News

April 12, 2010

New economic study shows impact of lignite industry on North Dakota

New economic study shows impact of lignite industry on North Dakota

North Dakota’s lignite industry continues to provide economic benefits to the state through its high-paying jobs, business activity and tax revenue, says a recently released economic survey completed by the North Dakota State University Department of Agribusiness and Applied Economics.

Larry Leistritz, an NDSU professor who conducts the study, said North Dakota could realize significant economic benefits as a result of growth and development of the lignite energy industry. Currently, the Spiritwood Station near Jamestown is under construction and is expected to begin commercial operation in the fall of 2010. The lignite for the new plant will be supplied by the Falkirk Mining Company near Underwood, North Dakota. The Spiritwood Station will be North Dakota’s newest coal-based power plant since Antelope Valley Station’s Unit 2 began operations in 1986.

“Expenditures from firms involved in lignite-related activities generated total business volume activity of nearly $3 billion in 2009 and projections show expenditures of more than $2.9 billion in 2010,” Leistritz said. Multi-million dollar projects aimed at improving the efficiencies of the existing electric generating plants and further reducing emissions are partly responsible for the higher expenditures.

Another indication of the impact of the industry on North Dakota’s economy is state tax revenue resulting from companies involved in lignite-related activities. In 2006, estimated tax revenues were less than $80 million. In 2010, estimated tax revenues should be more than $93 million.

The lignite industry is also a large employer with approximately 4,000 direct employees in 2010 and another 23,000 secondary employees, such as those who work for contractors and suppliers, which provide goods and services to the mines and plants.

Here are some other significant findings from this year’s report:

• Average mining wages in Mercer County were $80,949 in 2008, increasing from $76,403 in 2007. Mercer County is the home of the nation’s largest lignite mine, The Coteau Properties Company’s Freedom Mine, and the Beulah Mine, owned by Westmoreland Coal Company.
• Average wages for electric production workers in 2008 averaged $74,879 annually. The combination of mining and electric production wages puts the lignite industry among those paying the highest wages in North Dakota, substantially higher than the state’s average wage of $35,075 in 2008.

“This annual economic survey clearly measures the consistency and economic contributions of the lignite industry to North Dakota,” said Steve Van Dyke, vice president of communications for the Lignite Energy Council. “While the jobs are concentrated in Mercer, McLean and Oliver Counties, the economic benefits of this industry are felt throughout the state.”
The study was commissioned by the Lignite Energy Council, a trade association representing the state’s four lignite mines, which produce about 30 million tons of lignite annually, along with the lignite-based power plants, the Dakota Gasification Company and more than 300 companies that supply goods and services to the lignite industry. Annual economic studies of the lignite industry have been produced by NDSU’s Department of Agribusiness and Applied Economics since 1982.

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