Coal Age Magazine - For nearly 100 years, Coal Age has been the magazine that readers can trust for guidance and insight on this important industry.
Issue link: https://coal.epubxp.com/i/105148
southern coal Southern Coal Retools for the Future Managing through the trough, an Appalachian leader makes bold moves to secure a long-term position BY STEVE FISCOR, EDITOR-IN-CHIEF Southern Coal has revised its surface mining strategy to one that relies more on hauling material with smaller trucks rather than pushing it with dozers. Last year, Southern Coal found itself in a position where it was idling mines, laying off workers, and doing whatever it could to survive a coal market that had turned quickly. Until 2012, the company, which was founded by the Justice Family four years ago, was on a roll. It was mining lucrative metallurgical grade coal and it also had a respectable thermal coal business. In 2011, it was operating 33 mines and produced 7.2 million tons. Then prices in the met market began to head south and utilities began to turn their attention to natural gas. The company was forced to scale back its plans, reduce production and cut its workforce—a story all too familiar in Appalachia today. Just after the presidential election, when the situation for U.S. coal looked its bleakest, Southern Coal announced it had struck a deal with American Electric Power (AEP) that would not only save existing jobs, but allow the company to rehire and restart some of its shuttered operations (See December 2012, Coal Age, p. 6). This 30 www.coalage.com would be the first piece of really good news the U.S. coal industry could report in months. Jay Justice and his father have gained great notoriety for their leadership in putting together deals that benefit all parties involved. In this case, they worked with one of their customers, which also happens to be the electric service provider for the region in which all of their mines operate, and state government officials in Virginia, West Virginia and Kentucky, to structure a long-term deal that supplies AEP with an affordable, high quality fuel. The AEP deal also gave Southern Coal the long-term security it needed to invest and grow operations. The company has already called back the workers, bringing its total workforce to 1,700 miners working in Appalachia. It has adapted its mining plans on the surface to more effectively operate in today's regulatory environment, while it pursues higher grade reserves underground. Then and Now Southern Coal is the largest privatelyheld met producer in the U.S. What separates it from the others is the company's vast reserves. Southern Coal's permitted reserves now stand at 160 million tons. The operative term here is: permitted. Much of that reserve base is metallurgical grade coal, which commands a premium price. The last time Coal Age reported on the company (2010), it was producing 7 million tons per year (tpy) and had its sights set on more than 8 million tpy for 2011. It was investing $125 million in mining operations and the Tams mine had broken ground in West Virginia. Production at that operation was targeted for more than 750,00 tpy with a mine life of 12 to 14 years. The idea was to blend the production from Tams with A&G;, another subsidiary in Wise, Va., to produce the Ranger MidVol Blend. A&G; at the time consisted of eight surface mines and two underJanuary 2013