SunCoke Energy Partners LP will expand into handling coal exports with the $412 million acquisition of Convent Marine Terminal, one of the Gulf Coast’s largest export facilities.
The terminal can export up to 10 million tons of coal per year, and almost all of the facility’s capacity is taken up by long-term contracts. The facility has improved its efficiency with a recently completed $100 million revamp, and SunCoke expects to up the export capacity to 15 million tons through an additional $20 million investment that includes a new shiploader.
SunCoke Chief Executive Officer Fritz Henderson called the acquisition “a compelling strategic fit” to the company’s coal logistics business.
SunCoke expects to complete the deal with Raven Energy Holdings LLC, an affiliate of The Cline Group, by Sept. 1.
Ohio-based SunCoke stores and ships coal from its terminal in the Ohio River Valley Basin. The company also makes the coke — coal that has been heated to remove impurities — that steelmakers use in their blast furnaces.
SunCoke is jumping into an export market that has been declining in recent years. During the first quarter, U.S. coal exports fell just short of 22 million tons, down a little over 20 percent from the same period in 2014, according to the federal Energy Information Administration. Coal and shipping industry members have also run into opposition to new export facilities, such as the RAM Terminal in Plaquemines Parish.
Karl Cates, spokesman for the Institute for Energy Economics and Financial Analysis, said coal is fading as an energy source.
China is importing less coal. India is transitioning from coal imports. The institute’s research has found no evidence that additional U.S. export capacity is needed, he said.
A November report from the institute says U.S. export capacity, at 234 million tons, far outstrips demand.
However, SunCoke spokesman Steve Carlson said the Convent facility differs in some important ways from its U.S. counterparts.
“The terminal, I should say, is certainly outperforming what we consider the state of the coal industry in the U.S.,” Carlson said. “A big part of that is it serves primarily the Illinois Basin, which is low-cost (for mining). It’s highly efficient.”
The basin has been a bright spot in a challenged domestic coal market, Carlson said.
In addition, virtually all of the Convent Marine Terminal’s 10 million-ton capacity is under contract, Carlson said. Most of that coal is shipped to Europe.
And unlike a number of proposed coal export terminals, Convent Marine Terminal’s expansion hasn’t drawn any opposition as far as SunCoke knows, Carlson said.
Wilma Subra, a chemist and adviser to Louisiana Environmental Action Network, said the lack of public opposition doesn’t mean residents like the terminal.
Many are just scared to speak out, she said.
Coal export terminals cause a lot of problems for people in the surrounding communities because the terminals generate so much air pollution. The dust settles all over people’s property and creates respiratory issues. Sometimes there are spills from conveyors that move the coal to the ships. “They’re putting them in here because they’re wanting to export the coal to foreign countries … and yet they’re bringing into Louisiana something that’s really, really obnoxious to the people living in the immediate area,” Subra said.