Rio Tinto Energy America

From Global Energy Monitor

Rio Tinto Energy America (RTEA) is a wholly-owned subsidiary of the global mining company Rio Tinto and until 2008 it was the second largest US coal producer. Rio Tinto states on its website that it "sells its ultra low sulphur coal to electricity generators predominantly in mid western and southern states."[1] In 2008 Rio Tinto spun the most significant of its Powder River Basin coal assets off into Cloud Peak Energy, a company in which Rio Tinto has a 48.3% stake.[2]

On its website, RTEA states that "our motto is to provide for today and protect for tomorrow ... RTEA also continues to work to increase acceptance for coal as a fuel source in America."[3]

Corporate history

In a document filed with the U.S. Securities and Exchange Commission, Rio Tinto state that the company "initially formed RTEA in 1993 as Kennecott Coal Company in connection with the acquisitions of Northern Energy Resource Company, Inc., or NERCO and the Spring Creek coal mine, the Antelope coal mine and a 50% interest in the Decker coal mine operated by others. In 1993, Kennecott Coal Company also acquired the Cordero coal mine from Elk River Resources, Inc., and in 1997, it acquired the Caballo Rojo coal mine from the Drummond Company. These mines are currently operated together as the Cordero Rojo coal mine. In 1994, Kennecott Coal Company was renamed Kennecott Energy and Coal Company. Also in 1994, Kennecott Energy and Coal Company acquired the Colowyo coal mine in Colorado from the W.R. Grace Company. The Colowyo coal mine will remain with Rio Tinto following the completion of this offering. In 1998, Kennecott Energy and Coal Company acquired the Jacobs Ranch coal mine from the Kerr−McGee Corporation. In 2006, Kennecott Energy and Coal Company was renamed Rio Tinto Energy America Inc., as part of Rio Tinto's global branding initiative."[4]

In 2007 Rio Tinto announced that "as part of the Groupwide strategic review" it had decided to "explore options for the sale of some or all of Rio Tinto Energy America."[5] In a media release RTEA added a little further explanation for the sale than the media release issued by Rio Tinto's head office. RTEA, explained Colin Marshall, the President & CEO of Rio Tinto Energy America, "is not positioned to take advantage of the rapidly growing Asian market, particularly China, which Rio Tinto is focusing on. Rio Tinto recognizes that coal will continue to play a vital role in meeting US energy needs both now and in the future. One of the reasons for exploring the sale of RTEA is that due to the current positive outlook for western coal in the US, it is a valuable business. The sale review process will take some months."[6]

In August 2008 Rio Tinto announced that had filed a registration statement with the U.S. Securities and Exchange Commission (SEC) forshadowing a proposed initial public offering (IPO) of the common stock in Cloud Peak Energy. At the time Rio Tinto stated that CPE would comprise "most of the North American coal assets of Rio Tinto Energy America and that it expected to "make a final decision on whether to pursue a listing of the shares of Cloud Peak Energy or to pursue another form of divestment once these options have been more fully explored." (The lead underwriter for the IPO was Credit Suisse Securities.)

This reorganization resulted in RTEA's five open cut coal mines in the Powder River Basin of Montana and Wyoming being transferred to Cloud Peak Energy. These were:

In 2007 RTEA won a bid for 107 million tonnes of additional coal reserves for its Spring Creek Mine in Montana and an additional 83 million tonnes for the Colowyo Mine in Colorado.[1]

Cloud Peak Energy holds a 50% stake in the Decker Coal Company which operates the Decker Mine. In January 2010, Cloud Peak Energy announced that it had accepted a buy-out offer "from an eastern utility company for a coal supply contract originally scheduled through 2012." In an announcement CPE stated that "the customer’s contract accounted for approximately 30 percent of production for 2010 and the majority of the production for 2011 and 2012. The arrangement is mutually beneficial to both the utility and the Decker Joint Venture as it allows the utility to avoid purchasing coal it no longer requires, and Decker to pursue more favorable sales opportunities. Decker Coal Company currently holds no firm sales contracts beyond 2011, but continues to seek market opportunities for the approximately 42 million tons of non-reserve coal held by the Company."[8] (The other joint venture partner in the Decker Coal Company is Level 3 Communication. RTEA stated on its website that "Peter Kiewit Sons, Inc. is under contract to manage the Decker mine" which employs 131 people. It also stated that "coal mined from Decker Coal is primarily marketed to utilities in the Midwest."[9]

The float of Cloud Peak Energy left RTEA holding only the Colowyo Mine in Colorado, which it manages through its wholly owned subsidiary, the Colowyo Coal Company. RTEA also held an interest in a uranium mining venture.[4] In its 2009 annual report Rio Tinto states that the "Colowyo Coal Company produces thermal coal in north west Colorado. The company intends to fulfil long term contracts with two power generators located in north west Colorado until 2017, with the intention to cease production in 2018."[10]

It also noted in its 2009 annual report that one of its achievements during the year was the "separation from Rio Tinto Energy America (RTEA) and transition to a standalone business in 2009 by Colowyo Coal Company."[10] With the separation Rio Tinto financial reports no longer refer to RTEA.

RTEA and mercury

On its website RTEA sought to downplay concerns about the mercury content of Powder River Basin coal and the power stations that burnt it. On its now archived website, RTEA stated that "mercury emissions are among the important global issues. In fact, mercury has been identified as one of the environmental concerns facing Powder River Basin coal. Rio Tinto Energy America recognizes that coal-fired power plants are the largest producers of man-made or anthropogenic mercury in the United States. However, only 3 percent of the mercury in the atmosphere comes from US based power plants. Other sources are from natural events, such as forest fires, and from foreign and other sources. Even though Rio Tinto Energy America contributes a small fraction of the mercury emitted in the US, we remain dedicated to improving the quality of our environment. We support legislation and regulation at the national level that would substantially reduce mercury from current levels while giving the industry time to develop the needed technology."[11]

RTEA and climate change

On its website RTEA stated that "Rio Tinto Energy America (RTEA) recognizes the potential effects of greenhouse gas emissions caused in part by human activity. Because of this, we continue to monitor climate change and environmental impacts. RTEA strives to do our part in solving this issue. We are working with coalitions to monitor and support responsible legislative and governmental action to address this important climate change. One of the key focal points is the effort to facilitate commercial scale carbon capture and sequestration. RTEA takes a two-step, active approach to the issue: to reduce its own impacts on the environment and to account for the impacts it makes. Climate change is a global issue. RTEA believes all governments and individuals need to work together to solve this concern."[12]


RTEA is a member of the FutureGen Alliance.[1]


Contact details

Rio Tinto Energy America
505 South Gillette Avenue (82716)
PO Box 3009
Gillette, WY
United States 82717-3009
Tel: +1 (307) 687 6000

Articles and Resources


  1. 1.0 1.1 1.2 Rio Tinto, Operations & Financial Report: Energy group", Rio Tinto, 2008.
  2. Rio Tinto, 2009 Annual Report: Production & reserves: Group mines: Energy", Rio Tinto website, 2010.
  3. Rio Tinto Energy America, "Welcome to Rio Tinto Energy America", Rio Tinto Energy America website, accessed July 2010.
  4. 4.0 4.1 Rio Tinto, "Filing of a Registration Statement by Cloud Peak Energy Inc. for a Proposed Initial Public Offering", Media Release, August 8, 2008, page 12.
  5. Rio Tinto, "Rio Tinto explores options to sell Rio Tinto Energy America", Media Release, November 8, 2007.
  6. Rio Tinto Energy America, "Announcement: Rio Tinto Explores Options to Sell Rio Tinto Energy America", Media Release, November 8, 2007.
  7. Cloud Peak Energy, "Cloud Peak Energy Inc. Announces Results for Full Year and Fourth Quarter 2009", Cloud Peak Energy website, March 16, 2010.
  8. Cloud Peak Energy, "Decker Coal Accepts Buy-Out of Coal Supply Contract", Media Release, January 6, 2010.
  9. Rio Tinto Energy America, "Decker Coal", Rio Tinto Energy America website, accessed July 2010.
  10. 10.0 10.1 Rio Tinto, "Review of Operations", Rio Tinto 2009 Annual Report, 2010.
  11. Rio Tinto Energy America, "Clean Coal", Rio Tinto Energy America, undated page accessed from Internet Archive July 2010.
  12. Rio Tinto Energy America, "CO2 and climate change", Rio Tinto Energy America, undated page accessed from Internet Archive July 2010.

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