A new unit of Arch Coal (NYSE: ACI), Shelby Run Mining Co. LLC, applied Aug. 31 at the West Virginia Department of Environmental Protection for a permit on the new Tucker Run room-and-pillar mine, the latest piece of a planned new metallurgical coal mine complex in Taylor County.
The application for Tucker Run covers a room-and-pillar job in the Lower Kittanning seam, located near Grafton. The application also covers a loading facility and 33 surface acres for support facilities for the deep mine.
This follows an April 27 application from Shelby Run Mining that covers 41 surface acres of support area, a room-and-pillar deep mine called Shelby Run and a loading facility to be located near Wendel in Taylor County. This mine would also work the Lower Kittanning coal seam.
Based on past DEP permitting for mines like this, it could be two years or more before the agency issues these two deep mine permit. The first mine at this complex, now in production, ran into lengthy permitting delays due to protests by local citizens.
Arch Coal acquired this property in a June 2011 buy of International Coal Group. The reserve area currently consists of the Tygart Valley No. 1 deep mine (recently renamed the Leer mine) that is in pre-longwall development production, with the longwall due in operation in mid 2013. U.S. Mine Safety and Health Administration data shows that this first mine, currently listed under ACI Tygart Valley (formerly ICG Tygart Valley LLC), produced 4,008 tons in the first half of this year and 9,761 tons in the fourth quarter of 2011, its first quarter of production.
Arch said in its Feb. 29 Form 10-K annual report that this property included about 165.9 million tons of deep coal reserves as of Dec. 31, 2011, of both steam and metallurgical quality coal in the Lower Kittanning seam, covering approximately 68,300 acres. Construction of the Leer mining complex began in June 2010 and initial coal production commenced in November 2011. At full output, Leer is designed to have 3.5 million tons of capacity per year of high quality coal that is suited to both the utility market and the high volatile metallurgical market.
Arch Coal said in a Feb. 2 conference presentation that it eventually plans to develop a multiple-mine complex producing high-vol A met coal at this site. A map in the presentation, that didn’t have details on the mines themselves, shows Tygart Valley/Leer, with the Shelby Run reserve area just to the west of it. To the northwest of Tygart Valley/Leer, and to the north of Shelby Run, is the Tucker Run reserve area. To the northwest of Tucker Run is the Tygart No. 3 reserve. To the southwest of Shelby Run is the Rosemont reserve, which is also in Arch’s future development plans. Rosemont merges into the existing Sentinel complex of Arch. Sentinel is an operation also acquired in the ICG deal.
Arch said it is in the preliminary stages of developing the new Shelby Run mine. The initial mining plan utilizes continuous miners with a run rate of about 1 million tons per year starting in mid 2015. Shelby Run would produce a high-vol A coal, like Leer, and also like Leer, could produce up to 3.5 million tons per year if it eventually becomes a longwall operation.