The Twin Ports shipping season begins today, when the Mesabi Miner departs for the Presque Island Power Plant in Michigan with 55,000 to 58,000 tons of coal from Superior's Midwest Energy Terminal.
While the first several coal shipments from Midwest will remain on Lake Superior -- the Soo Locks don't open until March 25 -- that will not remain the case as the company continues to develop a European market for its low-sulfur coal.
Midwest sent 380,000 tons of coal overseas last year. It already has orders for more than four times that amount this year.
"This year we have a contract for almost 1.7 million net tons a year for the next three years," Midwest Energy Resources Company President Fred Shusterich said. "Two to three years down the road I would like to be exporting around 4 million," around a sixth of the capacity of the Superior terminal.
"We are cautiously optimistic that we can continue to grow that (European) market," he said. "It is kind of a flat market right now. They are experiencing some of the issues that we have with their own spins on it, like the Euro crisis and debt crisis."
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Coal from Superior bound for Europe is taken by lakers to St. Lawrence Stevedoring in Quebec. The year-round, deep-water (49 feet at low tide) terminal can accommodate vessels up to 175,000 metric tons of deadweight tonnage. To take advantages of economies of scale, the lakers' coal is unloaded at Quebec and loaded onto larger, ocean-going ships.
The facility handles around 10 million tonnes of cargo a year, mostly iron ore, said Jeff Lemont, vice president of St. Lawrence Stevedoring and of the bulk division of its parent company, Quebec Stevedoring. Coal has, until now, been a marginal commodity for the company. That is changing as Midwest Energy and several coal companies market North American coal in Europe. Lemont sees great potential for increasing coal shipments overseas.
"We're very excited and look forward to continue working together to increase the volumes in the years to come," he said.
Midwest Energy views expanding overseas exports as a way to help offset losses in the North American market. Midwest Energy's Superior terminal has an annual capacity of 25 million tons. In 2008 the terminal shipped just under 23 million tons. Last year it shipped 14 million tons, in large part because Ontario Power Generation reduced its orders from 8 million tons to about 300,000 tons. OPG is working to phase out the use of coal to produce electricity by the end of 2014, investing in electric and nuclear generation and testing the use of biomass fuels in plants that formerly were fueled with coal.
There is also doubt about the future of the Presque Island Power Plant in Marquette, Mich., which receives 1.75 million to 2 million tons of coal a year from Midwest Energy. We Energies announced last year that the plant could close in 2017 to comply with proposed federal pollution regulations.
In January, the Milwaukee, Wis., based We Energies and Wolverine Power Cooperative of Cadillac, Mich., announced they had signed a letter of intent to evaluate the formation of a joint venture to invest in environmental improvements at the plant.
"If this joint venue were to be approved, there would be construction of emission control equipment on the plant and it would continue to use coal," We Energies spokesman Brian Manthey said Tuesday. "I think by this summer we will have a pretty good idea of what direction we will be going."
Shusterich isn't overly concerned about the future of Presque Isle just year.
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"What is announced initially can be worst case scenarios," he said.
Shusterich expects to ship between 15 million and 16 million tons of coal this year.
"It will be better than last year, but it is still a tough economy -- especially a tough energy economy, not really because of government regs that are pending, but because of the (natural) gas market," he said. "Gas is unrealistically low, and it is probably going to stay there a while."
The Mesabi Miner loaded Thursday. After loading finished in the afternoon the ship moved to the Port Terminal for some final maintenance before leaving the harbor Friday.
Tradition says it's bad luck to start the season's first voyage on a Friday, Shusterich said. So they are considering Thursday's trip from Midwest to the Port Terminal as the Miner's first voyage of the season, he said.
