Image credits: Albert Hyseni
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News Article

CFE Buys Most of Coahuila’s Coal

By Fernando Mares | Thu, 08/11/2022 - 15:53

The Federal Commission of Energy (CFE) enjoys a close relationship with Coahuila, especially the Sabina region, which has recently been under the spotlight after a coal mine collapse trapping 15 workers 60m underground. The state-owned utility purchases most of the coal produced in the state.

CFE owns three coal-fired power plants, of which two are located in Coahuila: José López Portillo and Carbón II. Since 1982, when CFE inaugurated the first plant, it has sourced its coal from local producers, which has benefited Coahuila’s economy. The state is the main coal producer in Mexico, representing over 98 percent of the national production. According to the Mexican Geological Survey (SGM), Coahuila produced 2.1 million tons of coal in 2020, which generated an economic spill-over of more than US$1 billion. 

In October 2020, CFE announced the purchase of 2 million tons of coal from 60 local producers, at a price of US$51.7/t. According to CFE, 73 percent of the acquired coal was from micro- and small-sized producers, 16 percent from medium-sized producers and 11 percent from large-scale producers. “The Mexican president reaffirmed its commitment to support producers, with the aim to maintain jobs in the coal-producing area for operators, workers and transporters, which will ensure economic activity in the region,” CFE stated. 

On July 21, 2022, CFE announced that it would buy 3.1 million tons of coal from Sabinas, Coahuila. For this purpose it would assign 52 contracts under a progressive distribution  strategy, aimed to benefit smaller-scale producers with contracts that would run until 2024. CFE, with the support of SGM and the Ministry of Labor and Social Welfare (STPS), identified over 148 potential suppliers. After assigning the contracts, CFE announced it will invest over US$190 million in the acquisition of the coal.

Currently, CFE buys over 99 percent of the coal produced in the region. Nonetheless, concern is growing regarding the working situation of mines where the state-owned company supplies its coal, as well as the transparency of the acquisition process. Regarding the 148 potential suppliers, STPS did not reveal the location of the mines. Because of the mine collapse, where 10 mining workers remain trapped, of local Congress Member Yolande Elizondo urged the federal authorities to ensure safe conditions in mines and coal shafts. She furthermore proposed the cancelation of concessions for the latter, leaving only surface mining projects in operation.
 

The data used in this article was sourced from:  
El Sol de Cuernavaca, El País, Expansión
Photo by:   Albert Hyseni
Fernando Mares Fernando Mares Junior Journalist and Industry Analyst