A U.S. Bureau of Land Management office in Colorado is seeking comments by Dec. 24 on a proposed federal coal lease modification on public lands near Hesperus, Colo., applied for by GCC Energy LLC, which is controlled by a Mexican cement company.
GCC Energy has submitted an application to modify existing federal coal lease (COC 62920) to include an additional 952 acres. The surface estate is privately owned, and the BLM manages the mineral estate.
“This application was submitted to obtain known mineable federal coal reserves and prevent those reserves from being bypassed,” said Helen Mary Johnson, BLM geologist, in a Nov. 23 statement. “If the lease modification is issued, it would extend underground development allowing more efficient recovery of federal coal from the existing lease and recovery from the applied-for tracts.”
If approved under the National Environmental Policy Act analysis, the new area would be offered by non-competitive sale with appropriate lease stipulations to protect the surface resources. The additional federal coal recovery would extend the life of the current mine by about nine years.
The King II coal mine has been in operation since 2007, replacing the venerable King Coal mine nearby, and produced about 618,000 tons of coal in 2011. U.S. Mine Safety and Health Administration data shows production of 471,918 tons in the first nine months of this year. Currently, the mine employs 107 people directly and about 110 subcontractors. GCC Energy also operates a truck-to-rail loadout facility in McKinley County, N.M. Total direct economic benefits associated with the coal mine exceed $25m annually.
The coal seam ranges from six to ten feet, BLM noted in a leasing document. This is a room-and-pillar operation in the upper Menefee seam. No adverse roof conditions have been encountered. There is around 300 feet of material above the coal seam, depending on the surface terrain. When all mineable coal has been extracted from a given panel or section the remaining pillars are mined as the operation retreats from the panel. The water table is below the coal seam and the mine is dry, BLM said. Methane is present at minimal levels.
Raw coal leaves the mine via a conveyor system and is deposited into a raw coal stockpile. From the raw coal stockpile the coal is sized with a screen and coal crusher. Processed coal is deposited in stockpiles by size. Coal from the processed stockpiles is then conveyed to a silo, where it is loaded by contract specification, into over-the-road semi-trucks. The trucks haul coal to the end customer, or the rail loadout in Gallup, N.M.
This is a relatively high-quality, low-sulfur bituminous coal, with a heat content of 13,200-13,500 Btu/lb. Sulfur content is about 0.6%. Most of the coal is sold to cement producers. A minor amount is sold to tourist railroads that run steam-engine trains, include the Durango and Silverton Narrow Gauge Railroad.
This is a former Alpha Natural Resources (NYSE: ANR) operation, with Alpha having controlled the operation before the change from the older King Coal deep mine to the new mine. Alpha in 2005 sold the operation to current owner Grupo Cementos de Chihuahua SA de CV, a Mexico-based cement company.