by the cost curve. Mapping the price regimes for each commodity over the past 20 years, as well as the price premiums associated with those regimes (that is, the commodity’s price minus the cost of the marginal producer), can indicate what might lie ahead. Our analysis shows that while a single commodity can go through different price regimes, the price premiums associated with each regime are much more stable than commodity prices themselves. Better insights can therefore come from exploring the structural factors that influence which price regime will be in place than from attempting to predict actual commodity prices. The expected future price regime, the associated price premium, and our view on future costs can then be used to simulate industry cash flows for each commodity. By aggregating this information across mining commodities, we have developed an overall outlook for the industry—and the picture it reveals is not as bleak as current equity prices would suggest. The road to recovery Indeed, when all drivers are considered, our analysis suggests that after a 6 percent per year decline between 2011 and 2014, industry-wide mining revenues could grow at around 4 to 6 percent over the next decade. EBITDA performance for the industry overall is also projected to rebound over the same period, at 3 to 4 percent per year, held back by steady cost increases. So the mining industry will likely continue growing, albeit with lower margins. The outlook for different commodities clearly varies significantly, but applying this modeling approach to 11 important metals and minerals suggests that several of them are well positioned to achieve attractive returns again (Exhibit 3). Exhibit 3 - Enlarge Phosphate and some base metals such as zinc and copper seem to have a more attractive short-term outlook. Prices of bulk minerals, the stars of the previous boom decade, are nowadays close to cash-cost regimes. In any case, our analysis shows more than half the mining commodities studied in healthier, greenfield price regimes by the end of the decade; the exceptions include aluminum, nickel, iron ore, and potash. Building an action plan Investing countercyclically, whether in M&A or organic growth, is an often-stated mantra that is rarely executed. Today’s relatively low share prices for metals and mining companies and the expectation of increased commodity prices over the medium to long term should encourage miners to pursue M&A now. For those who do, here are three points to consider. 1. Weigh the merits of diversification Whether diversification across commodities provides benefits to mining companies—and their shareholders—has been debated over the years. In 2008, for instance, miners with precious metals or oil in the portfolio were buoyed despite the falloff in most mining commodities. However, achieving effective diversification has become more difficult. Commodities closely tied to the build-out of China’s infrastructure have become more tightly correlated. With such a high degree of correlation between commodities, many companies cannot convincingly claim to have a diversified portfolio. True diversification involves finding exposure to commodities that counterbalance one another or at least move in ways that are uncorrelated. Two opportunities for diversification are still open to the major mining houses. The first is fertilizer, where prices move differently from those of other mining products, driven by food consumption rather than infrastructure investment. The second is precious metals, where prices demonstrate limited correlation with those of other commodities during times of economic crisis. 2. Consider nonoperating stakes Miners should consider whether the split-ownership model prevalent in oil and gas could provide opportunity. Indeed, some mining companies active in the oil sector are already involved in such partnerships on oil-production assets. These smaller nonoperating stakes are less common in the mining industry, and a broader uptake could offer mining companies two advantages. First, they reduce risk, as the minority owner can rely on the expertise of an operator with greater local knowledge. Second, they potentially allow greater diversification faster and more cost-effectively, since the same amount of capital can buy multiple minority participations without paying control premiums. 3. Act while the stars are aligned Mining companies are currently well resourced for M&A. As Exhibit 4 shows, the financial capacity of mining companies relative to asset prices is starting to increase again. While the ratio is far away from the 2011 peak, when many players took advantage of the opportunity to acquire distressed assets from cash-strapped players, it is gradually increasing above historical average values. Exhibit 4 - Enlarge The mining industry has a history of procyclical investments, which have in many cases ended with disappointing shareholder returns. While it’s well recognized that swimming against the tide of the cycle is difficult, the companies that are able to move successfully today could reverse that record. About the authors *Michael Birshan* is a principal in McKinsey’s London office, *Guillaume Decaix* is a principal in the Rio de Janeiro office, *Nelson Ferreira* is a principal in the São Paulo office, and *Harry Robinson* is a director in the Southern California office and global head of the Metals & Mining Practice. The authors wish to thank Marcelo Azevedo, Tiago Berni, Henrique Ceotto, Friso De Clercq, Mark Dominik, Alessandro Mady, and Siddharth Periwal for their contributions to this article. - PDF - Print - E-mail <http://www.mckinsey.com/Insights/Energy_Resources_Materials/Is_there_hidden…> - Share Related articles [image: Productivity-in-mining-operations_1536x1536_Thumbnail] <http://www.mckinsey.com/insights/energy_resources_materials/productivity_in…> article Productivity in mining operations: Reversing the downward trend <http://www.mckinsey.com/insights/energy_resources_materials/productivity_in…> May 2015—A new metric shows just how far mining productivity has declined. It also points to ways to improve productivity more effectively.more <http://www.mckinsey.com/insights/energy_resources_materials/productivity_in…> [image: Riding-the-resource-wave_1536x1536_Thumbnail] <http://www.mckinsey.com/insights/sustainability/riding_the_resource_wave> article Riding the resource wave: How extractive companies can succeed in the new resource era <http://www.mckinsey.com/insights/sustainability/riding_the_resource_wave> August 2014—With economic and social expectations rising in resource-rich countries, extractive companies must re-think how they do business.more <http://www.mckinsey.com/insights/sustainability/riding_the_resource_wave> [image: MGIResourceDrivenEconomiesC_1536x1152_Thumbnail] <http://www.mckinsey.com/insights/energy_resources_materials/reverse_the_cur…> report Reverse the curse: Maximizing the potential of resource-driven economies <http://www.mckinsey.com/insights/energy_resources_materials/reverse_the_cur…> December 2013—In 20 years, almost half of the world’s countries could depend on their resource endowments for growth. These economies have a huge opportunity to transform their prospects, and a new model could help governments capture the coming resource windfall instead of squandering it. more <http://www.mckinsey.com/insights/energy_resources_materials/reverse_the_cur…> - includes: - [image: MGIResourceRevol2013_LargeFeature_1536x1152_Thumbnail] <http://www.mckinsey.com/insights/energy_resources_materials/resource_revolu…> report Resource revolution: Tracking global commodity markets <http://www.mckinsey.com/insights/energy_resources_materials/resource_revolu…> September 2013—Commodity prices, though off recent peaks, still reflect emerging-market demand, a challenging geology, innovative technology, and improved resource productivity.more <http://www.mckinsey.com/insights/energy_resources_materials/resource_revolu…> - includes: - - PDF - Print - E-mail <http://www.mckinsey.com/Insights/Energy_Resources_Materials/Is_there_hidden…> - Share McKinsey Insights [image: McKinsey Insights] <http://www.mckinsey.com/features/ipad_and_android_app> Get our latest thinking on your iPhone, iPad, or Android device. more <http://www.mckinsey.com/features/ipad_and_android_app> For iOS <https://itunes.apple.com/us/app/id674902075?mt=8> For Android <https://play.google.com/store/apps/details?id=com.mckinsey.mckinseyinsights> About this content The material on this page draws on the research and experience of McKinsey consultants and other sources. To learn more about our expertise, please visit the Metals & Mining Practice <http://www.mckinsey.com/client_service/metals_and_mining>. Most Popular 1. The new consumer decision journey <http://www.mckinsey.com/insights/marketing_sales/the_new_consumer_decision_…> 2. What it takes to deliver breakthrough customer experiences <http://www.mckinsey.com/insights/organization/what_it_takes_to_deliver_brea…> 3. A better way to understand internal rate of return <http://www.mckinsey.com/insights/corporate_finance/a_better_way_to_understa…> 4. The digital future of consumer-packaged-goods companies <http://www.mckinsey.com/insights/consumer_and_retail/the_digital_future_of_…> - includes: - 5. 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from Jim Hightower: Will This Lord of the Manor Get Locked Up?
by Paul Wilson 12 Nov '15

12 Nov '15

Will This Lord of the Manor Get Locked Up? Former coal CEO Don Blankenship is in the hot seat for putting money above everything else. By Jim Hightower <http://otherwords.org/authors/jim-hightower/> [image: Jim Hightower] <http://otherwords.org/authors/jim-hightower/> Don Blankenship had it all. The West Virginia coal baron had personal wealth, absolute control over his workers, and unmatched political power that extended through every branch of state government — and deep into the back rooms of Washington policymakers. In the house of Big Coal, Master Blankenship lorded over the manor. But soon, he could be moving into an even bigger house — as in “the big house.” The former Massey Energy CEO is presently on trial for intentionally neglecting mine safety laws, conspiring to cover up the violations, and effectively causing an explosion of methane and coal dust that killed 29 miners in Massey’s Upper Big Branch mine in 2010. It was the worst mine disaster in modern American history. [image: Powered by Pollution, an OtherWords cartoon by Khalil Bendib] <http://otherwords.org/powered-by-pollution/> Powered by Pollution, an OtherWords cartoon by Khalil Bendib In a rare turn of events for the corporate world, the boss himself has now been brought before a jury of common West Virginians to answer criminal charges that could put him in prison for 31 years. This is no mere formality. Already, four of Blankenship’s top assistants have been convicted for criminally risking the miners’ lives. And federal prosecutors have testimony, documents, and audio recordings <http://www.nytimes.com/2015/10/17/us/coal-barons-trial-may-turn-on-his-secr…> revealing that the CEO himself was “plainly cheating” on rules to protect workers. Blankenship bares his soul on one tape, declaring that it’s OK to demand that miners increase production of coal at the expense of their own safety. “This game is about money,” he explained. Quite a few other gamers ought to be in the dock with Don — George W. Bush, for example, along with the bipartisan bunch of Congress critters who took Big Coal’s campaign cash in exchange for defunding, denigrating, and discouraging the federal regulators who dared to stand up to Blankenship. Those for-hire political fixers are co-conspirators in Massey Energy’s corporate murders. OtherWords columnist Jim Hightower is a radio commentator, writer, and public speaker. He’s also the editor of the populist newsletter, The Hightower Lowdown <http://www.hightowerlowdown.org/>, and a member of the Public Citizen board. OtherWords.org <http://otherwords.org/>. Tagged: coal <http://otherwords.org/tag/coal/>, corporate crime <http://otherwords.org/tag/corporate-crime/>, Massey coalmine <http://otherwords.org/tag/massey-coalmine/>, West Virginia <http://otherwords.org/tag/west-virginia/> -- Paul Wilson Project Healing Waters Fly-fishing Sierra Club Military Outdoors 504 Jefferson Ave Charles Town, WV 25414-1130 Cell: 304-279-1361 "There is no forward until you have gone back" ~Buddha "In all things of nature there is something of the marvelous" ~ Aristotle JUSTICE, ONLY JUSTICE, SHALT THOU PURSUE. Deuteronomy 16:20

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