The Illinois Environmental Protection Agency is taking comment until June 22 on a draft National Pollutant Discharge Elimination System (NPDES) water permit for the Royal Falcon deep mine of Knight Hawk Coal LLC, a company that is 49% owned by Arch Coal (NYSE: ACI).
The mine site is located 2.5 miles west of Royalton in Jackson and Franklin counties. The surface facilities of this underground mine will are within a 250-acre area, also covered by Illinois Office of Mines and Minerals (OMM) Permit No. 384. The OMM re-issued the mine permit for Royal Falcon in September 2011.
“The surface facilities include drainage control structures, sedimentation basins, soil stockpiles, refuse disposal area, coal crusher, raw and clean coal stockpile areas, beltline, office and warehouse buildings and parking area,” said an IEPA notice. “Also included on the site will be an access incline into a boxcut area within which the drift entries are located for entry into the underground mining area.”
The Knight Hawk website said the company commenced underground mining in January 2008 at Royal Falcon in the No. 6 seam. Coal quality varies between the south and north areas with approximately 1.2% sulfur and 11,800 Btu/lb in the north and approximately 2.5% sulfur and 11,200 Btu/lb in the south.
The U.S. Mine Safety and Health Administration database shows Royal Falcon as currently “nonproducing,” with last production in 2009, when the mine turned out 366,773 tons for the year.
Said Arch Coal about its investment in Knight Hawk in its Feb. 29 Form 10-K annual report: “The Company holds an equity interest in Knight Hawk Holdings, LLC (‘Knight Hawk’), a coal producer in the Illinois Basin. In June 2010, the Company exchanged 68.4 million tons of coal reserves in the Illinois Basin for an additional 9% ownership interest, increasing the Company’s ownership in Knight Hawk to 42% from 33 1/3%. The Company recognized a gain of $41.6 million on the transaction, representing the difference between the fair value and the $12.1 million net book value of the coal reserves, adjusted for the Company’s retained ownership interest in the reserves through its investment in Knight Hawk. In December 2010, the Company increased its ownership interest in Knight Hawk to 49% for $26.6 million in cash.”