Reed Minerals gets permit for new Alabama coal mine

The Alabama Surface Mining Commission on Oct. 30 issued a permit to Reed Minerals Inc., which is a new subsidiary of North American Coal Corp., for the 178-acre No. 5 strip mine in Walker County.

The target seams at this site are the New Castle and Mary Lee seams of the Mary Lee coal group. The New Castle seam and the Mary Lee seam do not outcrop within the permit area. The interburden between the New Castle and the Mary Lee seams in this area ranges between 30 to 36 feet in thickness, said the permit application. According to exploratory drill holes from Alabama By-Products Corp. and Sloan Mountain Mining LLC, the Mary Lee seam averages about 33.6 inches thick within the proposed permit area. The New Castle seam averages approximately 10 inches. The New Castle and Mary Lee seams are the primary seams to be recovered at this site.

The total sulfur percentages of the coal seams, based on averages of many coal samples, are: 2.3% (dry) for the New Castle; and 0.82% (dry) for the Mary Lee.

The permit documents show this mine will have a U.S. Mine Safety and Health Administration ID number of 0103456. Reed Minerals has three strip mines in Alabama currently listed in the MSHA database, which are the Jap Creek, Town Creek and Slate Creek jobs. The ID number given in the permit data doesn’t appear at the moment in the MSHA database. MSHA shows Reed Minerals as controlled by TRU Energy Services LLC.

The U.S. Office of Surface Mining database shows TRU Energy Services as the 100% owner of Reed Minerals as of an Aug. 31 update, with the company owned before that by Robert Reed. The 100% owner of TRU Energy Services is North American Coal, the OSM database shows.

Lignite producer North American Coal said Aug. 31 that it acquired, through a wholly owned subsidiary, four related companies – Reed Minerals, Reed Hauling Inc., C&H Mining Co. Inc. and Reed Management LLC – from members of and entities controlled by the Reed family. These companies are based in Jasper, Ala., and are involved in the mining of bituminous coal. This means that North American Coal, which long ago got out of the bituminous coal mining industry to focus on lignite mining, has gotten back into bituminous coal.

These operations mine and market steam coal and mid- to high-vol metallurgical coal for sale primarily into the power generation and steel markets. Steam coal is primarily sold to a cooperative association which provides fuel under a long-term contract with a significant, unnamed U.S. utility. Met coal is sold to several customers. The acquired companies operate three mines on leased reserves in central Alabama. For the year ended Dec. 31, 2011, the Reed Minerals companies sold 0.9 million tons of coal and had revenue of about $86m and net income of approximately $4m. North American Coal expects the acquisition to be accretive to earnings immediately.

“The acquisition of the Reed family’s mining business in Alabama provides North American Coal with an opportunity to expand our established surface mining business into bituminous coal markets,” said Bob Benson, president and CEO of North American Coal. “North American Coal has been looking for opportunities to grow. The Reed Minerals’ coal reserves, established reputation and location offer us that opportunity. The eight-year steam coal sales contract provides a stable revenue, profit and cash flow base while we further develop a metallurgical coal business platform. We believe this combination will offer the company, its customers and its employees a number of substantial benefits, which we expect will lead to significant opportunities for future growth and profitability.”

North American Coal is headquartered in Dallas, Texas, and is a wholly-owned subsidiary of NACCO Industries (NYSE: NC).

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.