The Cumberland River Coal unit of Arch Coal (NYSE: ACI) is permitting an extended contour/highwall miner (HWM) operation in the southern part of Letcher County, Ky., right next to the state line with Virginia.
The proposed operation is a contour operation with auger/highwall mining on the all coal beds from the Wax to the Highsplint, said a July 18 socioeconomic report on the project written by the company. The report was released on Aug. 3 by the Kentucky Department for Environmental Protection as part of the company’s effort to get a wastewater permit for this project. The project is also covered by an amendment and a minor revision of an existing Kentucky Department for Natural Resources-issued mine permit (#867-0434).
The anticipated plan for this contour operation is to begin on the eastern end of the property at the junction with permit number #867‐0382 at the head of an unnamed tributary of Franks Creek, then proceed north to Halls Butt and then turn west towards River Ridge and terminate at the drainage area of Colliers Creek, the report added.
About 123 people will be directly employed by this project. This active operation is estimated to produce about 20,000 clean tons per month for 60 more months. At a current average sales price of $80/ton, the total revenue generated from this operation is estimated to be approximately $96m. The severance tax rate for coal companies is approximately 4.5% and it is estimated that this project area will generate about $4.32m in severance taxes for Kentucky.
Said Arch Coal’s Feb. 29 annual Form 10-K report about this operation: “Cumberland River is an underground and surface mining complex located on approximately 19,900 acres in Wise County, Virginia and Letcher County, Kentucky. Surface mining operations at the Cumberland River mining complex extract steam and metallurgical coal from approximately 20 different coal seams from the Imboden seam to the High Splint No. 14 seam. Underground mining operations at the Cumberland River mining complex extract steam and metallurgical coal from the Imboden, Taggart Marker, Middle Taggart, Upper Taggart, Owl, and Parsons seams.”
The Cumberland River complex had about 28.5 million tons of proven and probable reserves as of the end of 2011. Without the addition of more coal reserves, the current reserves could sustain current production levels until 2022 before annual output starts to significantly decline. The complex consists of deep and surface mines (including a highwall miner operation), a prep plant and a loadout. Arch ships about one-third of the coal raw, with the remaining two-thirds run through a 750-ton-per-hour preparation plant before shipping to customers via the Norfolk Southern railroad. The loadout can load a 12,000-ton train in about four hours.