GCC Energy has offered to pay nearly $3.5 million to secure an expansion of the King II coal mine in southwest La Plata County.
GCC Energy has operated the coal mine near Hesperus since 2007. But in preparation for its coal reserves to run out, it asked the Bureau of Land Management for a lease to expand the mine by 2,426 acres, opening access to another 9.5 million tons of coal.
The BLM approved the expansion in October 2019. But, as a matter of formality, the BLM had to put the new lease out for bid, which it did Friday, receiving one offer – from GCC Energy – for $3,434,400.
The BLM must determine if the bid meets estimated fair-market value before finalizing the deal. If the BLM decides it does, the lease will be issued after the Department of Justice has reviewed the deal in a 30-day time period.
In a news release, the BLM added that when a coal lease is issued, an annual rental payment of $3 per acre is required, along with a royalty payment of 8% of the value of coal mined.
“GCC wants to continue to be a part of the Durango community,” Gina Lotito, vice president of energy and sustainability for GCC, wrote in an email. “We hope that the BLM accepts our bid; we should know in a couple of weeks.”
Company officials have said previously the expansion would extend the life of the mine by about 20 years and keep about 100 jobs in the county.
Most of the coal extracted at King II goes to GCC Energy’s parent company – Grupo Cementos de Chihuahua, a multimillion-dollar international cement manufacturer based in Chihuahua, Mexico – for use in cement production.
Since the company took over the King II mine, it has produced an average of about 700,000 tons of coal per year. But increasingly, production has waned as the industry takes a downturn. In 2019, GCC Energy extracted about $658,000 tons of coal, according to state records.
GCC Energy officials have said the expansion would have minimal impact on surface operations.
There was little public opposition to the proposed expansion, save for a handful of residents who raised issues with climate change, truck traffic associated with hauling coal and potential impacts to water quality.