The Company’s mining operations include Westmoreland Mining LLC, which through its subsidiaries, operates four mining complexes in the United States, Prairie Mines & Royalty ULC, which operates five mining complexes in Canada, Westmoreland Resources, Inc., which operates the Absaloka Mine, Westmoreland Kemmerer, Inc., which operates the Kemmerer Mine, and Coal Valley Resources Inc., which operates the Coal Valley Mine. The mining operations are described below.
The Company’s 12 surface mine complexes enjoy significant transportation and logistical advantages to their principal customers, which reduce exposure to competition, and long-term coal sales contracts promote stable long-term earnings and cash flows. Westmoreland’s mines are located adjacent to, or only a short conveyor, truck or rail haul from their primary customers, with the exception of the Coal Valley mine, which exports coal to power utilities in the Asia-Pacific region. The majority of the Company’s coal production is sold under long-term contracts of one year or greater which, as they expire, are anticipated to be followed by extensions, new contracts or spot sales at prices reflecting then current market conditions. Pricing changes periodically under existing contracts as a result of adjustment provisions for cost and market variances.
Westmoreland Mining LLC (WML)
WML was formed as a separate subsidiary of Westmoreland Coal Company in 2001 to facilitate the acquisitions of the operating coal business of Entech, Inc., a subsidiary of Montana Power, and the coal assets of Knife River Corporation, a subsidiary of MDU Resources. WML’s subsidiaries are Western Energy Company (Rosebud Mine), Texas Westmoreland Coal Co. (Jewett Mine), Dakota Westmoreland Corporation (Beulah Mine), and Westmoreland Savage Corporation (Savage Mine).
Prairie Mines & Royalty ULC (PMRULC)
PMRULC was formed in 2014 as part of Westmoreland’s expansion into Canada with the acquisition of five coal mines in the Canadian provinces of Alberta and Saskatchewan. PMRULC supplies coal to domestic power stations under long term coal supply agreements with ATCO and Saskpower, and a joint venture arrangement with Capital Power Corporation. PMRULC also supplies coal for the manufacture of activated carbon in a Joint Venture agreement with Cabot Norit Canada, and char for the manufacture of charcoal briquettes.
Westmoreland Resources, Inc. (WRI)
WRI was formed by Westmoreland and a group of partners to lease coal reserves from the Crow Tribe of Indians in Montana and develop the Absaloka Mine in the early 1970’s. WRI shipped its first coal from the mine in 1974. Over the years, Westmoreland acquired the partnership interests of others and, as part of its renewal strategy, increased its ownership to 100% in October 2007. Unlike Westmoreland’s other mining operations that supply contiguous power generation facilities, the coal produced at this mine requires rail transport to its principal customers in Minnesota. WRI enjoys a proximity advantage to this customer relative to its main competitors.
Westmoreland Kemmerer, Inc. (WKI)
WKI was formed to acquire the assets of the Kemmerer Mine from Chevron Mining in 2012. Unlike Westmoreland Coal Company’s other mines that use draglines for mining, Kemmerer is a truck and shovel operation. The Kemmerer Mine is a 13,400-acre mine complex located in the southwest corner of Wyoming. It supplies coal to the Naughton Power Station by overland conveyor and to a number of industrial customers either by rail or truck.
Coal Valley Resources Inc. (CVRI)
CVRI was acquired by the Westmoreland Coal Company in 2014 as part of the acquisition of Canadian coal assets from Sherritt International. Unlike the majority of Westmoreland Coal Company’s mines, CVRI produces a thermal coal for both international and domestic consumption. The Coal Valley mine utilizes both dragline and truck and shovel methods to mine steeply dipping coal seams adjacent to the Rocky Mountains.