The Australia-based parent company proposing to build two coal terminals on the Lower Columbia River is swimming in debt that could put the project in peril, a Seattle-based conservation group said Wednesday.
Since its founding in 2005, Ambre Energy has collected $6.6 million in revenue while claiming losses of $124 million worldwide, which could make its prospects difficult to finance the proposed Millennium Bulk Terminals coal port west of Longview and a barge operation at Port Westward, according to a report released by the Sightline Institute.
“The capital and credit markets see Ambre as a high-risk company,” Clark Williams-Derry, the report’s author, said in a conference call with reporters Wednesday morning.
Company officials dismissed the criticisms, saying they have made big investments on the front end that will be paid back when the terminals are operating.
Ambre is the majority owner of $643 million Millennium project at the former Reynolds Metals Co. site, which is still awaiting permits from state and federal regulators. Millennium, which owns the buildings and equipment on the site, is working with land-owner Alcoa Corp. to clean up decades of soil and ground water contamination from the former aluminum smelter.
Williams-Derry said Longview residents should be concerned over whether Millennium can finish what it started.
“Based on their financial records that have been made public, there is a risk, a long term risk, that they’re not going to be able to fulfill their clean-up obligations,” he said.
Ambre also owns 100 percent of a proposed $242 million Oregon terminal project. Ambre plans to build a coal dock at the Port of Morrow in Central Oregon, then ship 8 million tons of coal annually to a proposed new barge dock at Port Westward near Clatskanie.
Both terminals would handle coal from the Powder River Basin in Wyoming and Montana and ship it to Asia, where demand for coal is high for growing economies.
Tom Sanzillo, finance director for the Institute for Energy Economics and Financial Analysis, told reporters that U.S. coal companies, not just Ambre, are struggling to expand into those foreign markets because of falling domestic demand. He questioned whether Ambre has the clout to compete with three other proposed coal terminals in the Pacific Northwest and expanded British Columbia operations.
“The current U.S. coal enviroment is tough,” he said.
Ambre officials did not dispute Sightline’s numbers but argued they are being taken out of context by a nonprofit with an anti-coal agenda.
“Like many successful companies today, Ambre Energy has developed quickly from humble beginnings to become an important player in its sector. Its structure allows it to leverage the experience of its executives but be nimble in its approach,” company spokeswoman Liz Gard said in a written statement.
Ambre officials noted that the company has 10-year contracts to ship 5 million tons of coal annually to two South Korean companies, employs 350 people in the United States and Australia and has partnered with other coal companies on multiple projects. The company has also received financing from a Colorado private equity firm, Resource Capital Funds.
Ambre owns 62 percent of Milennium, and Pennsylvania-based Arch Coal owns the rest. The Australian company also has a 50-percent share of two mines in Montana and Wyoming, full ownership of a port in Texas and the rights to two coal deposits in the Powder River Basin.
Ambre officials said they are confident they will be recoup their investment.
“You spend money before you make money. That’s essentially what Ambre is doing,” Gard said.