The U.S. Bureau of Land Management (BLM) on Jan. 4 held a competitive coal lease sale by sealed bid for the Greens Hollow Coal Tract— a 6,175-acre area in Sanpete and Sevier counties that is estimated to contain approximately 55.7 million tons of recoverable coal and is adjacent to the SUFCO mine.
The BLM said it received one bid, from SUFCO owner Canyon Fuels Co. LLC, for $22.85 million, or $3,700.17 per acre. However, this result is considered preliminary and will not be confirmed until the BLM sale panel determines if the bid meets or exceeds the estimated fair market value for the tract. That value is a secret known only within BLM.
If the BLM sale panel determines that a high bid meets or exceeds fair market value, the BLM will only issue the lease after the Department of Justice has been allowed 30 days to conduct an anti-trust review of the bidder’s coal holdings. When a coal lease is issued, an annual rental payment of $3 per acre is required, along with a royalty payment of eight percent of the value of coal produced by underground mining methods. The Greens Hollow Coal Tract will be mined using underground methods as part of the longwall-equipped SUFCO operation, which is Utah’s largest coal mine.
This lease sale was held in response to a lease by application submitted by Ark Land. That application was assigned by Ark to Canyon Fuel, a subsidiary of Bowie Resource Partners LLC. Bowie bought the adjacent SUFCO mine and related assets earlier this decade from Arch Coal.
The Greens Hollow Tract has one minable coal bed, which is designated as either the Upper Hiawatha or the Lower Hiawatha seam. These seams are approximately 11 feet in thickness. The coal beds contain approximately 73.4 million in-place tons of coal. However, based on BLM’s assessment and mitigation proposed by the U.S. Forest Service to address subsidence impacts, the tract offered for sale is projected to contain approximately 55.7 million tons of technically recoverable high-volatile C bituminous coal.
The “as received basis” coal quality in the Upper Hiawatha coal bed is: 11,565 Btu/lb., 7.46% moisture, 9.81% ash, 36.55% volatile matter, 46.1% fixed carbon, and 0.55% sulfur. The “as received basis” coal quality in the Lower Hiawatha coal bed is: 11,538 Btu/lb., 7.21% moisture, 9.69% ash, 38.88% volatile matter, 43.85% fixed carbon, and 1.26% sulfur.
U.S. Mine Safety and Health Administration data shows that SUFCO produced 4 million tons in the first three quarters of 2016 and 6 million tons in all of 2015.