A first for the oldest Class I: UP originates export metallurgical coal

The Class I now serves three coal mines in Colorado, 12 in the Powder River Basin and southern Wyoming, nine in Utah and six in the southern Illinois basin. Union Pacific Railroad

Union Pacific Railroad was founded on July 1, 1862, so there aren’t many things left for the 159-year-old Class I to experience for the first time. Yet, just such a development occurred in July, when the railroad began serving a mine in Weston, Colorado — the first export metallurgical coal to originate on its network.

UP is transporting the met coal from the New Elk Coal Mine under a long-term agreement with Allegiance Coal Ltd., which is based in Australia but recently began conducting business in North America. Met coal mined in Colorado is high in British thermal units — a heat measurement — but low in sulphur, ash and moisture, so it’s an ideal fuel source.

The met coal is moved from the Colorado mine to the Port of Los Guaymas in Mexico for export to steel-making markets in Asia and South America. UP works with Ferromex to transport the coal, with the two railroads interchanging in Nogales, Arizona.

UP traditionally has moved auto parts and grains across the U.S/Mexican border, but the met coal venture serves as a unique crossborder business segment for the Class I. The railroad expects to transport more than 8,000 carloads of the coal in the venture’s first 12 months.

New Elk Coal Mine Under a long-term agreement with Allegiance Coal Ltd., UP began transporting export coal from the New Elk Coal Mine in Weston, Colorado, in July. Union Pacific Railroad

“Union Pacific has not historically had significant participation in the metallurgical coal market,” said UP spokesperson Robynn Tysver in an email.

Landing the Allegiance Coal business required cross-departmental engagement, relationship-building and market knowledge, UP officials say. There was strong teamwork between the operating and marketing and sales departments, they add.

UP also serves two other coal mines in Colorado as well as 12 in the Powder River Basin and southern Wyoming, nine in Utah and six in the southern Illinois basin.

Thermal coal — which is used by utility plants to generate electricity — is more prevalent in the United States than metallurgical coal. Met coal is used to produce the carbon when steel is manufactured for buildings, trains, tools, cookware, cutlery, surgical instruments and other items. About 70% of global steel production currently involves met coal, according to the World Coal Association.

The steel-making market is booming worldwide as populations grow and nations around the world seek to improve their living standards, said Tysver.

“Steel is critical simply because no other material has the same unique combination of strength, formability and versatility,” she said.