Chevron 2010 Annual Report Download - page 63

Chevron Corporation 2010 Supplement to the Annual Report 61
Mining Other Businesses
Mining
Chevron’s U.S.-based mining company produces and markets coal and
molybdenum.
The company owns and is the operator of a surface coal mine in
Kemmerer, Wyoming; an underground coal mine in North River,
Alabama; a surface coal mine in McKinley, New Mexico; and a molybde-
num mine in Questa, New Mexico. The company also owns a 50 percent
interest in Youngs Creek Mining Company, LLC, which was formed to
develop a coal mine in northern Wyoming.
In March 2011, the company signed a purchase and sale agreement
for the sale of the North River Mine and other coal-related assets in
Alabama. Additionally, in January 2011, the company announced the
intent to divest the remaining coal mining operations, including the
Kemmerer Mine and Chevron’s interest in Youngs Creek.
Underground development and production plans at the Questa mine
remain scaled back in response to price levels in the molybdenum market.
Industry Conditions
Domestic demand for coal has improved from 2009, consistent with increases in electricity consumption.
Demand for molybdenum continues to be impacted by the economic slowdown.
Coal markets are dominated by electricity generators, which consume about 90 percent of the coal used
in the United States. During 2010, low natural gas prices relative to coal created a natural gas preference
for some power customers.
Molybdenum is primarily used as an alloy agent in steel. The economic slowdown and the resulting
decrease in demand for steel led to an overall sharp decrease in molybdenum prices that began in late
2008 and moderated through 2010.
2010 Accomplishments
• Commenced full reclamation activities at the McKinley Mine in New Mexico.
• Shared the 2010 Safety Innovator of the Year at the Questa and McKinley mines, as presented by the
New Mexico Mining Association.
• Received an award at Questa for Rescue Response presented jointly by the New Mexico Mining
Association in cooperation with the New Mexico Bureau of Mine Safety.
Coal Reserves
Millions of tons
Developed Reserves
Undeveloped Reserves
0
50
100
150
200
250
0706 08 09 10
189
CANADA
MEXICO
ATLANTIC
OCEAN
Kemmerer
Youngs Creek
North River
Questa
McKinley
UNITED STATES
Mines – CoalU.S. Coal Fields Mine – Molybdenum
Mining Operations1
State/ Capacity2 Annual Sales
Mine Name/Affiliate Country Principal Operation At 12/31/10 2010 2009 2008 2007 2006
Coal: Sulfur Content
Kemmerer Wyoming Truck-and-Shovel (T&S) Low 5.5 4.8 4.5 5.0 5.2 4.6
McKinley3,4 New Mexico Dragline/T&S Low – 0.1 2.6 3.2 3.7 5.2
North River Alabama Longwall Medium 3.1 2.9 2.7 2.9 3.1 2.8
Total Coal Sales 8.6 7.8 9.8 11.1 12.0 12.6
Minerals: Type of Mineral
Mountain Pass4,5 California T&S Rare Earths – – – 2.5 4.3 5.3
Questa4,6 New Mexico Underground Molybdenum 4.2 0.2 0.5 4.1 3.9 4.0
CBMM (35%)7 Brazil T&S Niobium – – – – – 6.1
1 Sales represent the company’s share. Quantities at the coal facilities and niobium facility are shown in millions of tons. Volumes of the rare earth and molybdenum facilities are expressed
in millions of pounds.
2 Quantity shown represents the estimated annual capacity.
3 Mining operations at McKinley were suspended at the end of 2009.
4 Environmental reclamation activities are in progress at McKinley, Questa and Mountain Pass (offsite remediation).
5 Mining operations at Mountain Pass were sold in September 2008.
6 Mining operations at Questa were scaled back in 2009.
7 Chevron’s interest in CBMM was sold in mid-2006.